0 The Puzzle of the Discount Price for the Foreclosed House: Does the Factor of Competition Explain more Discounts?*

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