According to the Garden State Multiple Listing System (GSMLS), in 2014, 84 properties in Tewksbury Township closed. On average, these homes sold at 93.7% of their final list price. The numbers regarding 2015 sales were strikingly different: 79 properties closed and the average sale price to list price ratio was 96% (in 2013, it was 88 sold properties and the ratio was 95.7%). We watch local sale to list price ratios as an indication of buyer tolerance for overpricing. In other words, if we assume that a buyer won’t buy a home for over its market value (of course, market value is nothing more than just the number where both the buyer agrees to buy and the seller agrees to sell), if we see this ratio at a lower number, it indicates that buyers are willing to make offers on houses even where there’s a large divergence between what the asking price is and market value. If the ratio is high — close, at, or over 100% — that shows that deals come together when homes are priced very close to their market value.
What this means if you’re a seller. In a market with a high sale price to list price ratio, a seller is advised to pay close attention to the interest in their home at their asking price because if there isn’t significant buyer interest at a particular asking price, it may be that the seller’s perception of the market value of their home is out of line with the perception of buyers in that market.
What this means if you’re a buyer. Buyers in a market with a high ratio should expect stiff competition from other buyers if they see a home priced close to market value and on houses priced above market value, buyers should be encouraged to make offers, despite the gap between asking price and what they think the market value of the home is, i.e., to wait for the seller to drop the price to closer to market value before making an offer could be a losing strategy because it might only mean waiting to make an offer in an environment of competition from other buyers.
Now what? If you would like an analysis of market trends more specific to your particular situation, let us know and we’d be happy to share our insights with you to give you an advantage in the market whether you’re buying or selling. Call us at 908-975-9856 or contact us through our website.