Using Order Statistics to Estimate Real Estate Bid Distributions

Abstract

In order to determine an optimum sales strategy for a property it is useful to estimate the distribution of bids which will be received for the property. The more accurate the estimate of the distribution, the higher the expected return will be from following the optimal strategy. This paper presents a technique for estimating the parameters of that distribution based on order statistics. It also describes how a posted list price might affect the sale price data used in this estimation technique, and how the technique can be modified to deal with this type of censored data.