A Foreclosure Reduces the Value of a Home by 27% on Average

A foreclosure reduces the value of a home by an average 27% -- a much higher discount than occurs with other types of forced sales, according to a recent study that will be published in the American Economic Review.

When a house is sold after the death of an owner, the price drops an average 5% to 7%, according to the study. When the owner declares bankruptcy, it falls 3%.