Who reduces prices on real estate faster: realtors or individual sellers?
During a joint seminar of the GAMES research group and research and training group “Empirical demand estimation”, Evgeniy Ozhegov, lecturer of HSE-Perm's School of Economics and Finance, presented a study focused on sellers’ behaviour on the secondary real estate market. The project is at the final stage: the author needed a feedback from colleagues before the publication of an article.
As Evgeniy Ozhegov explained, housing market often becomes an object of studies, but researchers mainly focus on demand, not supply. Although there is a fair amount of works about the influence of different variables on time of selling and the price of an apartment, it was interesting to study sellers’ behaviour. Are there any differences in the kind of behaviour? How agents make a decision about price establishing?
Evgeniy Ozhegov and Aleksandra Sidorovykh, the student of Economics educational programme, suggested that private individuals’ behaviour strategy on the secondary real estate market differs from actions of professional realtors. The study was carried out based on the unique massive of data on the sale of secondary real estate objects in Perm in late 2014 – early 2015 (source: Perm Internet-portal “Metrosphera”).
The authors of the study came to the conclusions that sellers on residential real estate market are heterogeneous in composition: one can separate the groups of private individuals and realtors. Professional real estate sellers are prone to decreasing the price of an apartment with time more than private individuals. For example, in one month after publication of an advertisement about the object sale realtors reduce the price in average by 1 thousand rubles per square metre. Individual sellers are more patient and they practically do not change the price of apartments.
During the discussion the seminar participants suggested that such effect is explained by the wish of a realtor to sell as many apartments as possible for a certain period of time.
Thus the project is significant not only from scientific point of view but for every purchaser of residential real estate. Probably, it would be more advantageous for them to pay attention to “long” realtors’ offers on residential real estate market.