If financing terms are below market and the buyer cannot obtain typical financing, the sale price is likely:

• A. Lower
• B. The same
• C. Higher
• D. Unknown

Answer: (C)

Financing terms influence value in the Sales Comparison Approach. When financing is more favorable to the buyer than typical market terms (for example, below-market rates or lenient terms), buyers have greater purchasing power and competition can push the price higher. Even if the buyer can’t get typical financing, if the available terms are still below market, these cheaper funds effectively raise what buyers are willing to pay, leading to a higher sale price than would occur with market-financing terms. If financing were worse for the buyer or harder to obtain, the sale price would tend to be lower.