A statistic that can be very helpful in understanding the state of the real estate market is the ratio between the list price and sale price of a home.  For example, 216 single family homes sold thus far in 2007 (1/1/2007 - 12/30/2007), with an average list to sell ratio of 97.81%.  This means that Sellers are getting, on average, 97.81% of their asking price - - - or are they??

When I (or any other Realtor) runs these calculations in the MLS, the statistical analysis compares the sale price to the final list price, not the original list price.  Unfortunately, comparing the sale price to the original list price is a manual process.  But let's see what it would show us . . .

Because of the tedious nature of this research, I have limited this to Harrisonburg single family homes that sold in the 4th quarter (9/1/2007 - 12/30/2007).  There were 39 homes, that sold at 97.24% of the final list price.  When looking at the sale price compared to the original list price, the ratio drops to . . . . . . . . . .  94.20%. 

Interestingly, of the 39 homes, 8 of them sold for less than 90% of the original list price.  Let's put a few of these numbers in perspective, with the lowest ratios in the set . . .

977 Summit Avenue
Original List Price = $498,000
Final List Price = $424,900
Sale Price = $375,000  (75% of original list price)

740 Collicello Street
Original List Price = $150,000
Final List Price = $145,000
Sale Price = $125,000  (83% of original list price)

60 Shenandoah Avenue
Original List Price = $182,500
Final List Price = $169,900
Sale Price = $156,000  (85% of original list price)

A few interesting take away points:

• On average, buyers seem to be willing to negotiate prices down 3% (to 97% of the asking price), but not 6%.  
• Thus, as a seller, it is important to stay within 3% of the market value, or your "bottom line".
• A seller can't pick any asking price out of the air and assume that their home will sell for 97% of that price (or even 94% of the price).
• When preparing to sell your home, don't just look at sale prices and final list prices of comparable homes -- check the original list prices as well!