Cash Sale as a comp

[Jerry Bone Jr]

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.

There are many less potential problems with a cash buyer.

 

[Michigan CG]

Sorry

No problem, it is a big world out there.

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You do not know what you do not know.

 

[OSU Beavers]

Just a note, I did a review of a report by written by a number hitter or "Skippy" appraiser as they are called here on the forum and I noticed that all three of his comps were cash sales. They also closed for the highest price of all sales that could be considered comparable to the subject. I verified all three sales with Realtors and found out that they were all out of town buyers who sold their existing homes and made full price cash offers without the benefit of a pesky appraiser telling them that they were paying too much.

No wonder Skippy "Cherry picked" those sales to support the inflated value of his subject.

 

[Pat Butler]

Whether or not an adjustment is required is something that will be researched. But I can tell you that a cash buyer if much more preferrable than a buyer who is securing financing. No problems with financing, appraisals, home inspections, etc. with cash buyer. Most sellers would gladly give a discount to a cash buyer in this market.

 

[Geoff Hatcher]

I don't understand the question. Market value is defined as:

Market value is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

· buyer and seller are typically motivated;

· both parties are well informed or well advised, and acting in what they consider ........
their own best interests;

· a reasonable time is allowed for exposure in the open market;

· payment is made in terms of cash in United States dollars or in terms of financial
arrangements comparable thereto; and

· the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

The Dictionary of Real Estate Appraisal, 3rd Edition, The Appraisal Institute, 875 North Michigan Avenue, Chicago, IL, 60611-1980, Page 222.


A cash sale is cash equivalent

 

[hglenbetts]

Whether or not an adjustment is required is something that will be researched. But I can tell you that a cash buyer if much more preferrable than a buyer who is securing financing. No problems with financing, appraisals, home inspections, etc. with cash buyer. Most sellers would gladly give a discount to a cash buyer in this market.

Sorry, I've represented many cash buyers over the years and MOST have gotten appraisals and home inspections. The only ones that didn't were investor type buyers, buying rehab quality homes.

 

[Mike Kennedy]

I don't understand the question. Market value is defined as:

Market value is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

· buyer and seller are typically motivated;

· both parties are well informed or well advised, and acting in what they consider ........
their own best interests;

· a reasonable time is allowed for exposure in the open market;

· payment is made in terms of cash in United States dollars or in terms of financial
arrangements comparable thereto; and

· the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

The Dictionary of Real Estate Appraisal, 3rd Edition, The Appraisal Institute, 875 North Michigan Avenue, Chicago, IL, 60611-1980, Page 222.

A cash sale is cash equivalent

Originally Posted by Jennifer Kathleen
...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...

"unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."

 

[Mike Boyd]

No adjustment for a cash sale. Sometimes an owner will discount the price a little for an all cash sale but that would not warrant an adjustment. The only problem I have had with using all cash sale comps is when ALL the comps are for cash. The one time that happened with me the UW came back and asked for a comp that had been finananced.

Some agents, through ignorance or laziness or just plain obtusiveness, will mark in MLS that the terms of sale was CASH. Check public records. 9 times out of 10 you will find there is a mortgage on the property.

 

[Jennifer Kathleen]

It's ok ray! I was waiting for someone to say it!! My own fault, but better ask and look stupid then to do it wrong in fear!! ...Certified Appraiser!

 

[Amy Perkins]

Interesting... Financing is very hard to come by in markets that have declining values. I would imagine a cash buyer would get it cheaper.