Sales Price as a Percentage of List Price in Granger’s Covington Shores Neighborhood

by Nick Molnar on May 16, 2008

Granger, Indiana doesn’t get much discussion on the web’s real estate boards but it did get an interesting question recently on Trulia:

 

What is the average percent paid for homes sold in Covington shores, and fox chase – on the water?

This is obviously someone who is smart about real estate and is doing their research before they make any large financial decisions. But they are being drawn into a common trap – thinking of sales in relation to list price rather than to inherent value.

 

But, there are two flaws with that way of valuing homes. The first is that list prices are arbitrary – there is nothing to prevent someone with a $500,000 home from listing it for sale for $900,000. Likewise there is nothing to keep you from under pricing a home and asking $300,000 for that same $500,000 house. Using list price as a guide assumes the list price is founded on something solid, and that’s often not the case.

 

The second reason it’s dangerous to use percent of list price as a benchmark is that list prices change. Every time you see a “price reduced” advertisement that’s a change to the list price. And, because it’s easier to query, most statistics you’ll see for sale price as a percent of list price are the sale price relative to the list price at the time of sale. A bit of reflection will show you that of course the house will sell for near list price once the price has been reduced closer to an amount at which the house will sell.

 

If you still want to see the percent of list price paid for homes, compare it to the original price, and take it with a grain of salt.

 

If you’re buying, base your offer on fundamentals and comparable recent sales, not the asking price.

 

If you’re selling, realize that you won’t be able to game the system with an artificially high list price and expect to set that as the benchmark for negotiations. Buyers won’t even look at your house. Put your energy into making your home look as good as it can and getting it in front of as many people as you can for the best result.

 

Here’s the breakdown of sales this year in Covington Shores, on the water: 

 

 

Address

Sale price

Original list price

List price at time of sale

Sale price as % of original list price

Sale price as % of list price at time of sale

14360 WYNSTONE

$382,500

$429,900

$399,900

89%

96%

14740 CARRIGAN

$470,000

$529,900

$509,900

89%

92%

14228 AVERY

$800,000

$859,900

$825,000

93%

97%

14681 CARRIGAN

$584,500

$598,500

$598,500

98%

98%