nach oben

The Journal of Real Estate Finance and Economics

Erschienen in:

13.07.2017

Price Signals and Uncertainty in Commercial Real Estate Transactions

verfasst von: Matthew Cypher, S. McKay Price, Spenser Robinson, Michael J. Seiler

Erschienen in: The Journal of Real Estate Finance and Economics | Ausgabe 2/2018

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

Using a sample of CCIM designees and candidates in an experimental setting, this study examines the impact of broker signaling in commercial real estate transactions. It also explores the effect of certainty of closure in commercial real estate transactions. Findings suggest brokers are able to influence transaction pricing. Moreover, detailed analysis reveals that when a signal is above a reference point implied by previous transactions, the strength of the signal matters; privately communicated signals from reliable sources have significantly greater impact than signals which are made widely available. Additionally, we find an approximately 10% premium in transactions with lower certainty of closure than one with high certainty. The latter result varies by transactional participant type; owner/developers require a larger premium than institutional sellers.

Vorheriger Artikel The Asymmetric Conditional Beta-Return Relations of REITs

Nächster Artikel Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

To be eligible for the CCIM designation a person must take a series of advanced courses, pass a full-day exam, and document substantial commercial real estate experience.

Zietz and Sirmans (2011) provide a detailed review of residential brokerage research from 1999.

The authors recognize that larger deals may use lower percentages and some brokers may work off fixed fees. No legal framework for fee structure exists.

The issue of pricing is also examined in the residential sector by Beracha and Seiler (2014).

Multiple authors of this paper have either held the CCIM designation or been affiliate members of CCIM chapters through industries like banking. The personal experiences of the authors also corroborate the evidence from interviews of CCIM leadership.

In addition, we independently contacted large national brokerages, small boutique firms, and the CCIM Institute directly and all confirm that the level of broker participation in CRE transactions as principals is high.

Our software automatically populates “X,” the cap rate, depending on the exact treatment to which the subject was randomly assigned.

Similarly, our software calculates in real time the cap rate that corresponds to the price the respondent enters as they type their answer.

Again, the cap rate is provided synchronously as the subject types in his answer.

An, X., Deng, Y., Fisher, J. D., & Hu, M. R. (2015). Commercial real estate rental index: a dynamic panel data model estimation. Real Estate Economics, 44(2), 378–410.CrossRef

Anglin, P. M., & Gao, Y. (2011). Integrating illiquid assets into the portfolio decision process. Real Estate Economics, 39(2), 277–311.CrossRef

Barwick, P.J., Pathak, P.A., & Wong, M. (2016). Conflicts of interest and steering in residential brokerage. American Economic Journal: Applied Economics. Forthcoming.

Benefield, J., Pyles, M., & Gleason, A. (2011). Sale price, marketing time, and limited service listings: the influence of home value and market conditions. Journal of Real Estate Research, 33(4), 531–563.

Benjamin, J. D., Chinloy, P., & Jud, G. D. (2004). Real estate versus financial wealth in consumption. Journal of Real Estate Finance and Economics, 29(3), 341–354.CrossRef

Beracha, E., & Seiler, M. J. (2014). The effect of listing price strategy on transaction selling prices. Journal of Real Estate Finance and Economics, 49(2), 237–255.CrossRef

Bernheim, B.D., & Meer, J. (2008). How much value do real estate brokers add? A case study. Working Paper, National Bureau of Economic Research.

Bian, X., Turnbull, G. K., & Waller, B. D. (2017). Client externality effects of agents selling their own properties. Journal of Real Estate Finance and Economics, 54(2), 139–164.CrossRef

Bokhari, S., & Geltner, D. (2011). Loss aversion and anchoring in commercial real estate pricing: Empirical evidence and price index implications. Real Estate Economics, 39(4), 635–670.CrossRef

Bond, S. A., Hwang, S., Lin, Z., & Vandell, K. D. (2007). Marketing period risk in a portfolio context: Theory and empirical estimates from the UK commercial real estate market. Journal of Real Estate Finance and Economics, 34(4), 447–461.CrossRef

Brastow, R. T., Springer, T. M., & Waller, B. D. (2012). Efficiency and incentives in residential brokerage. Journal of Real Estate Finance and Economics, 45(4), 1041–1061.CrossRef

Cheng, P., Lin, Z., & Liu, Y. (2008). A model of time on market and real estate price under sequential search with recall. Real Estate Economics, 36(4), 813–843.CrossRef

Chinloy, P., Hardin III, W., & Wu, Z. (2013). Price, Place, People, and Local Experience. Journal of Real Estate Research, 35(4), 477–505.

D'Lima, W. (2016). Optimal compensation and value added in commercial real estate brokerage. Working Paper, University of Notre Dame.

Daneshvary, N., & Clauretie, T. M. (2013). Agent change and seller bargaining power: a case of principal agent problem in the housing market. Journal of Real Estate Finance and Economics, 47(3), 416–433.CrossRef

Devaney, S., & Scofield, D. (2013). Broker use and the cost of liquidity in commercial real estate investment. Journal of European Real Estate Research, 6(3), 279–302.CrossRef

Devaney, S., & Scofield, D. (2015). Liquidity and the drivers of search, due diligence and transaction times for UK commercial real estate investments. Journal of Property Research, 32(4), 362–383.CrossRef

Devaney, S., & Scofield, D. (2017). Do 'foreigners' pay more? The effects of investor type and nationality on office transaction prices in New York City. Journal of Property Research, 34(1), 1–18.CrossRef

Dhar, R., & Goetzmann, W.N. (2005). Institutional perspectives on real estate investing: The role of risk and uncertainty. Working Paper, Yale University.

Elder, H. W., Zumpano, L. V., & Baryla, E. A. (1999). Buyer search intensity and the role of the residential real estate broker. Journal of Real Estate Finance and Economics, 18(3), 351–368.CrossRef

Elder, H. W., Zumpano, L. V., & Baryla, E. A. (2000). Buyer brokers: Do they make a difference? Their influence on selling price and search duration. Real Estate Economics, 28(2), 337–362.CrossRef

Garmaise, M. J., & Moskowitz, T. J. (2004). Confronting information asymmetries: Evidence from real estate markets. Review of Financial Studies, 17(2), 405–437.CrossRef

Gatzlaff, D. H., & Liu, P. (2013). List price information in the negotiation of commercial real estate transactions: Is silence golden? Journal of Real Estate Finance and Economics, 47(4), 760–786.CrossRef

Goodwin, K. R., Johnson, K. H., & Zumpano, L. V. (2012). Minimum service requirements, limited brokers and menuing of services. Journal of Real Estate Finance and Economics, 45(2), 471–490.CrossRef

Haigh, M. S., & List, J. A. (2005). Do professional traders exhibit myopic loss aversion? An experimental analysis. Journal of Finance, 60(1), 523–534.CrossRef

Han, L., & Hong, S. H. (2016). Understanding in house transactions in the real estate brokerage industry. RAND Journal of Economics, 47(4), 1057–1086.CrossRef

Hardin III, W., Johnson, K. H., & Wu, Z. (2009). Brokerage intermediation in the commercial property market. Journal of Real Estate Research, 31(4), 397–420.

Hendel, I., Nevo, A., & Ortalo-Magné, F. (2009). The relative performance of real estate marketing platforms: MLS versus FSBOMadison. com. American Economic Review, 99(5), 1878–1898.CrossRef

Hsieh, C. T., & Moretti, E. (2003). Can free entry be inefficient? Fixed commissions and social waste in the real estate industry. Journal of Political Economy, 111(5), 1076–1122.CrossRef

Johnson, K. H., Wiley, J., & Florida, Z. (2007). On the relationship between commercial property price and its selling time. Journal of Real Estate Portfolio Management, 13(4), 379–388.

Johnson, K. H., Lin, Z., & Xie, J. (2015). Dual agent distortions in real estate transactions. Real Estate Economics, 43(2), 507–536.CrossRef

Kadiyali, V., Prince, J., & Simon, D. H. (2014). Is dual agency in real estate a cause for concern? Journal of Real Estate Finance and Economics, 48(1), 164–195.CrossRef

Korngold, G. (2011). Real estate brokers are not 'fiduciaries': A call for developing a new legal framework. Real Estate Law Journal, 40(3), 376–391.

Kruskal, W. H., & Wallis, W. A. (1952). Use of ranks in one-criterion variance analysis. Journal of the American Statistical Association, 47(260), 583–621.CrossRef

Lambson, V. E., McQueen, G. R., & Slade, B. A. (2004). Do out of state buyers pay more for real estate? An examination of anchoring induced bias and search costs. Real Estate Economics, 32(1), 85–126.CrossRef

Levitt, S. D., & Syverson, C. (2008). Market distortions when agents are better informed: The value of information in real estate transactions. Review of Economics and Statistics, 90(4), 599–611.CrossRef

Lin, Z., Liu, Y., & Vandell, K. D. (2009). Marketing period risk in a portfolio context: Comment and extension. Journal of Real Estate Finance and Economics, 38(2), 183–191.CrossRef

Lin, Z., & Vandell, K. D. (2007). Illiquidity and pricing biases in the real estate market. Real Estate Economics, 35(3), 291–330.CrossRef

Ling, D. C., Naranjo, A., & Petrova, M. T. (2016). Search costs, behavioral biases, and information intermediary effects. Journal of Real Estate Finance and Economics, 1–38.

McAllister, P., Hughes, C., & Gallimore, P. (2008). Principal agent issues in asset acquisition: UK institutions and their investment agents. Journal of Property Research, 25(4), 269–283.CrossRef

Munneke, H. J., Ooi, J. T., Sirmans, C. F., & Turnbull, G. K. (2011). Sequential sales of similar assets: The law of one price and real estate. Journal of Regional Science, 51(2), 355–370.CrossRef

Munneke, H. J., & Yavas, A. (2001). Incentives and performance in real estate brokerage. Journal of Real Estate Finance and Economics, 22(1), 5–21.CrossRef

Scofield, D. (2013). Time to completion liquidity in UK commercial real estate investment: 2000-2008. Journal of European Real Estate Research, 6(1), 34–47.CrossRef

Seiler, M. J. (2014). Behavioral Real Estate. In H. K. Baker & P. Chinloy (Eds.), Private real estate markets and investments. Oxford UK: Oxford University Press.

Shy, O. (2012). Real estate brokers and commission: Theory and calibrations. Journal of Real Estate Finance and Economics, 45(4), 982–1004.CrossRef

Turnbull, G. K., & Dombrow, J. (2007). Individual agents, firms, and the real estate brokerage process. Journal of Real Estate Finance and Economics, 35(1), 57–76.CrossRef

Vandell, K. D. (2007). Expanding the academic discipline of real estate valuation: A historical perspective with implications for the future. Journal of Property Investment & Finance, 25(5), 427–443.CrossRef

Wiley, J. A., Benefield, J. D., & Allen, M. T. (2014). Cyclical determinants of brokerage commission rates. Journal of Real Estate Finance and Economics, 48(1), 196–219.CrossRef

Zietz, E. N., & Sirmans, G. S. (2011). Real estate brokerage research in the new millennium. Journal of Real Estate Literature, 19(1), 5–40.

Titel: Price Signals and Uncertainty in Commercial Real Estate Transactions
verfasst von: Matthew Cypher
S. McKay Price
Spenser Robinson
Michael J. Seiler
Publikationsdatum: 13.07.2017
Verlag: Springer US
Erschienen in: The Journal of Real Estate Finance and Economics / Ausgabe 2/2018
Print ISSN: 0895-5638
Elektronische ISSN: 1573-045X
DOI: https://doi.org/10.1007/s11146-017-9617-0

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 2/2018

The Asymmetric Conditional Beta-Return Relations of REITs

MLS Information Sharing Intensity and Housing Market Outcomes

Uncertain School Quality and House Prices: Theory and Empirical Evidence

Spatial Dependence, Idiosyncratic Risk, and the Valuation of Disaggregated Housing Data

Pricing Extreme Attributes in Commercial Real Estate: the Case of Hotel Transactions