Determinants of a Foreclosure Discount
Herman Donner ()
Additional contact information
Herman Donner: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Department of Real Estate and Construction Management , Royal Institute of Technology, Brinellvägen 1, 100 44 Stockholm, Sweden
No 17/2, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
Using a dataset with individual appraisals of foreclosed apartments sold through auction in Stockholm, Sweden, the issue of selection bias and a potential overestimation of a foreclosure related discount on price is addressed. A mean discount of 7.9% with a corresponding median value of 9.5% is shown. A hedonic model is also applied. It is found that about half of the impact on price caused by a forced sale is attributable to the search process on the real estate market. These results contrasts from earlier research having explained a negative impact on price to seller motivational factors. These results provide insight towards the dynamics of a negative impact on price caused by a forced sale, and has the potential to allow stakeholders to model a potential discount in greater detail for individual foreclosed properties, and contribute to management of credit risk.
Keywords: Foreclosure; Hedonic Models (search for similar items in EconPapers)
JEL-codes: D80 D82 R30 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.diva-portal.org/smash/record.jsf?dswid= ... ullText=false&sf=all (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hhs:kthrec:2017_002
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance Department of Real Estate and Construction Management, Royal Institute of Technology, Teknikringen 10B, 100 44 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Cecilia Hermansson ().