The seller wants the highest sold price; however, buyer wants to buy at the lowest possible price. There must be a “meeting of the minds” between the seller and buyer on the sales/purchase price and terms of the transaction; otherwise, there will not be a closing or transfer of ownership.
Realtors can assist the seller and the buyer agree upon the price and terms where both can achieve their goals. Tallahassee Realtors do a great job of listing and getting homes sold at fair market value. In June of this year and in 2019 the average sold price was over 98% of the listed price.
Selling a home all begins with the Realtor listing the home at a price and terms agreeable to the seller. Determining the initial list price is not just a mathematical process (i.e. cost per square foot). There are numerous factors that determine the price; however, the cost per square price is the starting point.
While Realtors still go through the “comparative market analysis” process in determining an asking price, consideration now is given to the supply of available homes on the market.
Currently in Tallahassee, the inventory of homes for sale that are priced under $500,000 is low. In today’s market with what is available for a buyer, when they find a home they really want, the listed price may be just the starting point. The purchase price is determined by how much they are willing to pay.
I canvassed the Realtors in my office as to what they are experiencing in current home sales.
Here are some of the responses:
- “Listed for appraisal price, 15 offers in 48 hours, cash contract $20,000 over asking price”
- “8 listings in last 3 months, under contract 1 or 2 days after going into MLS, 5 listings had multiple offers all sold for asking price or higher”
- “Closed one I had listed at $255,000 for $265,00 with 6 offers”
- “Listed for $335,000 had 7 offers and contracted for $355,000, had a pool and on a pond.”
In Leon County in June 2019 21% of the single-family homes sold on an average of 2% above listed price overall. June 2020 19% sold above listed price, on an average of 3% more overall.
June 2020 there were 35% more homes sold that were on a lake compared to last year. The coronavirus shutdown has spurred the spike in boat sales. In many cases, sales are running at twice the pace of a normal year. (If you have a boat you want to sell, now might be the time.)
For the sake of the seller and the buyer it is of upmost importance the listed price takes into consideration multiple aspects of market trends in determining the value of a home.
It all may sound like a “seller’s market,” and it can be if you have professionals help. A full time Realtor that is successful in today's very difficult market has knowledge of how an appraiser who thoroughly evaluates a home, regardless of market conditions determines market value.
Appraisers know what is going on in the home sales market and know that some buyers are willing to pay more than listed price. Appraisers make an assertive effort to try to justify a price higher than established market value but cannot risk their credibility with an unjustifiable value.
With a contract price higher than appraised value the sellers and buyers may agree with an adjustment to the purchase price. Other times buyers are willing to pay more than appraised value.
Last year a previous customer called and wanted me to sell her home and buy another on a lake. As a Realtor you love this call. Viewing her home found her mother had moved in with all her “cherished stuff.” She took my advice and got the home ready for market and it showed great.
The asking price, she thought it likely should be $300,000. After my analysis I estimated $318,000; however, I did not have enough comps to be satisfied and recommended an appraisal. The appraiser arrived at a market value of $335,000; but, due to the lack of supply he suggested we ask more. We priced it at $339,900 and had 3 offers in 2 days. The buyer offered full price and it appraised and closed.
A preliminary analysis of July’s sales data shows about the same number of closed sales as June with a 4% increase of the average sales price. Like June, 21% of the closed sales were higher than the listed price of the home.
Donald Pickett, a Realtor 40 years in Tallahassee, is with Coldwell Banker Hartung. Contact him at donpick@aol.com.
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