Seems a lot of people consider negotiation as “ask less than the list price and expect that they’ll come back somewhere in the middle.” At its’ simplest sure, that might work, but it also helps to know at what price sellers are pricing their homes, and also at what price buyers are buying those same homes for. This is where the list to sale ratio comes in.
Now, it’s not perfect, but it’s helpful, and the reason why it’s helpful is because it shows what kind of momentum, plus or minus, the market has at any given time. Should it be the only data point you and your agent examine when figuring out where to price your home, or at what price to make an offer on a home? Absolutely not.
For instance, here are some charts showing the average list prices (second column from the left) and average sales prices (third column from the left) for townhouses in Christiansburg in 2013. Note – these figures include foreclosures, which are not considered “arm’s-length transactions. Their impact on the market in 2013 was not statistically significant, so I left them in.
Unlike the example we saw in Radford, the list to sale ratios in Christiansburg, for both house styles, was 96.7%, a much better indicator of overall market health in the area. Does that mean if you list your house for $100000 you’re guaranteed to get $96700? Absolutely not. But aren’t numbers fun?