Using the data of the foreclosed houses and the brokerage houses in Taipei
from 2001-2002, we try to answer “Does the factor of competition explain more
price discount?” Three main empirical results are found: (1) The average price for
the foreclosed houses in the biding market is lower 17.20% than that for the
brokerage houses in the searching and bargaining market, controlling other things
being equal. We propose the market mechanism such as the foreclosed-housing
risk of the buyer exposure, and the participant number of biding can explains
more for the deep-discount price. (2) The price discount is 15.99% if one bidder
involves. Moreover, the more participant number of biding is, the lower price
discount between auction market and search market is. This implies that full
information disclosure can increase the competition and reduce the price discount
of foreclosed houses in the court-oriented auction market.
