Definition
Liquidation value is what a property might sell for if forced to sell quickly (foreclosure, distressed sale). It typically discounts 10-30% from fair market value. It's the bottom-end estimate for distressed properties.
Not sure where this fits?
Answer a few questions and we’ll open the path that fits, at the right step.
Find my pathAbout this term
Liquidation value reflects the reality that properties sold under time pressure or distressed conditions typically sell below fair market value. This value is relevant for distressed properties, short sales, and foreclosure situations where the seller needs to convert the property to cash quickly. Liquidation value discounts can range from 10% to 30% or more depending on market conditions and urgency.
Pro Tip
Liquidation values apply to distressed property investments. Use liquidation value to understand downside protection in market downturns.
Example
A property with fair market value of $400,000 in a foreclosure situation may have a liquidation value of $340,000-$360,000 when sold quickly to satisfy the lender's requirements.