Home Buying in Madison>Question Details

Ashley Trowb…, Home Buyer in Bloomington, IN

Do most houses sell for below asking price? If so, how far below (on average)?

Asked by Ashley Trowbridge, Bloomington, IN Sun Dec 30, 2007

My budget is 350k or less for a single family home with 2 bedrooms. Preferably within Madison city limits on the west side.

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7
I don't disagree with the other advice here, and it is helpful to know that properties, on average, sell for 3%-5% below list (at least nowadays). And that's the number you were looking for. However...

Forget the nonsense about basing your offer on whatever the list price of the house is. And it is nonsense. Some houses are overpriced; some are underpriced. Some need repairs; some don't. Averages are fine if you're buying 500 houses; hundreds (or thousands) of house sales are averaged to produce your magic 3%. But, unless I'm wrong, you plan on buying one house. Not 500. So what you want to do is find a house that fits your needs and is a good value at or below your $350,000 budget. And that might be a house priced under market at $280,000, and would be a great value at that figure. Or it could be a property priced at $400,000, in which the agent may have painted a too-rosy picture to the sellers...and the sellers now are willing to get out for what they owe.

Also watch out for the hidden "seller subsidy" in many sales. There's nothing wrong or illegal about it; most loan programs permit it. But, for instance, a house might "sell" for $300,000, but the seller might credit the buyer with a $9,000 seller subsidy (to be used for down payment, closing costs, etc.) Thus, as a practical matter, the house actually sold (that is, net to sellers) for $291,000...even though the official records show $300,000. That's one reason why, even in this very slow market, some houses seem to sell at or even above their list price.

Again, remember: Knowing the averages are fine, but in buying (or selling) a specific house, look at your needs, look at the comps, look at the true value, and leave the averages to statisticians.

Good luck.
3 votes Thank Flag Link Mon Dec 31, 2007
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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The 97% of list price that is quoted takes into account all of those homes that have sold. Not those which are on the market or failed to sell. So the ones that are overpriced will not sell. (This is based on my experience this year in a very tough market) So this is a historically correct figure of those that have sold.
However, not all agents are the same. So some will buck this trend and do better.

I recently pulled the stats of my team and calculated our list to sale price of 99.3%. That means if you listed a home for sale with our team, that you would have received on average 99.3% of sale price.

Another stat I was very proud of, it that we sold 83% of all of our listings last year- compare this to the average I found on the general larket of 29%.
1 vote Thank Flag Link Mon Dec 31, 2007
Ashley,

It depends on relative asking price. Homes priced closer to their current value and in good condition tend to sell close to or at their asking price. To get a better idea of this, contact a local realtor. Ask them to email you a list of homes within the parameters you're looking that have sold in the past 2 months. They can send you the information that includes list price as well as sold price and date of sale.

Best of luck
1 vote Thank Flag Link Mon Dec 31, 2007
Ashley,

This answer could go in many directions but I'm guessing you just want a quick answer for now.

As mentioned, the average was almost 3%. But, that can vary greatly (for a variety of reasons) depending on the specific property that you are looking at. A Real Estate Consultant can help advise you on properties to obtain the home that you want at the best possible price.

Madison is a great place to live and I would look forward to the opportunity to work with you through your move.

Feel free to contact me If you have a question about a specific property. You can check my site, http://www.cbSuccessRealty.com/ross for all homes for sale. Other good resources are http://www.wisconsinhomes.com (public MLS) and http://www.realtor.com.

Good luck!
0 votes Thank Flag Link Mon Dec 31, 2007
I just wanted to add... There are a lot of factors in writing an offer. The location, time of year, days of market, sellers incentives, closing costs, just to name a few. I agree with what Don said. A number or % from sale price does not give you the whole picture. Once you are able to look at homes in the market you and your agent will be better able to price the home. There are many ways to value a home; your needs and wants count too.
0 votes Thank Flag Link Mon Dec 31, 2007
Ashely, The average is 3% under the listing price. There are still homes in the Madison area in your price range. I would love to help.
Web Reference: http://www.669sold.com
0 votes Thank Flag Link Mon Dec 31, 2007
Ashley-I did a quick update on the market statistics for Madison in 2007. For the west side of Madison, the average homes have sold at 97.11% of most recent list price. The average list price of all 2 bedrooms sold was $234,019 with the average sale price at $227,255. There have been 113 homes sold that were 2 bedroom in 2007.

Based on your budget goal, you should be able to find a great home within your price range.

If you'd like to set up a customized homes for sale search, visit our website.
0 votes Thank Flag Link Mon Dec 31, 2007
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