Cash Equivalency

[D LANA]

If a house sold for $100,000 and the buyer putting 10% down and there is a 6% sellers concession, what is the cash equivalence?

 

[Pamela Crowley (Florida)]

With no other available information, I believe it would be $94,000.

 

[PropertyEconomics]

If a house sold for $100,000 and the buyer putting 10% down and there is a 6% sellers concession, what is the cash equivalence?

How much cash did the seller receive at closing? Then you have the answer to your question.
Cash equivalency reflects the gross amount of cash the seller would have received in a transaction that was unaffected by any creative financing, ie what the market would have borne for the property had there been no special financing considered. Net cash, after payment of fees and commissions is not a consideration.

What is typical within your market?

 

[Restrain]

Cash equivalency is NOT a mathmatical calculation. It can only be measured by what a property will bring IN THE MARKET on the basis of a cash transaction. That's why cash equivalency was abandoned after being tried on the old 41B form.

 

[Howard Klahr]

Cash equivalency relates to an adjustment attributable to "non-market" terms or a price influenced by favorable loan terms. The value associated with the favorable financing terms is a non realty interest in the property.

The amount of down payment can be part of the analysis for a cash equivalency adjustment, although the real estate commission would not be a factor. There is however not enough infomation provided to perform an analysis of cash equivalency.

 

[CURT VAN HOOSER]

D Lana, it appears your husband is still working on his appraisers exam. If so, there may be more to this question than you are relaying. Why not just pose the exact question, with possible answers, and any example commentary?

 

[Fred]

With no other available information, I believe it would be $94,000.

No wonder you think inflated appraisals are so prevalent.