The Value of Foreclosed Property

Abstract

This paper examines the expected price appreciation of distressed property and compares it to the prevailing metropolitan area appreciation rate. Whether due to individual property or local area heterogeneity in appreciation, the results show that foreclosed property appreciates less than the area average appreciation rate. The magnitude of the deviation is sensitive to loan characteristics, legal restrictions, housing market conditions and marketing time.

The neighborhood effects of foreclosure

“…Next, we use maximum likelihood (ML) estimation for the models specified by equations (6) (spatial lag) and (7) (SARAR (1,1)). Then, we implement the generalized method of moments (GMM) estimator presented by Prucha (1998 and2006), which makes no distributional assumptions, but requires a large number of observations. This model is particularly appealing because it allows for a heteroskedastic error structure.…”

The foreclosure discount: Myth or reality?

“…2 Two recent papers (Clauretie and Daneshvary, 2009 ;Pennington-Cross, 2006) provide excellent summaries of the early literature on the foreclosure discount so we provide only a brief overview of the early papers. 3 For more discussion of the conceptual framework for market segmentation, see Bourassa et al (2003), Maclennan and Tu (1996) and Palm (1978).…”

The Optimal Choice for Lenders Facing Defaults: Short Sale, Foreclose, or REO

“…3 In this paper, we develop a model that allows the estimation of price and time-on-market (TOM) effects of short sales, foreclosures, and REO options. We simultaneously estimate the price and TOM of a large number of four types of 1 For examples see Shilling et al (1990), Forgey et al (1994), Hardin and Wolverton (1996), Springer (1996), Carroll et al (1997), Pennington-Cross (2006), and Clauretie and Daneshvary (2009). 2 When a borrower is delinquent he or she is said to have "defaulted" on the loan.…”