The paper proposes a brief analysis of the main elements that, on a theoreti-cal, normative and situational basis, affect the value of properties placed as collateral for loans, with particular reference to the value they assume in the event that they are affected by an enforced procedure instead of being subject to normal sale, in free mar-ket conditions. Starting from the classic analytical estimate of the fair market value of a real estate asset in free market conditions, the paper will define the principles the appraiser has to follow to quantify the value of the asset from which to start the judi-cial auction. Considering the regulatory mechanisms in place in Italy, the paper will put in evidence how a value calculated for an execution sale of a property occurring in a foreclosure process is considerably far from its fair market value and even more from its final judicial value, considered as the amount that will be recovered at the end of the sale of the property by judicial auction. For debtors and creditors, the significant differences between fair market, execution and judicial values become an increasingly topical issue in the face of the growing number of default and distress of loans.

From fair market value to judicial market value of real estate / Menghini, Silvio; Alampi Sottini, Veronica; Fratini, Roberto. - In: AESTIMUM. - ISSN 1724-2118. - ELETTRONICO. - 84:(2024), pp. 19-29. [10.36253/aestim-15228]

From fair market value to judicial market value of real estate

Menghini, Silvio;Alampi Sottini, Veronica;Fratini, Roberto
2024

Abstract

The paper proposes a brief analysis of the main elements that, on a theoreti-cal, normative and situational basis, affect the value of properties placed as collateral for loans, with particular reference to the value they assume in the event that they are affected by an enforced procedure instead of being subject to normal sale, in free mar-ket conditions. Starting from the classic analytical estimate of the fair market value of a real estate asset in free market conditions, the paper will define the principles the appraiser has to follow to quantify the value of the asset from which to start the judi-cial auction. Considering the regulatory mechanisms in place in Italy, the paper will put in evidence how a value calculated for an execution sale of a property occurring in a foreclosure process is considerably far from its fair market value and even more from its final judicial value, considered as the amount that will be recovered at the end of the sale of the property by judicial auction. For debtors and creditors, the significant differences between fair market, execution and judicial values become an increasingly topical issue in the face of the growing number of default and distress of loans.
2024
84
19
29
Goal 8: Decent work and economic growth
Goal 16: Peace, justice and strong institutions
Menghini, Silvio; Alampi Sottini, Veronica; Fratini, Roberto
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Utilizza questo identificatore per citare o creare un link a questa risorsa: https://hdl.handle.net/2158/1380672
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