The Value of Foreclosed Property

FRB of St. Louis Working Paper No. 2004-022A

28 Pages Posted: 29 Jul 2005

Multiple version iconThere are 2 versions of this paper

Date Written: September 2004


This paper examines the expected price appreciation of distressed property and compares it to the prevailing metropolitan area appreciation rate. The results show that the simple fact that the property is foreclosed indicates that it will be sold at a substantial discount (appreciate less than expected). The magnitude of the discount is sensitive to loan characteristics, legal restrictions, housing market conditions, and the bargaining position of the selling institution.

Keywords: Distressed property, foreclosure, bargaining power, real estate owned property

JEL Classification: R31, D83, G21

Suggested Citation

Pennington-Cross, Anthony N., The Value of Foreclosed Property (September 2004). FRB of St. Louis Working Paper No. 2004-022A, Available at SSRN: or

Anthony N. Pennington-Cross (Contact Author)

Marquette University - Dept. of Finance ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

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