Cash is more valuable than equity. Here is a simple test. Pretend you are offered a free gift and given a choice – A or B:
Choice A - You can have free and clear equity in that nice $100,000 house over there.
Choice B – You can have this brief case containing $100,000 cash.
The answer is obvious. You don’t have to think about it. You’ll take the cash. Cash is better than equity. In fact, cash is what we use to buy equity.
BUT: What if there was a new, different choice – X or Y:
Choice X - You can have free and clear equity in that nice $125,000 house over there.
Choice Y - You can have this brief case containing $100,000 cash.
The answer might not seem so obvious now because you have to pause to think. But when you think about it, choice Y is very attractive. So you take it. Why is this?
It’s because cash is more valuable than equity:
When you chose Y, were you motivated by any other circumstances? No – just your perception that cash was the more valuable. You took a $30,000 discount and felt just fine about it. This was the straight cash value discount on the equity and there was no consideration of any other factor. However, when Sellers consider the cash vs equity equation, they also have other factors to take into account. See the report on other Equity-Value Factors.
Palm Springs Desert Area Homes, Condos & Real Estate are to be found in the Coachella Valley cities of Palm Springs, Palm Desert, Cathedral City, Rancho Mirage, Indian Wells, Bermuda Dunes, La Quinta, Desert Hot Springs, Thousand Palms and Indio. These are the cities that form the Greater Palm Springs Desert Area and are home to some of the finest living and the best resort real estate in the world. If you want to sell or buy homes, condos, or real estate anywhere in the Coachella Valley, this site will provide the little known information you need and the solutions you seek.