What does list price means?
The list price is the price at which a house is being sold for set by the seller of the house together with the seller’s agent. This price can change due to the demand for the house. For example, if there are not enough people who are interested in the house, the seller can reduce the list price.
There is no exact number of times the list prices can be changed. However, if the seller has been reducing price many times, it may be an indication of a motivated seller or the list price started much higher than the fair market value of the house.
How to calculate the list price?
When a house is on the market, always know that its list price was chosen by accident. The seller’s agent will work with the seller to come up with the listing price. Many methods will be used when estimating the price of the property.
The following are important factors that will that are used to estimate prices of properties.
1. Comparables
The seller’s agent will compare the house with similar houses that were recently sold in the same area to estimate the value of the house. These houses are known as comparables. The house will most likely have the same value as its comparables.
2. Location
The location of the house will determine its value. If the house is located in Class A and Class B locations, it will have more value compared to other locations. These homes will be close to schools, amenities, have good transportations, hospitals, and other public infrastructure.
3. The condition of the house
The condition of the house will play an important role when estimating its value. Abandoned houses where everything is falling apart will have low list prices compared to those that have been taken care of.
4. Updates in the house
When a house is updated, the buyer does not spend extra money for the same service. Of course, there are buyers who do not like designs picked by previous homeowners. In general, if a house is updated, it will have more value than a house that needs a lot of updates.
Why does the list price matter?
The list price will tell you what the seller is hoping to get from the house. As a buyer, you can make an offer based on that price and how you understand the market, in general.
The list price can also be used to know how motivated a seller of the house is. For example, if a seller has not changed the price for a long time, it will indicate that the seller may not be willing to take an offer that is much lower than the list price. Sometimes sellers indicate that the list price is not negotiable.
At the same time, if the seller is constantly reducing the price, it will mean that the seller is motivated, and therefore, willing to negotiate.
