Price is often the ultimate factor home-buyers use to decide what house they should (or shouldn’t) buy. But determining the listing price of a home isn’t an exact science, and it’s subject to change.
In this post, we’ll help you understand the difference between listing and selling prices, and share our tips for how to set your offer price.
What is a listing (or asking) price on a home?
The listing (or asking) price is generally a strategic decision made between the real estate agent and the seller. The seller’s real estate agent discusses recent “comparable sales” with the sellers, taking into consideration such things as age of the house, location, lot size, square footage of the home, updates/remodeling, schools and other current other homes on the market. This information guides the price range recommended by the real estate agent. Other factors taken into consideration are the seller’s timeline and the seller’s personal objectives. Sometimes a home might be listed under the market rate to drum up interest. Other times, a seller might overvalue their home, and need to see what the market will actually bear. The ultimate listing price decision is made by the sellers.
What is a selling price on a home?
The selling price is the price that the home ultimately sells for. It is the price the buyer pays for the house. The asking price and the selling price can be different. If a buyer purchases a home for the asking price, then the asking price and the selling price are the same. A buyer might negotiate a lower price in which case the selling price would be less than the asking price. Or conversely, if the buyer ends up paying more than the asking price (typically due to competitive multiple offers) then the selling price is more than the asking price. Selling prices then become those comparable sales, to inform other listing prices.
How do you know what to offer?
Knowing what to offer on a home can be tricky. Usually, it’s something you and your real estate agent discuss, weighing the asking price, your objectives, and the competition. Some buyers are tempted to go in low to negotiate, but they could risk insulting the sellers and losing the house altogether. Others feel comfortable offering the asking price, but include ample contingencies in case there are repairs or other issues that arise. Still others, prefer to come in strong — over the asking price — but require a quick decision to avoid a bidding war. Ultimately, buyers need to determine what the house is worth to them, while also keeping in mind how much financing they can get. It can be a sticky situation if the offer price and the appraisal value don’t match up.
And there you have it — what the listing price really tells you and how to think about making an offer. If you’re ready to get pre-approved, you can apply completely online now. It only takes about 3 minutes to see your personalized rates. Or chat with a licensed Loan Specialist.