Hedonic Models and the Inclusion of Conditions of Sale in Commercial Real Estate Transactions: A Review of the Literature

Abstract

In the hedonic analysis literature, there has been much discussion on the conditions of sale or the context, motivating factors, and contract specifics associated with real estate transactions. As conditions of sale are often present in commercial real estate transactions, the limited insight into their marginal price effects attenuates the effectiveness of both research and practice. The objective of this paper is to analyze the literature surrounding conditions of sale. We examine the hedonic literature to gain perspective on the extent to which conditions of sale could be an appropriate variable cluster added to hedonic analysis models. We summarize and thematically organize the empirical findings on specific conditions of sale in the real estate literature to help guide future ex ante empirical expectations.