You recently read here about formulating your offer based on the information included in a CMA (Comparative Market Analy-sis). You can fine-tune that offer by applying current market trends. Trends may vary by region, state, city, and even the neighborhood, so do your homework.
You and your agent can study a lot of available statistics – the CMA, local listings’ DOM (Days on Market), and list to sale price ratios. The CMA compares similar properties, while the DOM figure gives you an idea of whether you’re looking at a buyer’s market or a seller’s market (in which you’ll have more competition and less negotiating power). If possible, look at DOM for listings within a mile of the home you want to purchase – it’s that area-specific.
Let’s move on to the average “List Price to Sales Price Ratio” (LP:SP). Like it sounds, it’s simply a percentage based on how closely the final sales price corresponds to the price at which the home was listed. A house that sells for the asking price has an LP:SP ratio of 100 percent. So a house that lists for $175,000 but sells for $160,000 has an LP:SP of 91 percent. Look at the these ratios for the homes on the CMA that most closely match yours, and you’ll have a sound basis for what percentage of the list price to offer.
Elwynn Schwartz is the owner of Chattanooga Real Estate Consultants and may be reached at 423-894-3050.