The Joint Center for Housing Studies at Harvard report "Forced Sales and Housing Studies" describes some similar features of foreclosure sales that we have found in studying the Las Vegas market. Their study finds foreclosure discounts average of 28% lower than non-distressed sales. The authors also explain some of this disparity as a difference in the liquidity of the asset, which we have discussed in the blog titled Liquidity Adjusted Pricing. We also noted this in our January 2009 White Paper on the difference between REO and Non-REO sales. Further, most of the REO homes in Las Vegas are sold as-is, so the price reflects the lack of symetric information about the property, differing from owner occupied homes that may allow for longer inspection times and possible concessions or new homes, which usually have warranties. 

Check out the study (caution, may only be suitable for econo geeks): Click Here