| The Relationship between Foreclosure
Status and Apartment Price Author:
William G. Hardin, III and Marvin L. Wolverton
Start Page: 101
End Page: 109
Volume: 12
Issue Number: 1
Year: 1996
Publication: Journal of Real Estate Research
Abstract: Empirical studies
disclose that foreclosed residential properties sell at a discount from the expected
market price for non-foreclosed residences. This investigation shows that prior findings
on residential properties can be extended to include income-producing properties. In
addition, it employs market rent to control for variation in property quality. An analysis
of apartment sales in Phoenix, Arizona, demonstrates that foreclosure-status apartments
sell at a 22% discount when compared to non-foreclosure apartment sales. The rationale for
accepting discounted process may be atypical seller motivations such as a need to satisfy
regulatory capital requirements, to mitigate negative stock price effects, or to protect
credit ratings.
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