THE IMPACT OF SETTLEMENT PERIOD ON SALES PRICE

This study is an empirical investigation of the impact of ''settlement period'' on sales price while controlling for ''marketing period'' and standard explanatory variables. The hypothesized positive relationship between ''settlement period'' and sales price is confirmed by the results of this study. The estimated coefficient on ''settlement period'' is 0.0008 meaning that our market, on average, exacts a premium of 0.08 percent per day of ''settlement period'' beyond a ''norm'' of 60 days. The estimated coefficient on ''marketing period'' (a control variable) is -0.0003 meaning that our market, on average, requires a discount of 0.03 percent per day of ''marketing period.'' Our findings show the relative importance of ''settlement period'' in making real estate pricing decisions.