Hedonic Models and the Inclusion of Conditions of Sale in Commercial Real Estate Transactions: A Review of the Literature

Where the hedonic analysis literature has explored a plethora of topics, it has not given focused attention to conditions of sale or the context, motivating factors, and contract specifics associated with real estate transactions. As conditions of sale are often present in commercial real estate transactions, the limited insight into their marginal price effects attenuates the effectiveness of both research and practice. Presented as a literature review designed to help begin the process of systematic study, the objective of this paper is to analyze the literature surrounding conditions of sale in two ways. First, it examines the hedonic literature to gain perspective on the extent to which conditions of sale could be an appropriate variable cluster added to hedonic analysis models. Then, it summarizes and thematically organizes the empirical findings to date on specific conditions of sale in the real estate literature to help guide future ex-ante empirical expectations.