<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s reservation prices have been identified. The advantages and disadvantages, in terms of behavioral economics, of the pricing strategies practiced by housing developers have been indicated. The strategy based on fixing an asking price roughly equal to the estimated market value of the property was compared with the strategy based on offering an inflated asking price (with the assumption of price negotiations). A second comparison concerned the strategy of price disclosure compared with the strategy of price non-disclosure.</p><p>The reflections contained within the article were based on behavioral economics and marketing theory. The discussion was based largely on foreign articles, observed examples of pricing policy carried out by housing developers in Poland, and information obtained from housing developers and real estate brokers who are active on the primary market.</p></abstract>

This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s reservation prices have been identified. The advantages and disadvantages, in terms of behavioral economics, of the pricing strategies practiced by housing developers have been indicated. The strategy based on fixing an asking price roughly equal to the estimated market value of the property was compared with the strategy based on offering an inflated asking price (with the assumption of price negotiations). A second comparison concerned the strategy of price disclosure compared with the strategy of price non-disclosure.The reflections contained within the article were based on behavioral economics and marketing theory. The discussion was based largely on foreign articles, observed examples of pricing policy carried out by housing developers in Poland, and information obtained from housing developers and real estate brokers who are active on the primary market.

Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Faculty of Finance University of Economics in Wrocław

Real Estate Management and Valuation

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This paper deals with selected theoretical issues pertaining to the setting of asking prices by housing developers. Determinants of the buyer’s and seller’s...

Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Published Online: Feb 06, 2015

Page range: 17 - 26

DOI: https://doi.org/10.2478/remav-2014-0033

Keywords
housing market, developer, pricing strategy

© 2014 Iwona Dittmann

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Setting Offer Prices by Housing Developers - Selected Issues in the Light of Literature Review

Published Online: Feb 06, 2015

Page range: 17 - 26

DOI: https://doi.org/10.2478/remav-2014-0033

Keywordshousing market, developer, pricing strategy

© 2014 Iwona Dittmann

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
housing market, developer, pricing strategy