An Massachusetts Institute of Technology studey calculates that every foreclosure decreases the value by 1% of all homes within 250 feet. The study examined the sales of 1.8 million Massachusetts homes for the past 22 years. Banks got no bargains when they try to sell a foreclosed home. The MIT study said the average sale price for a foreclosed home was 27% less than the appraised value.

MIT economist Parag Pathak worked with two Harvard researchers, John Y. Campbell and Stefano Giglio, to produce the study. They found that a home sold by a bank after the owner died usually fetched a sale price about 5% less than the appraised value.

Currently, one in 12 American homes are in foreclosure.