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The Discounts Associated with Cash Deals in the Foreclosed Home Submarket

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  • Paul K. Asabere
  • Forrest E. Huffman
  • Ronald C. Rutherford

Abstract

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.

Suggested Citation

  • Paul K. Asabere & Forrest E. Huffman & Ronald C. Rutherford, 2015. "The Discounts Associated with Cash Deals in the Foreclosed Home Submarket," Journal of Housing Research, Taylor & Francis Journals, vol. 24(2), pages 163-174, January.
    • Handle: RePEc:taf:rjrhxx:v:24:y:2015:i:2:p:163-174
    DOI: 10.1080/10835547.2015.12092102
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