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Cash Sale Vs Conventional Financing

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MV definition, 4) Payment in terms of cash or terms of financial arrangements comparable thereto simply means its cash equivalence funding.... whether the buyer uses financing or not, the sale price is X$ and funds distributed in cash. 160k financed is 160k cash. The seller is paid in cash at closing whether buyer financed or not. Next sentence where the terms might get adjusted for...,5) (price ) unaffected by special or creative financing or sales concessions.r.

If the buyers i OP example used prevailing rate financing, there is no adjustment down because there was no special or creative financing. Unless OP says, no concessions.

The builder gave a discount for cash sales to get a fast closing/other reason. As far as OP reconciles the cash vs financed prices...where he finds MV...I would tend more toward the financed sale prices as long as the rest of the market was returning no clear discount for cash. Needs to look at ( and put on grid if possible) recent build date comp resales
 
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Why was the builder giving a discount for cash buyers?


Because he probably gives up to 6% in concessions to buyers that use financing. 6% for closing costs, buydowns, loan broker kickbacks, other costs in general, etc.

Not to mention the possibility that in 30-60 days he's notified that the sale isn't going to close because the borrower didn't disclose some financial trouble or that the AMC hired an idiot for $250 and he/she drove 100 miles from another area and the appraised value came in 10% under market value because he/she didn't know the market. Things like that.

The 6% is built in to every asking price.
 
I guess this builder makes more than 6% interest in 60 days.....

No, it's a matter of f builder needs cash to pay off loans, fund another project, etc . The other factor is it costs a builder far less to build than M/S or nat cost figures ( which are one person contractor) , builders buy bulk wholesale / negotiate labor the same. That, plus spread of land/lot costs leaves them room to play with prices to borrowers...from discounts to cash to offering "free" upgrade packages (not free, built into price) to concessions to perks for using their preferred lender, etc.
 
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Don't know but it would be interesting to see the first five or six sales were cash ? Over the years I have seen some smaller builders sell the first few to affiliated companies, silent partners, relatives to get he ball rolling , often their construction loans terms and length were tied to selling so many units per-month. Also on these types of developments many lenders want to see a few sales' in the project before they will make a loan.
 
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