Maybe you are looking to buy a home and you are wondering how much you should offer on a home? or maybe you are looking to sell and want to know the expectations of where to expect offers to come in.
Using the sale price to list price ratio can help give you an idea of how competitive a market is or even how competitive a price range can be and show trends on which way markets may be going. These are averages that might not be true for every home or situation. You still need to recognize if a home is overpriced or if you see the quality and a well-priced home.
But when you look at the different price ranges there is different demand in each price range. Based on this home the homes under $200,000 can expect a reduction of 10% from list price, which is a $20,000 hit, but the homes in the $500,000 to $900,000 range can expect a price 1.5% to 2% range with a $10,000-$15,000 hit from list price and a $1.5M home can expect around $53,000 to come off the list price. This also comes down to the strategy of buyers, this is the end result and not necessarily where the offers will start. Everyone has different negotiation strategies, some like to split the difference, some like to leave room for negotiation or some like to start close to market value and leave less room for negotiation depending on expectations. The market is always changing and in the last 6 months, the list to sell ratio has been getting tighter, with the average since June being 98.2% compared to 97.88% year to date.
If you are looking at buying, not all homes are selling for over asking price, there is normalcy in the market for the majority of the homes and some give depending on what home you are looking at. Using these ratios can help give you an idea of where things are and where you can expect to end up for the average homes on the market and fit it into your negotiation strategy. But just know if you do find a solid home that ticks all the boxes, right now with limited supply it may be worthwhile to go tighter to the list price than what these numbers tell you if you have been waiting a while for the home to come on the market. Have a great week! Mark Coons