The selling process : If , at first , you don ' t succeed , try , try , try again

About 40 percent of attempts to sell a house end with the seller not selling. This aspect of behavior has not been studied carefully and, by organizing the data in a way that reveals the behavior of sellers instead of listings, I consider some hypotheses related to the ability of a market process to efficiently allocate resources. First, a change in market conditions may cause the seller to change their decision between the time of listing and the end date. Second, the seller may enter the market as a test and find that the buyers' willingness-to-pay is less than their willingness-to-accept. Third, the seller may end a listing because they are dissatisfied with a broker and wish to switch to a new broker. There is some support for each hypothesis. This research uses historical data. Anybody using this research should consult a qualified professional since neither I nor the University of Windsor will accept any responsibility for costs or consequences associated with this research. Thanks are due to Dinghai Xu, Shi Fu and Yang Wang for their able research assistance. Robin Wiebe's assistance with data and insights has also been useful, though he does not bear any responsibility for errors and omissions. Comments would be appreciated and can be sent to [email protected] or by mail to the Try, try and try again 1 Economists like to argue that the price system rations the set of potential buyers and sellers so that the most willing sellers trade with the most willing buyers. In this model, it is difficult to understand why 40 percent of people who attempt to sell their house exit from the market before selling. Some people give up, which suggests that the market is sending the wrong signals and wasting scarce resources. Some people start trying to sell again, which suggests that some real estate agents are not doing a good enough job. These examples imply that traditional models of the selling process omit important margins of adjustment. The textbook model of the selling process can be criticized for many reasons, especially in the context of a housing market. First, it is so costly to sell a house and the commonly available information is so poor that professionals are often paid to assist most attempts. Even with their assistance, the process takes many months. Second, theoretical models of the market process tend to focus on the equilibrium outcome. …