Seller - Paid Concessions from 2004 to 2012: Implications for House Selling Price and Days on the Market

Abstract

In this paper, we examine the extent to which seller-paid concessions (SPCs) are capitalized into foreclosed and non- foreclosed housing selling prices and days on the market (DOM) from 2004:Q1–2012:Q1. The findings suggest that SPCs are fully capitalized into the net selling price of non-foreclosed properties but a 6.7%–15.0% price premium occurs for foreclosed property prices. Non-foreclosed transactions with SPCs have up to 19.5% longer DOM during this time period. The effect of SPCs on price and DOM vary before and after the housing debacle, supporting other studies finding that economic conditions influence price premiums and discounts through changes in underlying explanatory variables.