Asset acquisition criteria : A process tracing investigation into real estate investment decision making

Purpose – The purpose of this paper is to observe the decision‐making behavior of real estate investors, both novice and experts. In doing so, the study looks at the information content of the decision‐making process of these players involved in real estate investments. Design/methodology/approach – The paper uses a controlled experiment to directly observe the decision‐making process of the two group of investors (novices and experts) used in this study. Findings – The findings give us an insight on the type of data utilized by the two groups. Expert's frequency of cue utilization was greater in all cues except two. In four cues in particular, underwriter's analysis of stabilized cash flow, loan summary, Phase I and environmental reports and current rent roll the expert's frequency was twice that of novices. This suggests that experience may sensitize experts to the importance of some attributes of real estate overlooked by novices. This study also finds evidence of order of presentation of cues influencing the sequence of cue access by the subjects suggesting the possibility of recency behavior and its impact on real estate investment decision‐making. However, the findings are not conclusive and have to be tested further in future research. Originality/value – The paper gives an insight into the area of real estate decision‐making, which is a critical aspect of any company involved in real estate investments. The findings from this study can help in inputs for building a normative model of real estate investments that may help streamline the real estate decision‐making process across the industry.