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Why
'Average Sale Price' Statistics are Misleading
By Duane
LeGate
One of the most common statistics used when
gauging the strength of an area's real estate
market is the average sale price of its homes,
but looking into that figure more deeply reveals
just how misleading it can be.
When listing a home for sale, most realtors
establish a price for the home based on market
comps of the area — taking into account what
other houses sold for and how the home they are
listing compares to those. That price is a gross
sale price, however, and doesn't reflect what the
home owner actually receives from the sale. The
difference between the gross sale price and the
amount with which the seller actually gets to
walk away from closing is affected by a number of
factors.
Most people would be surprised to discover
that home owners in hot U.S. real estate markets
like California, Florida or Las Vegas often
receive offers for their homes that actually
exceed the asking price. That is because in
almost all other U.S. cities, statistics suggest
that a realtor usually secures an average sales
price of only 92 to 95% of the listing price. In
addition, a number of other costs must be
subtracted from that figure as well:
-
- 5 to 7% for realtor commission
- 3% toward the buyer's closing costs (on
average)
- Realtor-recommended upgrades to make the
house show better: new paint, carpet,
minor landscaping, etc.
After all costs are figured in, the seller
often walks away with only 75 to 85% of what the
house "sold" for.
This should not reflect negatively on realtors
by any means — their services are still very
much in demand and are invaluable for many home
owners — but the more people realize the
difference between what their home sells for and
what they actually net, the more the number
selling their home through
"non-traditional" methods continues to
rise.
It's easy to find two houses on the same
street in any neighborhood in the U.S. where the
seller who sold their house for a higher price
actually received less money at closing. If real
estate prices were discussed in terms of net
price to the seller rather than gross sales
price, more home owners would discover that, for
them, alternate channels for selling their home
are more profitable than going through a realtor.
Duane LeGate is president of House Buyer Network,
America's fastest-growing home buying service.
Since 2002, the company's nationwide network of
professional home buyers has helped more than
45,000 families and individuals who needed to
sell a property fast – processing more than
$7.5 billion in property during that time.
Article Source: http://EzineArticles.com/
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