Real estate

Hot real estate markets can create gaps between a home’s listing and the selling price

What’s the difference between selling price and selling price, and why are they often so different?

The listing price, also known as the asking price, refers to the amount for which a seller has put a property up for sale, and the selling price refers to the amount for which it is actually selling.

There is a lot of media attention these days on homes selling well above their listing or asking price. In a seller’s market, where market conditions favor sellers, it is not uncommon for multiple buyers to bid, with the final sale price sometimes far exceeding the asking price.

It is important to note that a seller has the right to set the asking price at the amount that they believe is the best strategy for selling their home. RECO does not regulate the decisions of sellers or buyers.

At one point, a common seller’s strategy was to set the asking price near or even slightly above the best estimate of the home’s value, and the final sale price would end up being very close to the price. demand.

However, in a booming housing market with low interest rates, more and more buyers find themselves competing fiercely for fewer properties and some sellers expect to profit. Keep in mind, however, that there is nothing forcing a seller to accept an offer. if they don’t reach their ideal price.

The listing price is one of the many marketing tools used to generate interest in a property. A seller may intentionally decide an asking price that appears low, high, or in line with market value.

In a competitive market, a seemingly low list price can be used to generate competing offers that may drive up the selling price. A seller may also decide to list their home for above market value and attempt to generate offers from willing buyers.

In both cases, the seller has the ultimate right to choose the offer that best meets his needs (price, closing date or other favorable conditions) or none.

All of this adds up to a complex market that presents challenges for both sellers and buyers.

This is why I recommend that you work closely with a real estate agent who is familiar with the local market to determine the best strategy, whether it is to sell or buy a home.

If you are a seller, an experienced agent can get detailed information on asking prices, selling prices, and other characteristics of recently sold homes in your neighborhood. They can then advise you on what you might expect to sell for and a strategy for getting there – or more.

A buyer’s agent also uses the same information to help the buyer decide on their buying strategy.

If you have a question for Joe about the home buying or selling process, please email [email protected]

Joe Richer is Registrar of the Ontario Real Estate Board (RECO). This column is for general information purposes only and is not intended as legal or professional advice on real estate transactions. Follow RECO on Twitter: @RECOhelps