Deed Types, House Prices, and Mortgage Interest Rates
| Autor: | David M. Brasington, Robert F. Sarama |
|---|---|
| Rok vydání: | 2006 |
| Předmět: |
Deed
Economics and Econometrics Property tax Actuarial science media_common.quotation_subject Warranty Spell Fair Housing Act Bond for deed Interest rate Accounting Value (economics) Guardian Economics Common value auction Warranty deed Asset (economics) Foreclosure Finance Law and economics media_common |
| Zdroj: | SSRN Electronic Journal. |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.924001 |
| Popis: | ∗∗∗ When houses are sold they come with a deed attached that spells out the legal guarantees on good title. Some deeds give clues about the characteristics of the seller or the house. Using a 37,043-observation house price hedonic with a Bayesian spatial error model, we find the type of deed attached to a housing sale can have a dramatic correlation with the sale price. Ten deed types command a discount, and one commands a premium relative to warranty deeds. Mortgage rates for sheriff’s deeds and foreclosure deeds are lower than for warranty deeds, indicating more sophisticated buyers. A deed is a written document that conveys a real asset from one party to another. A deed sometimes contains guarantees of good title, freedom from encumbrances and protection from competing claims against the property; other deeds make no such guarantees. The circumstances surrounding the sale determine the type of deed a property will sell with. Investigating the relation between deed type and house price is interesting for several reasons. A universal criticism of house price hedonics is that they fail to control for the condition of the house. The deed type often imparts information about the condition of the house at the time of sale, abating this source of omitted variable bias. Property tax assessors care about deed type if the use of this information yields a better prediction of the underlying structural value of the house than even the sale price does. General warranty deeds have the most robust guarantees of clear title. When a property is transferred with a general warranty deed, the seller is guaranteeing that he holds clear title to the property, and the clear title guarantee extends back to the origin of the property. Discounts and premiums for houses sold with certain alternative deed types, relative to the general warranty deed sales, suggest interesting stories, such as seller motivation for corporation deed sales. Additionally, the discounts associated with foreclosure and sheriff’s deeds may indicate suboptimal mechanism design for foreclosure auctions and sheriff’s sales. |
| Databáze: | OpenAIRE |
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