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The value of foreclosed property

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  • Anthony Pennington-Cross

Abstract

This paper examines the expected price appreciation of distressed property and compares it to the prevailing metropolitan area appreciation rate. The results show that the simple fact that the property is foreclosed indicates that it will be sold at a substantial discount (appreciate less than expected). The magnitude of the discount is sensitive to loan characteristics, legal restrictions, housing market conditions, and the bargaining position of the selling institution.

Suggested Citation

  • Anthony Pennington-Cross, 2004. "The value of foreclosed property," Working Papers 2004-022, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2004-022
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    References listed on IDEAS

    as
    1. Genesove, David & Mayer, Christopher J, 1997. "Equity and Time to Sale in the Real Estate Market," American Economic Review, American Economic Association, vol. 87(3), pages 255-269, June.
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    6. James D. Shilling & John D. Benjamin & C.F. Sirmans, 1990. "Estimating Net Realizable Value for Distressed Real Estate," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 129-140.
    7. Fred A. Forgey & Ronald C. Rutherford & Michael L. VanBuskirk, 1994. "Effect of Foreclosure Status on Residential Selling Price," Journal of Real Estate Research, American Real Estate Society, vol. 9(3), pages 313-318.
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    12. Miceli, Thomas J & Munneke, Henry J & Sirmans, C F & Turnbull, Geoffrey K, 2002. "Title Systems and Land Values," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 565-582, October.
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    More about this item

    Keywords

    Real property;

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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