The report describes a new model of consumers' choices in housing markets that incorporates three heretofore overlooked market considerations. The new model has been tested econometrically against the standard model. The new model gives estimates of buyers' willingness to pay for housing amenities that are significantly different from the estimates produced by the standard model. The standard hedonic model of consumers' choices in housing markets, which forms the basis of much environmental benefits analysis, fails to take into account three important characteristics of the bidding process through which houses are sold: (1) the prices of houses are established through sequential bidding, so sellers do not necessarily accept the highest bids that might be made for their houses; (2) ignorance of the market may lead potential buyers to make bids that are either higher or lower than those they would make if they had complete information; and (3) the distribution of bids for a house is truncated at the seller's asking price.