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The Price Effects of Cash versus Mortgage Transactions

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  • Paul K. Asabere
  • Forrest E. Huffman
  • Seyed Mehdiany
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    Abstract

    This paper investigates the price effects of cash versus mortgage transactions. Our hypothesis that home sales involving all-cash transactions will sell at discount is borne out by the results of this study. Analyzing a sample of comparable row home dwelling units, we find that all-cash transactions are associated with roughly a 13% price discount relative to transactions involving financing terms that are typical of the market. Cash is King. The findings are consistent with theories regarding buyer-seller behavior. Copyright American Real Estate and Urban Economics Association.

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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/1540-6229.00576
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    Bibliographic Info

    Article provided by American Real Estate and Urban Economics Association in its journal Real Estate Economics.

    Volume (Year): 20 (1992)
    Issue (Month): 1 ()
    Pages: 141-154

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    Handle: RePEc:bla:reesec:v:20:y:1992:i:1:p:141-154

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    Cited by:
    1. Paul K. Asabere & Forrest Huffman, 2008. "FHA/VA Financing and Price Discounts," Journal of Real Estate Research, American Real Estate Society, vol. 30(2), pages 191-206.
    2. Kenneth M. Lusht & J. Andrew Hansz, 1994. "Some Further Evidence on the Price of Mortgage Contingency Clauses," Journal of Real Estate Research, American Real Estate Society, vol. 9(2), pages 213-218.
    3. G. Donald Jud & John D. Benjamin & G. Stacy Sirmans, 1996. "What Do We Know about Apartments and Their Markets?," Journal of Real Estate Research, American Real Estate Society, vol. 11(3), pages 243-258.

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