The impact of house characteristics on the bargaining outcome

Abstract

Purpose

The paper proposes a statistical approach to investigate the role played by each house characteristic on the selling process. The paper aims to compare the impact of building characteristics, apartment characteristics and location on the bargaining outcome based on a case study in the Italian real estate market.

Design/methodology/approach

The paper first measures the overall contribution of characteristics and location to prices and bargaining outcome. Second, it studies the association between each characteristic and list price – the starting point of the selling process – and between each characteristic and selling price, i.e. the price agreed on to close a transaction. In order to focus on bargaining, the paper computed the association between each characteristic and bargaining outcome.

Findings

Structural characteristics empirically showed low association with bargaining outcome. In contrast, the paper found that location had a significant impact on the bargaining: location is the most important factor in negotiation. On the other hand, location amenities and disamenities may be attractive or unattractive depending on the buyers, and this could influence the bargaining outcome.

Originality/value

The paper findings confirm that factors influencing house prices are not always important factors in negotiation, in line with the literature on negotiation. Hedonic analysis showed the importance of house characteristics to explain house prices. Nevertheless, structural characteristics did not explain bargaining outcome variation. The findings also support the importance of a geographical segmentation to improve price prediction and bargaining outcome variation.

Citation

Semeraro, P. and Fregonara, E. (2013), "The impact of house characteristics on the bargaining outcome", Journal of European Real Estate Research, Vol. 6 No. 3, pp. 262-278. https://doi.org/10.1108/JERER-12-2012-0030