An Evaluation Model for the Optimization of Property Sales in Auction Markets

This paper proposes a logical-deductive model for the estimate of forced sale value, in support of individuals involved in real estate auctions. This value is estimated by starting from market value, considering an appropriate discount/premium coefficient which, due to obtainable yields and associated risk, guarantees transaction admissibility for the investor in terms of convenience. The model borrows from Ellwood logic as applied to the real estate sector, integrated through the evaluation approach of investment risk inherent in Real Options Analysis. Applying this model to one hundred and forty cities in which the Italian courts are based allowed for comparison of the discount/premium coefficients determined by the model with those determined by sector operators. The results of this application underlined the speculative behavior of market operators, who mainly focus on obtaining better discounts than those admissible, while at the same time supplying useful indications on the territorial contexts where the difference between hammer price and admissible value can be maximized.