This morning I met up with home inspector Tom Corbett and went out in search of shoddy construction on the North Side. After we were finished, but before we went back to his office for cups of coffee, I asked Tom to reflect on some of the trends he noticed among his clients and the properties he inspected in 2010, and to give some advice to people who are contemplating a purchase in 2011, especially those who are interested in buying foreclosures or short sale properties.
I found it interesting that the home inspector is saying on average he is seeing a 30% price drop between the asking price and what buyers are paying. I dug into the data available in the MLS; for Single Family homes in the City of Chicago, the Sales Price to List Price ratio has been 94% with over 8,000 closed transactions in 2010 and for condos this ratio has been 97% with over 10,000 transactions in the same time period.
While I suspect there is an anomaly here or there, most buyers are not getting 30% discount from the seller’s asking price.
The MLS data that shows Sales Price to List Price data only shows the “last actual list price” prior to the final sales price (99% sure). So, the original list price when the home came to market could have been much much higher. This also does not include homes that have listed but then taken off the market for 3 months “wiping out” the visable market time to consumers. My guess is the actual ratio is probably 10% on average.
Although my partner and I have sold 3 of our listings this year within 1%-3% of list price in less than a weeks time when priced very well and looking and really good (and with some rare amenitiy or another), that’s not usually the case in my anecdotal exerience for list price to sale ratio.
I’m sure the inspector has seen a 30% difference in some properties from list price to sale (so have I), but this cannot be applied to city wide averages nor do I think it’s the norm. There is no rule of thumb, it’s a crapshoot of who’s availble to buy when you are listed reasonably for what you own (unless you just are crazy overpriced and just don’t get what’s going on right now).
I consider the source, he’s an inspector NOT an agent nor appraiser… He should stick to inspecting and not try to make blanket valuations of the market.