What is the difference between list and sales prices?

Generally in the real estate business those wishing to sell or purchase a property seek the services and advice of a real estate agent, broker or attorney. Whether you choose to solicit the services of any of these people is entirely your choice, and there are positives and negatives to each one of them. However one of main benefits to having the option of discussing the sale or purchase of a property to an expert in the field is that they can define various real estate terms, which you may not be familiar with.

Two real estate terms that normally confuse prospective sellers and buyers alike are sale price and list price. Whilst in effect they may be the same and generate the same amount of cash from a sale, the two do not have the same meaning.

The list price really is what it sounds like; the price that the house is listed for on the housing market i.e. the price that the house is advertised for sale for. Setting the right price is essential for a fast and fair sale and you should make certain that you come to the right number for the list price.

There are a few ways to choose the right value of your home, each one making sure that it fits in with the market place and other houses that are for sale. To work out the market value of your house you can look at similar house to yours that are on the market and also have your realtor prepare a thorough market study of the current housing market, called a comparative market analysis, to place how your house relates to current market trends and conditions.

In addition to the comparative market analysis you could have an appraisal carried out on your property. An appraisal can provide information for the seller that weighs up specific criteria including proximity to desirable schools, condition of the home and recent sales prices of similar properties, to arrive at a value for the list price.

The sale price, should in theory, be the same as the list price, but in reality it is often not. Because of the complex negotiation process that happens in real estate sales the offer that is usually received by a seller, is sometimes less, or more than the list price. If the offer is more it maybe the result of a bidding war amongst buyers, if on the other hand the offer is less than the list price it maybe due to many things such as the condition of the house and the repairs needed on it, the market is flat or another reason.

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