Core Insights - The article emphasizes the role of judicial auction properties (法拍房) as a mechanism to clear "bad debt assets" within the real estate market, highlighting their efficiency derived from unique institutional designs and market dynamics [1] Pricing Mechanism - The pricing mechanism of judicial auction properties is distinct, with starting prices typically set at 70% of the assessed value, reflecting a discount for asset liquidity in judicial processes [3] - The supply curve for judicial auction properties is nearly vertical, with limited opportunities for transactions, leading to final sale prices often being 10%-30% lower than comparable market prices [3] Property Rights Clarity - The clarity of property rights is a significant but often overlooked advantage, as potential risks such as mortgage status and lease agreements are disclosed during the judicial auction process [5] - The requirement for courts to investigate property rights and provide detailed reports enhances transparency, reducing the risk of adverse selection in transactions [5] Market Regulation Function - Judicial auction properties serve as a buffer in real estate cycles, maintaining independent pricing mechanisms during market fluctuations and stimulating demand during downturns [7] - In 2022, the transaction volume of judicial auction properties increased by 18%, with a notable rise in three- and four-tier cities, demonstrating their counter-cyclical adjustment role [7] Financial Efficiency - Judicial auction properties offer a comparative advantage in capital efficiency, with shorter payment timelines and lower overall costs compared to traditional second-hand property transactions [9] - For example, a property valued at 10 million yuan may start at 7 million yuan in a judicial auction, saving buyers significant capital compared to the higher costs associated with second-hand properties [9] - While there are costs associated with due diligence and potential risks, the existence of the judicial auction market benefits both creditors and ordinary buyers by enhancing asset liquidity and providing access to lower-priced properties [9]