Our free monthly market reports for Calgary real estate show how much a home was initially listed for and how much it actually sold for. That difference is translated into a percentage and called the sold price vs list price ratio. If a home sells at list price the ratio shows 100%. If it sells under list price it shows under 100%, and if it sells over list price it shows over 100%.
Sometimes home buyers want to know the percentage between sold price and list price in the community in which they are buying a home. Next, the buyers want to apply that percentage to the list price of the particular home they plan to buy.
But this average percentage of sold price vs list price cannot be applied to just any asking price.
Homes for sale can expire and can be relisted at a lower price
The average percentage of sold price vs list price cannot be applied to just any asking price
For example, the statistics show that this month 250 homes sold, and the average sale price was $450,000. The sold price vs list price percentage shows 98%. That means that the average home was listed at an asking price of $459,000.
But these statistics don’t tell us that out of these 250 sold homes, there were 50 homes listed beforehand, that expired because they didn’t sell, and then they were relisted at a lower asking price.
If we move forward with this same example using the average asking price of $459,000, now 50 of those homes were first listed at $469,000. These 50 homes didn’t sell, so the listing contracts expired. Then these 50 homes got relisted for $459,000, after which they eventually sold for $450,000. For those 50 homes, the sold price vs list price ratio would be 96%. They sold for $450,000 but were originally listed at $469,000.
The seller can set any asking price for a home
Sellers are free to decide the price at which to sell their home
Every home evaluation (CMA) from a realtor shows a price range at which a home should sell; the market value. This value is usually expressed in a range. For example, “This home should sell for between $440,000 and $450,000”.
Sometimes sellers decide to list the home a bit higher and ‘see where it goes’. So, if sellers decide to sell that same home at $460,000, and the buyers decide to apply that average sold price vs list price percentage of 98% to that asking price, buyers essentially overpay, or, at least, buy at the higher end of its market value.
Price setting above or below market value
Sometimes, sellers want a quick sale. Thus, if sellers decide to set the asking price of the home a little bit under market value, more buyers may be attracted. This strategy can result in a quicker sale, close to list price. It even may lead to competing offers, and the home may sell over list price. Then the ratio of sold price vs list price may end up over 100%.
What else can affect the sold price vs list price ratio?
A market evaluation done by different realtors may also show different views on the choice of selling price for a home
A market evaluation done by different realtors may show different views on the choice of selling price for a home. This results in different sold price vs list price ratios that can skew an average significantly.
Different styles and varied homes in a community
Taking an average sold vs list price ratio can be very much affected if applied to a community, where there are generally fewer sales.
Also, many communities in Calgary offer different styles of homes, along with varied types of homes: townhomes, apartments, attached homes, detached homes and estate homes. If one month sees higher sales in, for example, the number of estate homes, the average of sold price vs list price can be skewed and give the buyers the wrong impression.
Furthermore, many factors can change the averages: a shift in economy, a change in mortgage interest rates, type of market such as buyers’ or sellers’ market, and so forth.
A market evaluation for buying a home
As a buyer you will have to look at each home individually to see what its fair market value is
When selling a home, an official home evaluation is done. But also when buying a home, we can do lots of research and create a market evaluation. This market evaluation is done to make sure that buyers don’t pay too much for a home.
We find similar homes that recently sold in preferably the same community. Then we adjust for a number of features. If two homes are similar but one has a developed basement and the other home has an unfinished basement, then the price needs adjusting with a certain value for this basement development. Also, differences in square footage, upgrades, garages, location are all factors that need to be taken in consideration to come to a price point for a property. And to go even more in-depth about pricing a property, many different features can have different values in different communities.
For example, a price adjustment on square footage is different between a condo and a detached single family home. The value of a home located on a ridge with views of the river and the mountains is different from the value of a condo in the Beltline with views of the river and mountains.
Services for buyers and sellers
If you decide to hire us as your buying realtors, we offer you sale prices during the entire process of orientation, viewings and buying, so you can make an informed decision
If you decide to hire us as your buying realtors, we offer you sale prices during the entire process of orientation, viewings and buying, so you can make an informed decision. Before every purchase, we do a market evaluation to make sure you don’t overpay. As well, we advise and negotiate for you the best price possible.
If you are thinking of selling your home, we offer free market reports. These reports are monthly and show you all homes that sell in your community, including the number of days they are on the market and the sold price vs list price. Or, alternatively, if you need a market evaluation of your home for the purpose of selling, you can request this CMA via our website.