Someone asked the other day how much below the asking price homes in this market typically sell for. I said about 5 percent, which I’ve heard for years. In other words, on average homes close for about 95 percent of listing price.
I checked the most recent report from Carolina Multiple Listing Services, and sure enough: The average sale price last month was 94.7 percent of the average listing price, which is 95 percent if you round up just a little.
Last year, the figure was 93.6 percent in January, hit 95.5 percent in July, then held at 95 percent in November and December.
I was feeling pretty good about my reply.
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To paraphrase H.L. Mencken, for every question there is an answer that is clear, simple and wrong.
The problem isn’t the percentage, I learned – it’s the “on average.”
“I almost hate to talk about it in general terms,” said Maren Brisson-Kuester, president of CMLS and the Charlotte Regional Realtor Association. “It’s just so specific to neighborhoods, and even to streets.”
The statistics don’t lie, she said, but they can be misleading.
Easy to see that both buyers and sellers have an interest in the matter. Buyers want to know what a reasonable offer might be, and sellers want to know much they might expect to come down from their asking price.
But there’s no one-size-fits-all answer.
Just as you can drown in a stream that averages 6 inches deep, to paraphrase another adage, you can miss opportunity if you assume a ratio of 95 percent in your situation, whether you’re a buyer or seller.
Buyers won’t get the homes of their dreams in some neighborhoods if they offer 95 percent of listing price, said Brisson-Kuester, who’s with CottinghamChalkHayes. “In Myers Park, it’s almost 100 percent right now. In my neighborhood, Quail Hollow Estates, it’s 97 percent.”
That 94.7 percent figure from the recent report is the average for the entire MLS. But the averages for Charlotte and Mecklenburg County are above 96 percent – and the Lake Wylie market is still higher.
The same report shows other areas below the average for the regional MLS. Go to www.carolinahome.com and click on Market Data for the full report.
So, why is that ratio of closing price to listing price included in the sales data?
Some who use the data – relocation companies, for instance – want to see the figure. But mostly, Brisson-Kuester said, it’s another of the broad measures of market activity. Like average days on the market, and the months’ supply of homes on the market, it helps fill in the picture of the balance between supply and demand.
When the market was struggling to recover from the downturn, the ratio was well below 90 percent. My answer would have been way off the mark.
As it pushes past 95 percent and closer to 100 percent? “It shows you have a strict sellers market,” Brisson-Kuester said. “The buyer has no leverage.”
Next time I get that question I think I’ll just answer, “It depends.”
Allen Norwood: firstname.lastname@example.org