Foreclosures, Returns, and Buyer Intentions

Herman Donner

Journal of Real Estate Research, 2017, vol. 39, issue 2, 189-214

Abstract: Using data from Stockholm, Sweden, I examine whether foreclosed properties are sold at a discount. This institutional setting differs from the United States and studies of real estate owned properties. The findings show that properties experience an eight times higher turnover subsequent to a foreclosure compared with the general market, indicating that professional buyers are taking advantage of a discount. That a substantial fraction of buyers are found to have bought more than one foreclosed property provides further support towards such a pattern. Holding period returns prior and subsequent to a foreclosure also supports a price discount.

Date: 2017
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DOI: 10.1080/10835547.2017.12091469

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