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Forced sale discount on property market – How to assess it?

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  • Renigier-Biłozor, Małgorzata
  • Walacik, Marek
  • Źróbek, Sabina
  • d’Amato, Maurizio

Abstract

The aim of the article is to reduce the gap in the lack of tools dedicated to determining forced sale value. It is focused on the development of a methodology that takes into account the procedures used in property valuation with the use of automated valuation methods based on rough set theory and fuzzy logic. The authors propose an alternative method serving as an alternative to individual/human valuation, which may not be objective and reliable for such purpose. The method gives more accurate results than hedonic models in the face of qualitatively and quantitatively ambiguous, imprecise and vague data, which is commonly found in the real estate market, especially regarding not typical/market sales. The methodology was verified on the basis of data collected on two property markets: city of Bari (Italy) and city of Olsztyn (Poland). The achieved results indicated that value regarding forced sale is about 22% lower in the case of Olsztyn when compared to average market value of the used sample, whereas in the case of Bari – about 45% lower.

Suggested Citation

  • Renigier-Biłozor, Małgorzata & Walacik, Marek & Źróbek, Sabina & d’Amato, Maurizio, 2018. "Forced sale discount on property market – How to assess it?," Land Use Policy, Elsevier, vol. 78(C), pages 104-115.
    • Handle: RePEc:eee:lauspo:v:78:y:2018:i:c:p:104-115
    DOI: 10.1016/j.landusepol.2018.06.026
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    References listed on IDEAS

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    1. Mocking, Remco & Overvest, Bastiaan, 2017. "Direct and spillover effects of forced sales on house prices: Evidence from the Netherlands," Journal of Housing Economics, Elsevier, vol. 38(C), pages 50-61.
    2. John Y. Campbell & Stefano Giglio & Parag Pathak, 2011. "Forced Sales and House Prices," American Economic Review, American Economic Association, vol. 101(5), pages 2108-2131, August.
    3. Donner, Herman & Song, Han-Suck & Wilhelmsson, Mats, 2016. "Forced sales and their impact on real estate prices," Journal of Housing Economics, Elsevier, vol. 34(C), pages 60-68.
    4. Harding, John P. & Rosenblatt, Eric & Yao, Vincent W., 2012. "The foreclosure discount: Myth or reality?," Journal of Urban Economics, Elsevier, vol. 71(2), pages 204-218.
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    Cited by:

    1. Song Shi & Vince Mangioni & Xin Janet Ge & Shanaka Herath & Fethi Rabhi & Rachida Ouysse, 2021. "House Price Forecasting from Investment Perspectives," Land, MDPI, vol. 10(10), pages 1-17, September.
    2. Małgorzata Renigier-Biłozor & Sabina Źróbek & Marek Walacik, 2022. "Modern Technologies in the Real Estate Market—Opponents vs. Proponents of Their Use: Does New Category of Value Solve the Problem?," Sustainability, MDPI, vol. 14(20), pages 1-18, October.
    3. Gaca Radosław, 2018. "Price as a Measure of Market Value on the Real Estate Market," Real Estate Management and Valuation, Sciendo, vol. 26(4), pages 68-77, December.
    4. Marek Walacik & Małgorzata Renigier‐Biłozor & Aneta Chmielewska & Artur Janowski, 2020. "Property sustainable value versus highest and best use analyzes," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(6), pages 1755-1772, November.
    5. Krajewska, Małgorzata & Szopińska, Kinga & Siemińska, Ewa, 2021. "Value of land properties in the context of planning conditions risk on the example of the suburban zone of a Polish city," Land Use Policy, Elsevier, vol. 109(C).
    6. Conklin, James N. & Edward Coulson, N. & Diop, Moussa & Mota, Nuno, 2023. "An Alternative Approach to Estimating Foreclosure and Short Sale Discounts," Journal of Urban Economics, Elsevier, vol. 134(C).
    7. Wisniewski, Radoslaw & Brzezicka, Justyna, 2020. "Translocality on the real estate market: A new extended approach," Land Use Policy, Elsevier, vol. 97(C).

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