Abstract
This thesis examines the impact of asking price on the final sale price based on a unique dataset of more than 30,000 transactions of single-family houses in Montreal from 2011 to 2016. We construct different proxies for reference points, including predicted selling price, regional average (and median) asking price, regional average (and median) selling price, and assessment value, used by sellers in setting their asking prices. We explore the effectiveness of high-price strategy and low-price strategy based on these reference points. We find that higher asking prices are associated with higher selling pricing, suggesting buyers anchor to the asking price. Our results support the high-price strategy and reject the low-price strategy in both cold and hot markets, even controlling for unobserved quality. In addition, the anchor effect of the asking price on the final sale price does not differ between the two markets.