Validation of an Information Asymmetry Scale in the Portuguese Real Estate Market

Abstract

Purpose -The motivation to study the information asymmetry in the real estate market comes from the fact that this market is far from being efficient and perfect, and buying a house is, for most families, the biggest deal of their lives. This paper aims to validate a scale that evaluates the information asymmetry in the Portuguese real estate market.Theoretical framework -During the sales negotiation process, estate agents exhibit the positive aspects of the house, as well as its amenities and qualities, and camouflage the least positive aspects of the deal. Finding both the positive and the negative aspects is crucial.Design/methodology/approach -To collect the sample, an instrument based on a questionnaire survey was used, which analyses the information asymmetry in the real estate market and the sociodemographic profile of estate agents in Portugal. The sample is composed of 350 commercial delegates from the three biggest real estate mediation companies in the Portuguese market.Findings -The results show that the scale for the information asymmetry in the Portuguese real estate market is composed of six factors, which present adequate levels of validity and reliability: negative externalities, possibilities of making a deal, housing quality, service areas, proximity to businesses, and positive externalities.Practical & social implications of research -This study is expected to contribute to improving the scientific knowledge on the real estate market, and to enhancing the information transmitted by estate agents to their future clients.Originality/value -In Portugal, there is no study with such depth about this topic of research. The validation of the information asymmetry scale in the Portuguese real estate market represents a breakthrough in the knowledge in this area.

The Value of Farmland and Its Determinants—The Current State of the Art

“…That explains why plattage value (the value of breaking one larger parcel into several smaller parcels) exists in the market because of subdivision costs, the liquidity of the buyers, and the lack of market information held by the sellers [30]. The real estate market is not efficient and information asymmetry is a particular problem that buyers must face, as it is crucial to find both the positive and the negative aspects of a property [56]. If information asymmetries are correlated with hedonic characteristics, not acknowledging their implications can lead to inefficient estimation and biased coefficients for the hedonic function [17].…”