The Discounts Associated with Cash Deals in the Foreclosed Home Submarket

Holders (lenders) of foreclosed homes face considerable pressure to quickly remarket these properties (Crockett, 1990; Curry, Blalock, and Cole, 1991; Hardin and Wolverton, 1996). In this study, we examine the price effects of cash versus mortgage financing for foreclosed homes. Using a database for...

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Bibliographic Details
Published in:Journal of housing research 2015-01, Vol.24 (2), p.163-174
Main Authors: Asabere, Paul K., Huffman, Forrest E., Rutherford, Ronald C.
Format: Article
Language:English
Subjects:
Bids
Cash
Cash payments
Cash sales
Costs
Deeds
Discounts
Financial transactions
Foreclosure
Foreclosure sales
Foreclosures
Inventory
Lenders
Mortgage loans
Multiple listing services
Prices
Property ownership
Real estate financing
Residential real estate
Sales
State court decisions
Studies
United States
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Summary:Holders (lenders) of foreclosed homes face considerable pressure to quickly remarket these properties (Crockett, 1990; Curry, Blalock, and Cole, 1991; Hardin and Wolverton, 1996). In this study, we examine the price effects of cash versus mortgage financing for foreclosed homes. Using a database for the Dallas-Fort Worth Metroplex, we show that cash financing attracts an average price discount of 10% for foreclosed properties. The results are consistent with those of Asabere, Huffman, and Mehdian (1992) and Lusht and Hansz (1994), who found significant price discounts of 13% and 16%, respectively, for properties sold under normal conditions.
ISSN:1052-7001
2691-1337
DOI:10.1080/10835547.2015.12092102