Overcoming adverse selection in buying an existing home
Carl R. Gwin
(Babson College, Economics Division, Babson Park, Massachusetts, USA)
Seow‐Eng Ong
(National University of Singapore, Department of Real Estate, Singapore)
872
Abstract
Existing home sellers may be aware of defects in the home that are not observable to the untrained eye of a buyer. Sellers may not disclose the defects in order to receive a higher price. Home warranties for existing homes appear to provide protection against defects. However, it is not clear how home warranty compares against building inspections and seller disclosure laws. In an adverse selection model, we study the tools available to buyers to overcome this problem.
Keywords
Citation
Gwin, C.R. and Ong, S. (2001), "Overcoming adverse selection in buying an existing home", Journal of Property Investment & Finance, Vol. 19 No. 3, pp. 283-295. https://doi.org/10.1108/14635780110387628
Publisher
:MCB UP Ltd
Copyright © 2001, MCB UP Limited