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Abstract
In this paper we analyse agricultural land prices in the state Brandenburg. Our objective is to
understand the price formation in foreclosures. Knowledge of the impact of foreclosures is
desirable for the determination of mortgage lending values. The effect of foreclosures can be
decomposed into two parts. First, the effect of a pressured sale, which will likely reduce the
realized price compared with an unpressured sale and second, the effect of an auction, which
may lead to a price premium. The empirical analysis is based on a rich data set of land prices
in Brandenburg between 2000 and 2011 provided by the “Oberer Gutachterausschuss für
Grundstückswerte”. The treatment effect of forced sales is derived by means of a statistical
matching approach. Our results show that on average prices premia rather than price discounts
are realized in forced sales of agricultural land. The price differential between forced and nonforced
sales, however, is not constant but depends on the land market conditions.