Valuation accuracy : A comparison of residential guide prices and auction results

This study examines the relationship between guide and sale prices for residential properties in Greater Dublin during the recent housing boom. The results indicate that degrees of divergence can be present, auctioned properties tend to sell more frequently at a premium to their guide price and that the average level of premium is also higher. These findings are confirmed by econometric analysis. It is proposed that the two potential causes behind this mis‐pricing are the speculative boom in the Dublin market during the period and the possibility that agents build into auction guide prices an element of underpricing in order to increase interest in the properties on the market.