Revisiting Cash Financing in Residential Transaction Prices

Real Estate Finance, Summer 2016

15 Pages Posted: 20 Jan 2017

See all articles by J. Andrew Hansz

J. Andrew Hansz

E.V. Williams Center for Real Estate

Darren K. Hayunga

University of Georgia - Department of Insurance, Legal Studies, Real Estate

Date Written: June 10, 2016

Abstract

The primary cash financing literature consists of two early 1990s publications. Both of these studies found large cash discounts in residential transaction prices. We revisit this topic by examining residential transaction prices in Pinehurst, North Carolina. We find that cash buyers in the market do not negotiate a discount for the use of cash financing. Instead, the results demonstrate that cash purchasers pay a significant higher price. The findings stand in contrast to the limited literature on cash financing and highlight why financing needs to be included in hedonic pricing models.

Keywords: Cash financing, Cash discount, Cash premium, Hedonic pricing model, Residential real property

JEL Classification: D14, D70, E30

Suggested Citation

Hansz, J. Andrew and Hayunga, Darren K., Revisiting Cash Financing in Residential Transaction Prices (June 10, 2016). Real Estate Finance, Summer 2016, Available at SSRN: https://ssrn.com/abstract=2901885

J. Andrew Hansz

E.V. Williams Center for Real Estate ( email )

Norfolk, VA 23529-0222
United States
7576833505 (Phone)

Darren K. Hayunga (Contact Author)

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
706-542-1365 (Phone)

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