In the previous post in this series we looked at way to use the Number of Real Buyers measure. In this post we'll be looking at the List-to-Sales Price Ratio.
The List-to-Sales Price Differential is a measure of the difference between the initial list price and the final sale price of a property (or the average difference among a group of properties). This is often expressed as a percentage, and another way to think about this measure is as percentage discounted. As we discussed in Part 1 of this series, you'll want to calculate this for each price segment you define in your market.
Here's a sample chart for one segment of an imaginary market:
The List-to-Sales Price ratio is trending down. Discounts are increasing in this market segment, and prices are likely slipping. Think about how you can use this information. Are other price segments of this market following the same trend? Is this segment following the overall market trend or running counter to it? Do others in the marketplace perceive this? What factors are likely to alter this trend? Are they likely?
How will this change your strategy for this market segment? Would you take a slightly overpriced listing in a market segment showing this trend? How would you advise your buyers in these market conditions?
Next: Listed vs. Sold or the odds of selling a property.
