This article investigates the performance of real estate auctions relative to negotiated sales. It uses a repeat-sales methodology to control for unobserved differences in the quality of auction properties. Properties auctioned in Los Angeles during the 1980s boom sold at an estimated discount of 0%-9%, while sales in Dallas following the oil bust obtained discounts of 9%-21%. This evidence is consistent with the theoretical prediction that the auction discount increases in downturns when a seller trades-off a longer than expected selling time in a search market against an immediate auction sale. The study finds no evidence of the declining price anomaly.
Mayer, Christopher. "Assessing the Performance of Real Estate Auctions." Real Estate Economics 26, no. 1 (Spring 1998): 41-66.
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