The Journal of Real Estate Finance and Economics

, Volume 41, Issue 3, pp 272–293 | Cite as

Home Price, Time-on-Market, and Seller Heterogeneity Under Changing Market Conditions

  • Ping Cheng
  • Zhenguo Lin
  • Yingchun Liu


This paper develops a formal model to examine the effect of changing market conditions and individuals’ selling constraints on selling price and time-on-market. Using the concept of Relative Liquidity Constraint (RLC)—a stochastic variable that captures the randomness of future individual constraints and market conditions—the study presents the first ex ante analysis that extends the investigation of the issue of seller heterogeneity to the point of the buying decision, that is, from the perspective of the buyer’s (future seller’s) point of view. We show that seller constraint, as well as the uncertainty of such a constraint, significantly depresses the expected selling price and increases risk. Our closed-form formulas provide a set of simple quantitative tools that enable buyers and sellers to adjust the “market average” to their ex ante “individual expectations”.


Home price Time-on-market Seller heterogeneity Market conditions 



We wish to thank editor James Kau, two anonymous referees at the Journal of Real Estate Finance and Economics, David Beltran-del-Rio and Paul Obrecht at Fannie Mae for their insightful comments and suggetions. All errors remain our own. The views expressed in this article are our own and do not necessarily represent the views of the authors affiliated organizations.


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of Industry Study, College of BusinessFlorida Atlantic UniversityBoca RatonUSA
  2. 2.Fannie MaeWashingtonUSA

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