Cash Sale as a comp

[Jennifer Kathleen]

I am working on an appraisal and there is not many comps out there and I am forced to use one where the buyer paid cash. I am wondering how I adjust for this, it seems as if they got a deal of about 20K or so, but i need to prove it. The classes I took are fading in my mind:Eyecrazy:, and I think I need to do the cash equivalency adjustment?! I don't remember how it works, could someone please advise! Thank you!

 

[Fred]

I think I need to do the cash equivalency adjustment?!

I think you have that mixed up. Cash is the equivalent of cash already. It's funky financing that has to be adjusted to be the equivalent of cash.

 

[Jennifer Kathleen]

Thank you! I think I am mixed up! I have been out of the game a while and not too excited about re-entering in this crazy market Thank you again for your help!!

 

[hglenbetts]

Unless the seller provided financing, the seller received cash at closing. Would the seller have taken a discounted price for a 2-3 week quicker closing instead of waiting for the buyer's financing approval?? If you can prove that, then there's your adjustment.

 

[Mike Kennedy]

expand your search and get a better comp without a "possible" discount.

 

[Lee Lansford]

...I am forced to use one where the buyer paid cash. I am wondering how I adjust for this, it seems as if they got a deal of about 20K or so, but i need to prove it...

Or, perhaps, the transaction was "merely" a reflection of current market conditions.

 

[Michigan CG]

Jennifer,

If I am selling my house and some buyer walks up with cash in hand and another buyer walks up with a rock solid pre-approval are they not the same? At closing you still get paid.

Your problem to define is to figure out if the buyer (cash buyer or not) got a deal, but it is not in the financing.

 

[RustNeverSleeps]

deleted edit

 

[Michigan CG]

Shouldn't this be a question in the Newbie section? You have a License? :Eyecrazy:

Ray, we have little information about the situation and with the current housing crisis this could have circumstances we are not aware of. Until we know the whole story judgment is most likely not called for.

Additionally most appraisers are not exposed to alternative financing in the normal course of work.

We all need to play nice in the communal sandbox and not rush to judgment.

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You do not know what you do not know.

 

[RustNeverSleeps]

Sorry