Considering it is widely regarded that we are in a buyer’s market (a point I completely agree with), I find one statistic to be one of the more compelling statistics that can be gleaned from the MLS: The ratio of the asking price to the selling price.
In a buyer’s market, you might expect that buyers are able to really negotiate that price down considerably from the asking price. I mean, shouldn’t we expect 10% or more off the price of a home, given sellers outpace buyers significantly?
Given that basic premise, what do you suppose the average percentage paid in Maricopa County was over the last 6 months? The answer: 95% To those viewing the market from afar, I imagine that’s shocking, isn’t it. I recently pulled up a nice subdivision in North Phoenix and found that the average price being paid was 97.5% of the asking price. And this was for homes between $300K and $400K.
This leads to one of the most important marketing tools that you have at your disposal, if you are planning to sell your Phoenix home: Price it right. Buyers know when a home priced right, priced fairly, and will make an offer, or perhaps via counter-offer, agree to a fair price for both the buyer and the seller. I have long advised my clients that if the difference between asking price and expected selling price is wider than 5%, the home will languish on the market. Over-pricing a home is sure fire recipe for disaster, and this statistic, if none other, demonstrates that perfectly.
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Steve,
I recently ran the same stat for Tucson and got 95% for all residential so I broke it down to SFR, Townhomes, Condos and MSFR it was the save across all types give or take 1 hundredth of a percentage point.
Steve,
Great Advice. If the house is priced right it will sell.
I thought that as well when I bought my house, that even in a down market I still came up to close to what the asking price was…
However, does that take into account the sellers closing costs, or any other deal that makes the seller pay for anything?
What we were able to do was come up close to the asking price but ask for a large closing cost agreement so we barely paid anything at closing… which to the seller means his total profit is less than 95%.
I am betting that in this “money” crunch, that buyers are simply less able to let their free money go to closing costs and are making the sellers come up with it, disorting the true sale price.
Dave, we are seeing it pretty typical that the seller is contributing 2% on average to closing costs. If it’s an FHA deal, with AmeriDream, then 5-6% total contributions are pretty common. However, those FHA deals are getting close to full asking price.
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