Liquidity

Definition: Liquidity is the ease with which an asset can be converted to cash promptly without a substantial reduction in value or excessive transaction cost.

Example

Cash is readily available, while selling a building can require marketing, negotiations, inspections, and closing time.

Keep the distinction clear

Liquidity differs from profitability or net worth. A valuable property can be illiquid, and having equity does not mean the owner has cash available today.

Related terms

Asset · Equity · Market Value

Keep studying

Income Approach: NOI, Cap Rate, Property Value, and Cash-on-Cash Return

References: California DRE: real estate glossary

Pronunciation (US): lih-KWID-ih-tee (capitals show stress)

Pronunciation reference: Merriam-Webster