Final answer:
If your neighbor's home sells for $5,000 less than what you are asking for your similarly modeled home, the neighbor would pay less. Examples used in the answer help explain the concepts of home equity and how market values can change over time.
Step-by-step explanation:
When your neighbor's home sells for $5,000 less than what you are asking for your home, which is the same model, it would mean that you are asking for a higher selling price. Therefore, if both homes were to sell at these prices, the neighbor would pay less for their home than you would for yours, assuming you achieve your asking price.
In the given examples:
- Freda bought a house for $150,000 in cash, which is now valued at $250,000. This means Freda's equity is the whole value of the house since she owes nothing to the bank.
- Ben bought a house for $100,000, put 20% down, and borrowed the rest. The house's value increased to $160,000, and he has paid off $20,000 of the bank loan, leaving him with a loan balance of $60,000 and equity of $100,000.
- Marvin is considering two used cars, priced at $4,000 and $4,600 respectively, which appear similar. The choice of which car Marvin should buy would depend on further factors such as overall condition, potential hidden costs, and personal budget.
Returning to the original question, if your neighbor's home sold for $5,000 less than yours, they would pay less assuming all other factors are equal.