A Griffith Listing

Real Estate Services by Jon Griffith

You are here: Home / Archives for percentage

Interpreting Statistics: Sold Price vs. Asking Price

by

Know what the statistics represent before making a decision.
Know what the statistics represent before making a decision.

Statistics help us know what happened so we might prepare for what could happen based on the patterns we’ve observed.  It is very easy to manipulate statistics to show results that will help us gain your trust and confidence.  One of the statistics that I’ve been looking at in the Valley is the percentage of sold price versus asking price.

When a home receives an offer, those of us who think statistically and mathematically will quickly determine what the percentage of the asking price the offer represents.  On a home that is listed for $300,000, if someone offers $285,000 they have submitted a 95% offer.  This information can be very useful for the buyer to determine what to offer the seller.  If the buyer were to look at this from the percentage angle as opposed to the dollar amount, and they were willing to put in a 90% offer, we’d know that their offer is going to be $270,000.  What the seller does at this point is up to the seller, but that’s not the point of this article.

With thousands of sales every month, it is becoming easier for us to compare your property to the rest of the market.  One of the comparisons we look at is the sold price to asking price, which helps our sellers understand what to expect when they receive an offer.  What has often been overlooked is the percentage result we obtain by determining the sold price versus the original asking price.  Most reports that we run are defaulted to show the list price at the time of sale, not the list price at the time the property was listed.

I conducted a simple comparison on 16 properties of a subdivision in the west valley that were all comparable properties.  In order to obtain enough results, I had to go back two years.  I compared the sold to list price of each property and then averaged the results.  What it showed was that on average, the properties that were selling in that neighborhood were selling for approximately 95.6% of their list price.

After calculating the percentage based on the original list price, which is the price for which the seller originally wanted to list their home,  the results showed that the sold price was actually  88.8% of the original list price.

Without conducting your own statistical analysis, it is difficult to understand what someone might be attempting to show you if they don’t disclose how they came up with their numbers.  On one hand, you could pitch to your buyer that it’s likely the seller will settle upon a price that is around 95% of the asking price.  Likewise, you could show a potential seller that their asking price is far too high and that they could expect on average to settle for 88% of their original asking price.

Make sure you know when you are presented with statistics what those statistics are actually measuring, and which statistics really matter to you.

How do Real Estate Agents Get Paid

by

…and who pays them?

Before I was a REALTOR, I was a consumer, and I bought a house. Fortunately for me, or maybe it wasn’t so fortunate, my REALTOR was my father. He also owned the house that I purchased. This worked both for and against me, but we won’t go into that now. The point is, I had no idea how REALTORS made a living prior to diving into the business myself, and you may also have questions about how we get money on our european wallets.

Real estate agents are 100% commission based jobs. That means, we don’t get a paycheck unless we do business. Makes sense. Open up shop, provide a service, get paid, or sit on the couch all day wondering what to do.

Real estate agents also work as sales agents under a real estate Broker. That broker typically collects a percentage of what we make to cover the costs of running the company. At Realty Executives, we pay a premium to use the name while we conduct business according to their standards and the standards of the Arizona Department of Real Estate and the National Association of Realtors.

If we don’t sell a home, we still pay our broker, mortgage, utilities, etc. So we’re always in a position where cash is flowing out, but not always in a position where cash is flowing in. We’re also in a business where we need to be available when most of the rest of the world is not. This means that we sometimes have to work on the holidays that you get to spend having fun. On the other hand, we have the freedom to “take a lunch” whenever we want.

What does having a Realtor cost the Buyer? Answer: Nothing. Zero. Zip. Nada.

When you meet me for the first time and express an interest in purchasing a home, I assess how serious you are about purchasing, and then I begin to spend money on you to help you find that home. Searching for a home with a REALTOR costs you only time. You will spend nothing out of pocket, but we will commit a large portion of our business day(s) and marketing budget to provide you with the most pleasant showings as we possibly can. We fill our tanks, fill your stomachs, and become your city tour guide for the duration of your search. If you purchase a home without using us after spending all that time, we don’t get paid, but we also don’t hold it against you, because you may not have known, which is why I’m writing about it. 🙂

When the seller hires a broker to sell their home, the broker charges them a commission to do so. When that broker lists the property on the MLS, they indicate how much of that commission will be paid to the agent who brings YOU (the buyer) to the table to purchase the home.

The buyer won’t have to open their wallets until an offer is accepted, at which point a series of events begin that justify why the selling broker is willing to pay us in most cases half of the agreed upon commission.

What does having a Realtor cost the Seller?

The seller is the one who has the highest expense. From fixing up their property to staging it, the seller will bear the majority burden of cost in selling a home.

When the seller strikes an employment agreement with the broker, they typically agree to a set commission of the final sales price of the home and they offer a portion of that to anyone who brings a buyer. When the property closes escrow, the funds owed the listing brokerage are distributed according to the agreement between the two brokerages and each real estate agent is paid accordingly.