Every homeowner, before selling his home, should know how much homes
have depreciated in this market area; and in his neighborhood especially.
In today’s market, the price that is listed in the newspaper
may not be telling you the whole story.
On the “Get
Market Smart” page,
you will notice I have included the “original list price” of
recently sold homes along with the “last list price” and
the “sold price.” This is an important piece of information
because it shows you the home’s entire pricing history. It
also is important to consider the “seller subsidy column.” Along
with significant price reductions, many sellers are offering to pay
buyers’ closing costs, home fixes and other subsidies to make
their home more saleable. These subsidies must also be considered
in the net price.
Take for example, a home that went up for sale on a popular Bethesda
Street recently. It came on the market with a list price of $1.6
million. After many price reductions, the list price went down to
$1,355,000. When it finally sold, the contract price was $1,300,000
with a $20,000 subsidy. Net price of this home? $1,280,000.
Would it be accurate to report that this home sold for 96% of its
List price? Yes and no. A more accurate statement would be that it
sold for 96% of its last list price. The untold story is the difference
between the original list price of $1,600,000 and the sale price
of $1,280,000; which is really 80% of the original list price.
If similar homes sold for $1,600,000 in 2007 then you can conclude
that the home values have dropped 20% from 2007 to 2008.
When many of the media organizations report on price and value fluctuations
they use the last list price of a home and compare the difference
between that price and the sale price to determine market trends.
You will often hear agents say they sell their listings for 98%
of the list price. That’s probably true, but which list price?
It is a critical question and one that should be answered before
putting your home on the market.
When thinking about buying or selling a home, working with an agent
will ensure that you get the whole story on home prices in Kenwood
Park. While prices are set by homeowners and agents, value is ultimately
determined by buyers.
- Jane Fairweather
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