Current research documents astonishingly large price discounts for foreclosures and short sales. However, such outsized estimates may largely be due to omitted variables bias. We propose an innovative methodology relying on appraisers’ ability to match properties along both observable and unobservable attributes when performing appraisals. Our empirical approach, which relies on the use of appraisal fixed effects, produces foreclosure and short sale discounts of approximately 5% after controlling for a rich set of characteristics, including quality and condition, attributable mostly to the stigma associated with distress itself. We show that these lower estimates are not due to appraisers selecting high-price distressed properties as comps and are robust across a wide variety of subsamples and under alternative estimation methods.

当前的研究记录了止赎和卖空的惊人的大价格折扣。然而，这种过大的估计可能主要是由于遗漏变量偏差。我们提出了一种创新的方法，该方法依赖于评估师在执行评估时将属性与可观察和不可观察的属性相匹配的能力。我们的实证方法依赖于评估固定效应的使用，在控制了一系列丰富的特征（包括质量和状况）后，产生了大约 5% 的止赎和卖空折扣，这些特征主要归因于与困境本身相关的耻辱感。我们表明，这些较低的估计值并不是由于评估师选择高价不良资产作为补偿，并且在各种子样本和替代估计方法下都是稳健的。