Cash sales analysis methodology
Published August 16, 2016
The sales transaction data used for this analysis comes from MLS and county registry of deeds datasets provided by CoreLogic. These data include parcel identifiers that make merging records for parcels possible. We used the MLS data to determine whether the transaction was an REO sale, as they consistently included closing prices. The deed data reported the sale price less frequently but were a good source for other information, such as indicators of owner occupancy and financing method (e.g., cash or mortgage).
There are shortcomings in the data. Not all MLS records have matching deed data. And not all deed records indicate whether the purchase was financed with a mortgage or cash. Just over 50 percent of the records include a classification for either “cash” or “mortgage” in the deed data. Our internal analysis suggests that the remaining transactions without an indicator were likely cash sales. We base this judgment on the similarities of most records flagged as “cash” to those missing the indicator. Additionally, the MLS listings for a large number of these records listed “cash” as the requested financing terms. While MLS listings do not necessarily indicate the type of financing ultimately used for the transaction, we found that, of the records that included financing information in both the MLS and deed registry, roughly 90 percent of records that indicated “cash” in the MLS data were ultimately cash transactions according to deed records. Based on this correlation, we classified records with a “cash” indicator in the MLS data as cash transactions for our analysis. We classified all other records as mortgage transactions.