An Alternative Approach to Estimating Foreclosure and Short Sale Discounts
Bibliographic Data
| ID | 11081043 |
|---|---|
| Authors | James Conklin (0000-0002-2077-4148, University of Georgia), James N Conklin, N Edward Coulson (0000-0001-9705-9663, University of California, Irvine, corresponding author), Moussa Diop (0000-0002-3199-1818, University of Southern California), Nuno Mota (0000-0003-0413-6696) |
| Year | 2023 |
| Volume | 134 |
| Pages | 103546 |
| Publication date | 2023-03-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Urban Economics (JOURNAL) |
| Journal identifiers | ISSN: 0094-1190 • E-ISSN: 1095-9068 |
| Publisher | Elsevier BV (PUBLISHER) |
| DOI | 10.1016/j.jue.2023.103546 |
| OpenAlex | W4321463885 |
| Language | EN |
| Citations received | 1 |
| References cited | 19 |
Current research documents astonishingly large price discounts for foreclosures and short sales. However, such outsized estimates may largely be due to omitted variables bias. We propose an innovative methodology relying on appraisers’ ability to match properties along both observable and unobservable attributes when performing appraisals. Our empirical approach, which relies on the use of appraisal fixed effects, produces foreclosure and short sale discounts of approximately 5% after controlling for a rich set of characteristics, including quality and condition, attributable mostly to the stigma associated with distress itself. We show that these lower estimates are not due to appraisers selecting high-price distressed properties as comps and are robust across a wide variety of subsamples and under alternative estimation methods
Econometrics · Economics · Foreclosure · Quality (philosophy · Set (abstract data type · Unobservable · Variety (cybernetics · Auditing, Earnings Management, Governance · Computer Science · Finance · Financial Markets and Investment Strategies · Housing Market and Economics
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2024 - 2024 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |