All cash sale

[Fernando]

What's your consensus on all cash sale? Are they sold above or below market.
Before I found them to be under market. Now with bidding on limited number of homes for sale, cash sale are near market.

 

[KONA]

What do the Comps tell you?

 

[Terrel L. Shields]

In my opinion, cash is always king. MV is based upon cash (not credit) therefore when a sale sells more with financing, it suggests that the financing is above market, not that the cash is "below" market value. It is never below market value.

 

[Tim The Enchanter]

When it's $2,000,000 or more in cash, cash is King Kong.

Then you drive by and see it;s been scraped.

 

[Fernando]

In my opinion, cash is always king. MV is based upon cash (not credit) therefore when a sale sells more with financing, it suggests that the financing is above market, not that the cash is "below" market value. It is never below market value.

Most sales are financed so MV is based on financing. Without Fannie, few Americans can afford to buy and housing prices should be lower.
Right now there is so much money out there that more people can easily compete with cash buyers. Advantages I see with cash buyers are quicker close of sale and less contingencies (especailly loan and appraisal contingency).

I'm putting most weight on this one comp but it was all cash sale.

 

[Terrel L. Shields]

Most sales are financed so MV is based on financing.

payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto

Read the definition. Obviously if cash is "cheaper" than financing, it is financing that is high. You pay for that non-cash transaction. The two have to be equal to be "market value".

few Americans can afford to buy and housing prices should be lower.

Actually half of all mortgages are not financed in secondary market. And property sold before Fannie Mae even existed - ditto VA and FHA. And yes property might be cheaper but that's a good thing when you are poor. All secondary market does is cause people to go in debt for the remainder of their lives.

 

[sputnam]

According to the definition of Market Value that you regularly use in your appraisals.... cash IS the market. It's the use of Seller financing or the payment of closing costs, etc... that might have an impact.

 

[J Grant]

payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto

Read the definition. Obviously if cash is "cheaper" than financing, it is financing that is high. You pay for that non-cash transaction. The two have to be equal to be "market value".

Actually half of all mortgages are not financed in secondary market. And property sold before Fannie Mae even existed - ditto VA and FHA. And yes property might be cheaper but that's a good thing when you are poor. All secondary market does is cause people to go in debt for the remainder of their lives.

The cornerstone of the concept of market value is cash or financing is COMPARABLE ( equivalent )

Cash or in terms of financial arrangements comparable to = even when a sale is financed, the SELLER GETS CASH FUNDS AT CLOSING.

Market value as defined is what a property should bring ( transact ) for in the open market. In the open market, cash buyers compete with financed buyers. Sometimes cash can affect a price, other times not. That is for the appraiser to determine. A sale with unusual financing or concessions in the financing can also affect price. Whether it did is up to the appraiser to determine.

 

[J Grant]

According to the definition of Market Value that you regularly use in your appraisals.... cash IS the market. It's the use of Seller financing or the payment of closing costs, etc... that might have an impact.

WRONG.

The market is the sum of the transactions, and in some markets there are many cash sales, in some very few, in some the use of cash and financing is about equal.

Cash can sometimes be predominant in the extreme ends of the market -investor , homes needing repair are typically sold cash, as are very expensive high end homes. The middle class and working class segments of market one usually sees financing predominant, though cash is also seen. BTW " cash" in a contract usually means no financing contingency - but the buyer can choose to get a mortgage anyway - the agents write "cash" on the MLS comments, because the contract just had no financing contingency - however a buyer can still apply for and get a mortgage - the contract no financing contingency means if the financing is declined, they are obligated to buy it with cash funds.

 

[J Grant]

According to the definition of Market Value that you regularly use in your appraisals.... cash IS the market. It's the use of Seller financing or the payment of closing costs, etc... that might have an impact.

That is NOT what the definition of market value says.