The Discounts Associated with Cash Deals in the Foreclosed Home Submarket

Paul K. Asabere, Forrest E. Huffman and Ronald C. Rutherford

Journal of Housing Research, 2015, vol. 24, issue 2, 163-174

Abstract: Holders (lenders) of foreclosed homes face considerable pressure to quickly remarket these properties (Crockett, 1990; Curry, Blalock, and Cole, 1991; Hardin and Wolverton, 1996). In this study, we examine the price effects of cash versus mortgage financing for foreclosed homes. Using a database for the Dallas-Fort Worth Metroplex, we show that cash financing attracts an average price discount of 10% for foreclosed properties. The results are consistent with those of Asabere, Huffman, and Mehdian (1992) and Lusht and Hansz (1994), who found significant price discounts of 13% and 16%, respectively, for properties sold under normal conditions.

Date: 2015
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DOI: 10.1080/10835547.2015.12092102

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