TY  - JOUR
AU  - Haurin,Donald R.
AU  - Hendershott,Patric H.
TI  - Affordability and the Value of Seller Financing
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1695
PY  - 1988
Y2  - March 1988
UR  - http://www.nber.org/papers/w1695
L1  - http://www.nber.org/papers/w1695.pdf
N1  - Author contact info:
Donald R. Haurin
E-Mail: haurin.2@osu.edu

Patric H. Hendershott
Fisher Hall
Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 218/963-1393
Fax: 218/963-9484
E-Mail: hendershott.2@osu.edu
AB  - The typical methodology in valuing seller financing consists of calculating a discount -- the present value of the after-tax interest savings due to the creative financing --and including this variable, along with other characteristics of the purchased house, in an hedonic price equation explaining the house price actually paid. Resulting from this equation is a set of marginal prices corresponding to each characteristic of the house, including the quantity (discount) of creative finance accompanying the house. The central question usually addressed is whether the discount is fully capitalized in the value of the house -- whether the price of creative finance is unity. In our view, one should not ask what the price of creative finance is because this price, like that of other housing attributes, likely depends upon supply and demand conditions. We develop and estimate a model incorporating this dependency.
ER  -