Why Should You Ignore The List Price Of A Home?

Ignore the list price of a home

So much is made of statistics saying one thing and real estate agents saying another. But the numbers don’t lie. They may tell a story that an agent doesn’t want to hear, but they most assuredly don’t lie. Sellers listen up. If your home isn’t selling you had better make sure that your agent isn’t ignoring relevant market data.

The market numbers for August 2008 came out here locally and while the volume of sales hasn’t taken a significant beating, there are some things in the numbers that you really need to take notice of and I doubt you will read anywhere else.

This information should be important to both buyers and sellers. Buyers will want to know this information when looking at a prospective home and sellers really need to know this and question their agent to see why they weren’t told this.

In reviewing the August 2008 data, it was determined by local MLS data that the average sale price of a home was only 88% of what the home was listed for at the time of the sale. Well at first glance you maybe inclined to say..well that’s not that bad. It’s only 12 percent below what the seller was asking. Okay, so if the average home was listed at say $300,000.00 you’re talking a discount of say $36,000.00. Not bad eh? But wait (spoken in true infomercial voice)…it gets even better…or worse depending upon which side of the table you are on.

When the MLS calculates this data it is based upon the list price at the time of the sale. Right now the average home has been sitting on the market for as much as 120 days…4 months. During that time, the bright agent the seller hired more than likely has followed suit and followed the same old tired real estate agent marketing plan of reducing the price over and over again.

So by the time the house actually sells, the actual listing price at the time of the sale is far less than what the “original” list price was. See the picture here? Mr IM A. Good Agent told the sellers that he believed the house would sell for “X” dollars. Then in a couple of weeks when there have been no offers, Mr. Good Agent opened the Realtor playbook and told his seller that he needed to lower the price…and I bet never said he would also lower his commission for not selling the house as he said he would but that’s another article.

Then this scenario repeated itself a couple times over to the point when the property did get an offer, albeit far south of the original list price. However when the data is reported, Mr. Good Agent appears as though he did a great job and only cost his seller a 12% decline in the expected sales price when now you know in fact that the discount taken was FAR more.

Moral of the story for sellers, settle in and buckle up…you’re in for a bumpy ride if you list with the Mr. Good Agent type. If you’ve already been seeing this modus operandi now you know you’ve been suckered…sorry.

Moral of the story for buyers, ignore the list price of a home. Do your own homework. Check how long the home has been listed, see how many times the home has been reduced, and make your offer with the comfort of knowing how the game is played and how these agents are pricing their listings. Know where you are in the cycle of price stepdowns.

If you’d like some assistance, please feel free to contact me and I would be more than willing to provide you with any help that you might need.