What Real Estate Prices Mean Anything

There are many factors that go into selling or buying when it comes to real estate. Some of the factors are dependent on understanding the game. This includes pricing. Specifically, there is more than on price for a home, neighborhood and city. The trick is to figure out what they mean.

Different prices? How could there be different prices on a home? That makes no sense! Well, remember we are talking about a function of finance, which is rarely a straightforward, logical concept.

When it comes to the real estate market, there are really two prices for every home. The first is called the listing price. The second is the known as the sales price. They are almost always different, and only one really matters. Let's take a closer look.

The listing price is like a political opinion. Everyone has one and it is usually based on some non-factual basis. In real estate, this is known as the wish price. A person selling a home assigns a price to it when they list it online, in the multiple listing service and so on. This price reflects what the homeowner wishes to get for the house based pretty much on their sole desire.

The sales price is, of course, a different animal. As the name suggests, the price is based on a more factual set of information. It is not the amount the home in question sold for. Since it is still on the market, that hasn't happened yet. Instead, it the price that comparable homes in the area have sold for. This figure represents the realistic, real time figure that the home in question can sell for given all the circumstances then present.

So, what price figure of the two means anything to you as a buyer or seller? The answer should be pretty obvious. It is the sales price. Whether you are buying or selling this is the figure you want to research. It tells you the real range of prices the neighborhood will support. You can then price your home or compare list prices to it accordingly. Stay close the sales price figure and you should avoid getting involved in a bad deal.

Raynor James writes about selling a house yourself for FSBOAmerica.org where you can post free FSBO property listings for 1 month.