Distressed Property Sales: Differences and Similarities Across Types of Distress

Efficiency of distressed property sales in Lagos city, Nigeria

“…This is contrary to the sale of distressed properties by private treaty, which entails arms length negotiation and transaction using broker channels, some scholars have reported how distressed properties have been "efficiently" sold within a limited period of time through short sales (Allen et al, 2022;Daneshvary et al, 2011;Downs and Xu, 2015), with a corresponding reduction in the time-on-the market (TOM). In other situations of secured lending, distressed properties were sold pursuant to a foreclosure and acquisition by the lender (Allen et al, 2022;Clauretie and Daneshvary, 2011;Mallach, 2014), and with TOM that is inversely proportional to the selling price on one hand (Ajayi, 1997;Anglin et al, 2003;Bello and Olusola, 2018;Benefield et al, 2014;Taylor, 1999), and directly proportional to property market conditions on the other hand (Filippova and Fu, 2011). However, these distressed properties that have remained on the market for a long period of time prior to their actual sales date might signal an adverse impact on the efficiency of selling landed properties in that category.…”

“…The distressed sale is likened to property asset liquidation such that the proceeds of the sale is used to settle outstanding liabilities arising from the primary transaction under which the encumbered property assets had been held (Brueggeman and Fisher, 2011). Among the rationale for the sale of distressed properties outlined by Brueggeman and Fisher (2011), the dominant trajectory arises from non-performing loans or other forms of secured lending for which property was given up as a collateral security (Allen et al, 2022;Brueggeman and Fisher, 2011;Chow et al, 2015;Daneshvary et al, 2011;Vandell and Riddiough, 1992).…”

“…Scholars have averred that the sale of distressed properties is mostly carried out within limited period of time known as short sales, and at discounted prices (Allen et al, 2022;Chow et al, 2015;Daneshvary et al, 2011;Downs and Xu, 2015), which entails foregoing the benefits of arms length transaction in exchange for a timely aversion of ever increasing financial obligations that are associated with the primary transaction which the property was used to secure. This is contrary to the sale of distressed properties by private treaty, which entails arms length negotiation and transaction using broker channels, some scholars have reported how distressed properties have been "efficiently" sold within a limited period of time through short sales (Allen et al, 2022;Daneshvary et al, 2011;Downs and Xu, 2015), with a corresponding reduction in the time-on-the market (TOM).…”

“…Scholars have averred that the sale of distressed properties is mostly carried out within limited period of time known as short sales, and at discounted prices (Allen et al, 2022;Chow et al, 2015;Daneshvary et al, 2011;Downs and Xu, 2015), which entails foregoing the benefits of arms length transaction in exchange for a timely aversion of ever increasing financial obligations that are associated with the primary transaction which the property was used to secure. This is contrary to the sale of distressed properties by private treaty, which entails arms length negotiation and transaction using broker channels, some scholars have reported how distressed properties have been "efficiently" sold within a limited period of time through short sales (Allen et al, 2022;Daneshvary et al, 2011;Downs and Xu, 2015), with a corresponding reduction in the time-on-the market (TOM). In other situations of secured lending, distressed properties were sold pursuant to a foreclosure and acquisition by the lender (Allen et al, 2022;Clauretie and Daneshvary, 2011;Mallach, 2014), and with TOM that is inversely proportional to the selling price on one hand (Ajayi, 1997;Anglin et al, 2003;Bello and Olusola, 2018;Benefield et al, 2014;Taylor, 1999), and directly proportional to property market conditions on the other hand (Filippova and Fu, 2011).…”

How Multiple Creditors, Market Liquidity and Homeowner Participation Affect Foreclosure Discounts

“…Findings about whether distressed properties have shorter (Goodwin and Johnson, 2017; Terrence M Clauretie and Nasser Daneshvary, 2011) or longer time on the market (as claimed by (Allen et al, 2022)), are inconclusive. Differences in liquidity in the market where a foreclosure occurs may inŕuence these different results; also, differences in the time on the market are relevant to the size of the foreclosure discount (T M Clauretie and Daneshvary, 2009).…”