IDEAS home Printed from https://ideas.repec.org/a/vaj/journl/v15y2020i1p39-71.html
   My bibliography  Save this article

Methodology For Calculating Collateral Discount In The Valuation Of Residential Real Estate For Collateral Purposes

Author

Listed:
  • Tatiana KASYANENKO
  • Olga BUZU
  • Gabriel SANDULACHE

Abstract

The article presents a technique for calculating the collateral discount, which the authors propose to apply in the valuation of residential real estate offered as collateral. This technique is based on the construction of a two-factor model, built by analogy with a certain model that is applied in lending secured with movable property (a sea vessel). The factors introduced into the model were selected by comparative analysis of various pricing aspects that are taken into account in the lending process. These are, first of all, the probability of successful debt collection and the level of liquidity of the property being valued, as these factors are the ones that minimize waste of time and cost in a bank’s effort to draw a preliminary conclusion regarding the possibility of successful seizure and sale of the collateralized residential property. The application of the proposed technique allows the employees of the bank’s lending department to have a formalized decision-making process regarding the grant of a loan and the discount rate - in fact, to do so without involving specialized valuation knowledge.

Suggested Citation

  • Tatiana KASYANENKO & Olga BUZU & Gabriel SANDULACHE, 2020. "Methodology For Calculating Collateral Discount In The Valuation Of Residential Real Estate For Collateral Purposes," The Valuation Journal, The National Association of Authorized Romanian Valuers, vol. 15(1), pages 39-71.
    • Handle: RePEc:vaj:journl:v:15:y:2020:i:1:p:39-71
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vaj:journl:v:15:y:2020:i:1:p:39-71. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stefan Alexandru (email available below). General contact details of provider: https://edirc.repec.org/data/anevaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.