The Price Effects of Cash versus Mortgage Transactions |
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| Authors: | Paul K Asabere Forrest E Huffman Seyed Mehdiany |
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| Institution: | School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122 |
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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. |
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