Forced Sale Values vs. Market Values in Italy

Abstract

In this paper, we analyze the concept of forced sale value (FV) and investigate the Italian real estate forced sale market. The aim of this study is to fill the gap in the literature on the proper quantitative determination of FV. A robust FV evaluation is a key issue for financial institutions in order to determine the value of mortgages' underlying guarantees. By an empirical investigation, we identify the relation between FV and market value (MV), analyzing the components of the Italian real estate forced sale auction market. We sampled and analyzed 119 cases of forced property sales that took place between 2006 and 2014 in the North of Italy, in order to determine the discount between MV and FV.