There's been lots of good discussion on this topic. I go back to what I originally said -- my background is in economics and statistics -- numbers -- averages, ratios, etc. can be a bit misleading in real estate as the market is very dynamic from year to year and there are also seasonal adjustments to consider.
Whether you are the Seller or the Buyer, my advice is the same -- look at the recent "comps" from the past 6 months -- make sure they are really good "comps" (apples to apples). As stated below, as Agents, as much as we try to advise Sellers about the realities of the market, it is their house -- they have the final say in Asking Price and the timing and size of price reductions. To Buyers, first and foremost, find a house that you really like and will enjoy living in; unlike buying a stock, it goes beyond the numbers -- "a really good deal" that you dread waking up in each day vs. something you truly love that perhaps you had to bid the extra $5K -- that choice is yours and yours alone -- a good Agent can gather up all the data for you, but you will be the one living there.
We have seen several homes recently (I can share some examples off-line) that have sold over the Asking Price and have had multiple Offers -- in Cranford, Scotch Plains, and Westfield. This throws some of the stats off, as do "short-sales" and other special circumstances (estate sales, relocation, divoirces, etc). Again, as much as I love "statistics", my advice is to let it be just one element of your home-search strategy.
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