Real Estate List Prices vs. Sale Prices
When marketing real property, what is the best price to list at? And how much of a discount from the listing price should be accepted by the vendor, or offered by a purchaser?
These questions have been considered by every person involved in a real estate transaction since the dawn of time. Here at Bourgeois Brooke Chin Associates, we’ve analyzed 456 Industrial, Commercial, and Investment property sales from the last three years to help provide some perspective.
As the top and bottom end of the chart show, the range in the percentage difference between the list price and sale price achieved exceeds 100%. (As a shameless plug, this is an excellent argument for obtaining an appraisal prior to listing, so as to better anticipate the achievable sale price).
Once the anticipated sale price is estimated, what should the list price be to avoid such a misalignment between the list price and sale price?
Our analysis indicates the average list price is set 7.4% above the achieved sale price. Further, 50% of the list prices were set between 3.7% and 14.3% above the achieved sale price. As list prices are also reflective of the time a vendor is willing to wait to “test” the market, a premium above the anticipated sale price should take this into consideration, with vendors looking to sell quickly asking a modest premium (4% to 7%) above the appraised market value, and vendors willing to wait for the best offer asking a higher premium (7% to 14%) above the appraised market value.
Please contact Mark Poechman at our office if we can help with more information on this, or any other real property related questions.