Listing Price vs. Selling Price: Demystifying the Home Sale Numbers

Written by Wena Roeloffze, REALTOR and Lifestyle Expert. Owner of Realty Club 74, brokered by Coldwell Banker Realty.

Decoding Listing Price vs. Selling Price: What Home Sellers Need to Know

When you're preparing to sell your home, understanding the distinction between the listing price and the eventual selling price is crucial. These two figures might not always align, and here's why:

1. Listing Price: Setting the Stage

The listing price is the amount at which your home is advertised for sale. It's determined based on various factors, including market trends, comparable property prices, your home's condition, and location. It's essentially the initial asking price presented to potential buyers.

2. Factors Influencing the Listing Price

- Market Conditions: Fluctuations in the real estate market can significantly impact the listing price. A seller's market, with high demand and low inventory, might lead to a higher listing price. We have seen some crazy markets in the last 3 years, and predominantly it was a seller’s market with continuing higher prices in each market. There was a point when an obscene amount of multiple offers streamed in for every property on the market. It was nuts! But the pendulum eventually do swing to the opposite side and pricing has to be adjusted to still enjoy a quick and seamless close.

- Comparable Sales (Comps): As a REALTOR, we analyze recent sales of similar properties in your area (comps) to determine a competitive listing price. The reason for this is very simple. Your house needs to sell 3 times: with an accepted offer, make it through the inspection contingency and finally the appraisal contingency the lender uses. Appraisers use the same comps to deliver a report to the lender. With this knowledge, the price will adjust to include the amount of amenities you have, the remodeling you have done or the lack of maintenance.

- Home's Condition: Upgrades, renovations, or the overall condition of your home can influence the listing price. A well-maintained property might warrant a higher asking price, while a neglected property (regardless of the location) might warrant a lower asking price.

3. Selling Price: The Final Tally

The selling price, on the other hand, is the amount for which your home is ultimately sold. This figure is negotiated during the sale process and might not always match the initial listing price.

4. Factors Impacting the Selling Price

- Market Dynamics: Market conditions at the time of sale can affect the selling price. Changes in demand, supply, or economic factors can lead to a difference between the listing and selling prices. While inventory is still very low, the higher interest rates definitely influences listing prices. Buyers are far more concerned in keeping to their monthly budgets, rather than competing on price with other buyers in the market. While that dynamic is in play, there are fewer buyers competing, which makes negotiation on property prices in the favor of buyers. For sellers, there are no more competing offers to choose from and pricing strategies must be adjusted accordingly.

- Negotiation: Buyers often negotiate the price based on various factors like inspection results, appraisals, or repairs needed. This negotiation can lead to the selling price being higher or lower than the listing price. In my previous blog I spoke about the advantages of having a pre-listing home inspection to limit the negotiation from buyers. As your REALTOR, it is our devotion to advise you correctly on the current market expectations, conditions of your home and how best to prepare for all this.

5. Appraisals and Lender's Influence

An appraisal by a professional can also impact the selling price. Lenders require an appraisal to ensure the property's value aligns with the loan amount. If the appraisal comes in lower than the listing price, it might affect the final selling price. It is imperative to set a listing price that will convince all parties, including the appraiser, that the property is worth what the buyer has offered. As your real estate expert, we will advise you on the correct pricing strategy for your home to ace this contingency.

6. Realistic Expectations for Sellers

It's essential for sellers to have realistic expectations about the potential difference between the listing and selling prices. While aiming for a good sale price is natural, market dynamics and negotiations can influence the final outcome. In our detailed consultation we will calculate whether your desired outcome or profit will be achieved by the correct listing price strategy, explain the current market conditions and set the stage for a successful and stress-free home sale.

7. The Role of a Skilled Realtor

A knowledgeable real estate agent can guide you through this process. We help set the listing price strategically, navigate negotiations, and ensure you understand the factors affecting the selling price. This is a collaborative process where we guide you to achieve your real estate goals. Our expertise is to give you real-time facts about the market, how your home can be the obvious choice to potential buyers and how to structure your listing price to attract the largest amount of buyers. We are in the trust business and believe in total honesty and openness. At times we will be brutally honest when it comes to your expectations and we passionately believe in a transparent process. If you rather would want to work with real estate agents who tell you what you want to hear, we are not the partners you are looking for.

Final Thoughts

While the listing price represents the starting point of your home sale journey, the selling price signifies the culmination of negotiations and market dynamics. Understanding the differences between these figures is pivotal for sellers, ensuring informed decisions and realistic expectations throughout the selling process. Collaborating with a skilled real estate professional can help navigate these nuances, maximizing the chances of a successful sale. Curious about our processes and successful listings? Fill out the form below to ask a question, schedule a meeting or leave a comment for us.