A Comparison of the Appraisal Process for Auction and Private Treaty Residential Sales

Abstract

This paper examines residential sale mechanisms from an appraisal perspective and empirically tests for differences in the valuation process for auctioned and private treaty sales. We test the hypothesis that agents use different criteria in preparing the guide prices for auctioned housing, with an element of under pricing in order to aid in the marketing of the property. The empirical tests are undertaken on a sample of auctioned and private treaty sales in Dublin, Ireland for the period of 1997-2004. We find that the evidence is consistent with the hypothesis that agents do adjust valuations for auctions to attract additional potential bidders.