Published 2023-12-08
Keywords
- market approach,
- short table market comparison approach,
- forced sale value,
- intrinsic value,
- auctions
Copyright (c) 2023 Maurizio d'Amato, Giuseppe Cucuzza, Giampiero Bambagioni
This work is licensed under a Creative Commons Attribution 4.0 International License.
Abstract
For International Valuation Standards (IVS) the estimate of the “forced sale” value implies a value judgment with reference to a degeneration of the market value basis, since “a forced sale” is a description of the situation in which the exchange takes place, not a distinct basis of value (IVS 2022, Par. 170.1).The paper illustrates a model that can be used to measure the difference between market value and forced sale value, as an aid to real estate valuations related to real estate executions. The proposed method is aimed at determining the difference between the estimated values and the final sales values obtained through the executive process, on the basis of the Short Table Market Comparison Approach (MCA). This method contributes more appropriately to the estimate of the value obtainable from the outcome of the enforcement process than arbitrary reductions in the market value. An application on a small sample of residential properties undergoing enforcement procedure highlights the possibility of using the Short Table MCA even with a limited number of comparables.
Metrics
References
- Allen, M., & Swisher, J. (2000). An analysis of the price formation process at a HUD auction. Journal of Real Estate Research, 20(3), 279–298. DOI: https://doi.org/10.1080/10835547.2000.12091039
- Amoruso, P., Mariani, M., d’Amato, M., & Didonato, R. (2020). Italian auction market: features of discounted forced sale price. Real Estate Management and Valuation, 28(3), 12–23. DOI: https://doi.org/10.1515/remav-2020-0020
- Associazione Bancaria Italiana (2022). Linee guida per la valutazione degli immobili in garanzia delle esposizioni creditizie. Available at: https://www.abi.it (Accessed: 6 July 2022).
- Bambagioni, G. (2021). Sostenibilità del valore nel finanziamento immobiliare. Milano, Maggioli Politecnica.
- Bambagioni, G., & Simonotti, M. (2018). Codice delle Valutazioni Immobiliari | Italian Property Valuation Standard (Quinta Edizione). Roma, Tecnoborsa Editore.
- Banca d’Italia – Eurosistema (2008). Vigilanza bancaria e finanziaria – Matrice dei Conti, Circolare n. 272 del 30 luglio 2008 – 10° aggiornamento. Available at: https://www.bancaditalia.it/ (Accessed: 6 July 2022).
- Borella, G., Marchi, M., & Schepis, B. (2019). La giusta esecuzione. Ruolo e compiti dell’esperto stimatore nelle espropriazioni immobiliari. Mantova, Stimatrix.
- Borella, G. (Ed.) (2020). La giusta esecuzione. Ruolo e Compiti dei protagonisti della tutela del credito., Mantova, Stimatrix.
- Burti, A. (2020). I problemi giuridici legati alla stima degli immobili nelle esecuzioni immobiliari. Incontro di studio Esecuzioni immobiliari. Approfondimento giuridico dell’incarico dell’esperto estimatore, Verona, 10 gennaio 2020 Available at: https://www.e-valuations.org (Accessed: 1 July 2022).
- Campbell, J. Y., Giglio, S., & Pathak, P. (2011). Forced sales and house prices. The American Economic Review, 101(5), 2108–2131. DOI: https://doi.org/10.1257/aer.101.5.2108
- Carroll, T. M., Clauretie, T. M., & Neill, H. R. (1997). Effect of foreclosure status on residential selling price: comment. Journal of Real Estate Research, 13(1), 95–102. DOI: https://doi.org/10.1080/10835547.1997.12090866
- Clauretie, T. M., & Daneshvary, N. (2009). Estimating the house foreclosure discount corrected for spatial price interdependence and endogeneity of marketing time. Real Estate Economics, 37(1), 43–67. DOI: https://doi.org/10.1111/j.1540-6229.2009.00234.x
- Consiglio Superiore della Magistratura (2017). Buone prassi nel settore delle esecuzioni immobiliari – linee guida, (delibera 11 ottobre 2017). Available at: https://www.csm.it/ (Accessed 4 July 2022).
- Consiglio Superiore della Magistratura (2021). Buone prassi nel settore delle esecuzioni immobiliari – Aggiornamento linee guida, (delibera 6 dicembre 2021). Available at: https://www.csm.it/ (Accessed 4 July 2022).
- d’Amato, M., (2015a). Stima del valore di trasformazione utilizzando la funzione di stima. Il MCA a tabella dei dati ridotta. Territorio Italia, Giugno, 97–106.
- d’Amato, M., (2015b). MCA a Tabella Ridotta e Sistema Integrativo di Stima. Un secondo caso a Bari. Territorio Italia, Gennaio, 97–109.
- d’Amato M. and Kauko T. (2009). Property Market Classification and Mass Appraisal Methodology. In d’Amato M. and Kauko T. (Eds.). Mass Appraisal Methods: An International Perspective for Property Valuers. Oxford, Wiley. DOI: https://doi.org/10.1002/9781444301021.ch13
- d’Amato M. and Siniak N. (2009). Using Fuzzy Numbers in Mass Appraisal: The Case of Belorusian Property Market. In d’Amato M. and Kauko T. (Eds.). Mass Appraisal Methods: An International Perspective for Property Valuers. Oxford, Wiley. DOI: https://doi.org/10.1002/9781444301021.ch5
- Di Liddo, F., Tajani, F., Amoruso, P., Ranieri, R. and Anelli, D. (2022). The assessment of the forced sale value in the Italian residential market. Aestimum, 80, 15–32. DOI: https://doi.org/10.36253/aestim-12953
- Donner, H., Song, H. S., & Wilhelmsson, M., (2016). Forced sales and their impact on real estate prices. Journal of Housing Economics, 34(C), 60–68. DOI: https://doi.org/10.1016/j.jhe.2016.08.002
- Donner, H. (2017). Foreclosures, Returns and buyer intention. Journal of European Real Estate Research, 39(2), 189–213. DOI: https://doi.org/10.1080/10835547.2017.12091469
- Dotzour, M. G., Moorhead, E., & Winkler, D. T. (1998). The impact of auctions on residential sales price in New Zealand. Journal of Real Estate Research, 16(1), 57–72. DOI: https://doi.org/10.1080/10835547.1998.12090935
- European Banking Autority (EBA) (2020). Guidelines on loan origination and monitoring (EBA/GL/2020/06), June 29, 2020. EBA.
- Forgey, F. A., Rutherford, R. C., & Vanbuskirk, M. L. (1994). Effect of foreclosure status on residential selling price. Journal of Real Estate Research, 9(3), 313–318. DOI: https://doi.org/10.1080/10835547.1994.12090758
- Hardin, W. G., & Wolverton, M. L., (1996). The relationship between foreclosure status and apartment price. Journal of Real Estate Research, 12(1), 101–109. DOI: https://doi.org/10.1080/10835547.1996.12090837
- Hungria-Gunnelin, R. (2013). Impact of number of bidders on sale price of auctioned condominium apartments in Stockholm. International Real Estate Review, 16(3), 274–295. DOI: https://doi.org/10.53383/100174
- Knight, J. R., Sirmans, C. F., & Turnbull, G. K. (1994). Listing price signaling and buyer behavior in the housing market. The Journal of Real Estate Finance and Economics, 9(3), 177–192. DOI: https://doi.org/10.1007/BF01099271
- International Valuation Standards Council (IVSC) (2022). International Valuation Standards (IVS). Effective 31 January 2022. IVSC, London.
- Isakson, H. R. (2002). the linear algebra of the sales comparison approach. Journal of Real Estate Research, 24(2), 117–128. DOI: https://doi.org/10.1080/10835547.2002.12091090
- Lusht, K. M. (1996). A comparison of price brought by English auctions and private negotiations. Real Estate Economics, 24(4), 517–530. DOI: https://doi.org/10.1111/1540-6229.00702
- Marcus, A. (2001). Discount in real estate auction price: evidence from South Florida. The Appraisal Journal, 69, 28–43.
- Mayer, C. J. (2003). Assessing the performance of real estate auction. Real Estate Economics, 126, 41–66. DOI: https://doi.org/10.1111/1540-6229.00737
- Mottadelli, D., & Ponti, G. (2016). La consulenza estimativa giudiziaria ed il processo civile telematico. Palermo, Grafill
- Ong, S. E. (2006). Price discovery in real estate auctions: the story of unsuccessful attempts. Journal of Real Estate Research, 28(1), 39–60. DOI: https://doi.org/10.1080/10835547.2006.12091171
- Pennington-Cross, A. (2006). The value of foreclosed property. Journal of Real Estate Research, 28(2), 193–214. DOI: https://doi.org/10.1080/10835547.2006.12091177
- Quan, D. C. (2002). Market mechanism choice and real estate disposition: search versus auction. Real Estate Economics, 30(3), 365–384. DOI: https://doi.org/10.1111/1540-6229.00043
- Renigier Bilozor, M., Walacik, M., Zrobek, S., & d’Amato, M. (2018). Forced sale discount on property market – how to assess it? Land Use Policy, 78, 104–115. DOI: https://doi.org/10.1016/j.landusepol.2018.06.026
- Shilling, J. D., Benjamin, J. D., & Sirmans, C. F. (1990). Estimating net realizable value for distressed real estate. Journal of Real Estate Research, 5(1), 129–139. DOI: https://doi.org/10.1080/10835547.1990.12090603
- Simonotti M. (2016). Metodi di Stima Immobiliare. Palermo, Flaccovio.
- Simonotti, M., Salvo, F., Ciuna, M., & De Ruggiero, M. (2016). Measurements of rationality for a scientific approach to the market oriented methods. Journal of Real Estate Literature, 24(2), 403–427. DOI: https://doi.org/10.1080/10835547.2016.12090435
- Susilawati, C., & Lin, V. C. C. (2006). Case analysis of auction market in Brisbane housing system. pacific rim real estate conference, Auckland, January.
- TEGOVA (2020). European Valuation Standard, 9th ed. Italian version. Torino, E-Valuations.
- Wong, W. C., Ng, P. L., Lee, J. Y. M., & Daud, M. N. (2015). Apartment foreclosure discount in Kuala Lumpur. Pacific Rim Property Research Journal, 21(2), 127–138. DOI: https://doi.org/10.1080/14445921.2015.1058034