Why 'Average Sale Price' Statistics are Misleading

One of the most common statistics used when gauging the strength of an area's existent estate market is the average sale terms of its homes, but looking into that figure more deeply uncovers just how misleading it can be.

When listing a home for sale, most real estate brokers set up a terms for the home based on market comps of the country — pickings into account what other houses sold for and how the home they are listing compares to those. That terms is a gross sale price, however, and doesn't reflect what the home proprietor actually have from the sale. The difference between the gross sale terms and the amount with which the marketer actually gets to walk away from shutting is affected by a number of factors.

Most people would be surprised to discover that home proprietors in hot U.S. existent estate markets like California, Florida or Las Vegas often have offers for their homes that actually transcend the request price. That is because in almost all other U.S. cities, statistics suggest that a real estate broker usually secures an average sales terms of lone 92 to 95% of the listing price. In addition, a number of other costs must be subtracted from that figure as well:

5 to 7% for real estate broker commission

3% toward the buyer's shutting costs (on average)

Realtor-recommended upgrades to do the house show better: new paint, carpet, minor landscaping, etc.

After all costs are figured in, the marketer often walks away with lone 75 to 85% of what the house "sold" for.

This should not reflect negatively on real estate brokers by any agency — their services are still very much in demand and are invaluable for many home proprietors — but the more than than people recognize the difference between what their home sells for and what they actually net, the more the number merchandising their home through "non-traditional" methods goes on to rise.

It's easy to happen two houses on the same street in any vicinity in the U.S. where the marketer who sold their house for a higher terms actually received less money at closing. If existent estate terms were discussed in terms of nett terms to the marketer rather than gross sales price, more than than home proprietors would discover that, for them, every other channels for merchandising their home are more profitable than going through a realtor.