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The Price Effects of Cash versus Mortgage Transactions

Author

Listed:
  • Paul K. Asabere
  • Forrest E. Huffman
  • Seyed Mehdiany

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.

Suggested Citation

  • Paul K. Asabere & Forrest E. Huffman & Seyed Mehdiany, 1992. "The Price Effects of Cash versus Mortgage Transactions," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 20(1), pages 141-154.
  • Handle: RePEc:bla:reesec:v:20:y:1992:i:1:p:141-154
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    Citations

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    Cited by:

    1. Ramya Aroul & J. Hansz, 2014. "The Valuation Impact on Distressed Residential Transactions: Anatomy of a Housing Price Bubble," The Journal of Real Estate Finance and Economics, Springer, vol. 49(2), pages 277-302, August.
    2. repec:kap:jrefec:v:56:y:2018:i:1:d:10.1007_s11146-016-9591-y is not listed on IDEAS
    3. 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.
    4. Andres Jauregui & Alan Tidwell & Diane Hite, 2017. "Sample Selection Approaches to Estimating House Price Cash Differentials," The Journal of Real Estate Finance and Economics, Springer, vol. 54(1), pages 117-137, January.
    5. repec:kap:jrefec:v:56:y:2018:i:4:d:10.1007_s11146-017-9609-0 is not listed on IDEAS
    6. 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.
    7. 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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