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| An Analysis of the Price Formation
Process at a HUD Auction Author: Marcus T. Allen and Judith Swisher Start Page: 279 Abstract: This
study considers whether auctioned properties sell for different prices than they would
bring through private negotiation. After reviewing the procedural aspects of HUD auctions,
we compare the observed prices of properties sold at one such auction with predicted
market values based on assessment ratios for the region to detect any discount or premium.
We also consider whether the order of sale of the auctioned properties affects observed
prices. We find that sample properties sell at a significant discount relative to
predicted market values and that prices tend to increase as the auction proceeds, holding
quality of the properties constant. |
