Defining the Denominator
One of the more useful (ballpark) benchmarks for determining a home’s likely selling price these days is what Realtors call “sales price as a percentage of list (or asking) price.”
Depending on what part of the Twin Cities you’re talking about (and what price point), the number that’s out there at the moment is just over 90%.
But that begs the question, “90% of what?”
The answer: ‘original list price.’
So, if a home originally listed for $500k, subsequently took two, $15k price reductions, and ultimately sold for $455k, the percentage would be . . . exactly 91%.
Accounting For Re-List’s
So far, so good.
But what if instead of reducing the price two times, the listing agent instead did what’s called a “cancel-and-relist?”
If you’re not aware, that’s a common practice whereby the agent takes the additional step of canceling the original listing, and putting it back on MLS as a new listing at the lower price.
Why do that?
Because it garners more attention that way, especially if the home has been on the market awhile, and new Buyers — who may not be aware of the home — have subsequently joined the market.
In that case, MLS would calculate the sales price as percentage of list as 96.8% — even though the “real” number is 91%.
P.S.: Thanks to fellow blogger and Edina Realty agent Aaron Dickinson for help on this one.