by Kurt Wannebo
on Monday, June 25th, 2018 at 3:43pm.
Today I want to talk about one of the most important things that every seller should know if they're considering selling or hiring a real estate agent. In fact when I'm interviewing to list somebody's home and they're interviewing a couple different agents it's one of the first questions people will ask me. But other times I'd say 25-30% of the time people don't ask me this question or sometimes don't even know what it is.
So what is that one important thing that you should know if you're going to hire a real estate agent and sell your home? That is their career (the agent’s career) sales price to list price ratio. Now what is that? Let me break it down for you very simply; let's say an agent lists a property for $1,000,000, they put it on the market asking price is a million dollars but in the end of the day when it's all said and done, it closes escrow and it only sells for $950K. Listed at a million, sold for $950K, that would be 95% sales to list price ratio. It's like a grade like a percentage. Now let's say over the course of a couple of years the agent listed three properties, all for a million dollars. But one sold for $950K, one sold for $975K, and one sold for a million, when you average out all three of those then their career or track record of the three listings becomes a 97.5% sales to list price ratio.
Now why is this important, this might come into play based off of you interviewing two different agents, one agent might have a 97.5% and another has a 95%, now what does that mean? That means statistically, numerically speaking, based off of their track record, that this agent, typically out sells this one by at least 2.5%. Granted a few variables are consistent such as the time frame and sometimes the amount of units that they've sold or not. But it's one thing that consumers or sellers will always ask me; what is your sale to list price ratio? And they'll look at these numbers especially if they're weighing out different agents and their different commission's that they charge. They want to go for somebody who can sell it for the most and possibly get good commissions.
Now there's another way of looking at this as well, and that is this: the MLS that we operate and use off of now based off of the computers that's been around since 1997. Every sale that's happened on the MLS has been tracked and when you take every sale from 1997 to the day that I filmed this, the average for all the agents and all the properties sold, the average sales to list price was 96.68%. Now you'd say well that's pretty decent. A couple things to take into account about that, sometimes the market slows down and that average will start to drop, likewise when the markets hot and things are going crazy then sometimes that average will start to rise. So this average is really the consistency from that year until today 2018, almost now twenty years that we're looking at here. So again, it does fluctuate, last year obviously it was a pretty good year so the average was a little bit higher if you just take into account that year was at 98.16%.
Again, this tool can be used because you want to weigh out is the agent that you're hiring based off of their sales to list price ratio, are they even keeping up with what all of the other agents have been doing? So, in this case if you have an agent who has 95% sales to list price ratio, but the market history of all agents and everything that sold is running it over a little over 96%, well that means that the agent can't even keep up with what everyone else is doing in the market. And they actually might be selling properties less than what the market is doing and what all the other agents are doing. Likewise, if you have somebody at 97.5%, they're beating all of the other agents and the market out there by almost 1%. You can also ask an agent for their sales to list price ratio just for last year and see. Did they track along with all of the other agents in the business or did they do better? You would think you, don't all agents do the same thing and don't all houses sell for the same price irrespective of the agent? I will tell you this; there are plenty of agents out there who are running in the low 90% or even 80% and can't even keep up with the entire market of San Diego and are underperforming and selling properties less than what all the other agents are doing. Likewise there is a handful, not all but a handful of agents who actually beat the market and the entire MLS each and every time, sometimes by 1%, 2% or 3%. These are things that you should take into consideration.
For those sellers out there who know what this is and ask me it, I'm always happy because I'm glad that they understand this, but for those of you who don't know, it's one of the most important questions that you want to take into consideration. Next thing people will ask me is, Kurt what is your career sales to list price ratio? What is your sale to list price ratio for 2017? Well first, I always give that to people. I provide it in verifiable writing. This is something that any agent can pull directly from the MLS and should be presented to you right at the table especially if that's important to you. Now if you're interested in hearing what my sales to list price ratio, I'm more than happy to give that to you. Just give me a call, ask me, or shoot me an email and I'll just email you my statistics so that you can see where things lie. But in the meantime I wanted you to make sure you understood this important information.
Thank you so much, for watching have a great day!