Terms Like “Priced to Sell” Come With an Average Discount of Just Under $38,000 Nationally
SANTA CLARA, Calif., Sept. 25, 2024 /PRNewswire/ — Homebuyers who are looking for a way to save money while looking for a home, might want to pay attention to key phrases used in listings. According to a new report from Realtor.com® released today, nationally, listings with the phrase “Priced to Sell” or similar in the listing description come with an average discount of just under $38,000 off the median priced home.
“We have all seen listings with terms like under valued, priced to sell and bargain, and we wanted to find out if those terms actually came with a price reduction,” said Ralph McLaughlin, senior economist, Realtor.com®. “We found there is a relationship between key value phrases and listing prices. For a keen eyed buyer who is willing to spend a little time looking at listings, targeting these key phrases might be a great place to start.”
Certain “value” based words used in listing descriptions are correlated with lower listing prices, and can be used to help homebuyers find true bargain properties during their online home search. At the national level, phrases such as “priced to sell,” “under valued,” “under priced,” and “bargain” are associated with listing prices that are 8.5% lower on average than similar homes with similar configurations in similar neighborhoods.
However, this varies substantially across metros, both the discount associated with such phrases as well as the density of listings with them. The average discount ranges from 23.1% in Little Rock, Ark., to just 3.2% in Orlando, Fla., across the 38 markets where there is a statistically meaningful discount. The share of listings with “priced to sell” in the listing description ranges from just 1.9% in Long Island, N.Y., to 6.7% in Sarasota, Fla.
“Much of this variation can be explained by the share of listings with such listing terms, suggesting that buyers in markets with few listings that are “priced to sell” may be more sensitive to the characteristics that are associated with a lower than the usual listing price–such as home condition–than buyers in markets where such listings are more common,” said McLaughlin.
Discounts Largest In South and Midwest
Homebuyers in Southern and Midwestern markets can expect the largest discounts on properties listed with “priced to sell” in their listing description. Little Rock, Ark.; St. Louis, Mo.; and Charleston, S.C., lead the pack, where, on average, bargain properties come with a 23.0%, 18.7%, and 15.9% discount, respectively.
10 Metros with Largest Discount on “Priced to Sell” Homes
Market
Average
Discount
Median Listing
Price
Discount on
Median Listing
% of Listings
“Priced to Sell”
Little Rock-North Little Rock-Conway, AR
-23.0 %
$249,900
$57,494.00
2.6 %
St. Louis, MO-IL
-18.7 %
$264,900
$49,476.00
2.7 %
Charleston-North Charleston, SC
-15.9 %
$499,999
$79,558.00
3.9 %
Memphis, TN-MS-AR
-14.5 %
$299,000
$43,262.00
3.0 %
Lake County-Kenosha County, IL-WI
-12.6 %
$399,900
$50,464.00
2.8 %
Nassau County-Suffolk County, NY
-12.5 %
$759,000
$94,662.00
1.9 %
Cambridge-Newton-Framingham, MA
-11.5 %
$779,000
$89,851.00
2.1 %
Tulsa, OK
-11.4 %
$287,500
$32,801.00
3.0 %
El Paso, TX
-11.2 %
$279,000
$31,295.00
2.8 %
Wichita, KS
-10.9 %
$262,000
$28,655.00
3.0 %
On the other hand, markets with the smallest discounts are almost exclusively in Florida and Western markets. Orlando, Fla.; Seattle; and Salt Lake City fall to the bottom of the list, where bargain properties will get you just a 3.2%, 3.7%, and 3.8% average discount, respectively.
10 Metros With Smallest Discount On “Priced To Sell” Homes
Market
Average Discount
Median Listing Price
Discount on Median Listing
% of Listings “Priced to Sell”
Orlando-Kissimmee-Sanford, FL
-3.2 %
$424,900
$13,497.00
4.8 %
Seattle-Bellevue-Everett, WA
-3.7 %
$800,000
$29,804.00
2.8 %
Salt Lake City, UT
-3.8 %
$565,000
$21,458.00
3.7 %
Austin-Round Rock, TX
-4.0 %
$499,000
$20,200.00
4.6 %
Denver-Aurora-Lakewood, CO
-4.3 %
$609,800
$26,125.00
4.6 %
Los Angeles-Long Beach-Glendale, CA
-4.4 %
$955,000
$42,375.00
4.1 %
North Port-Sarasota-Bradenton, FL
-4.4 %
$489,000
$21,750.00
6.7 %
Washington-Arlington-Alexandria, DC-VA-MD-WV
-5.2 %
$555,000
$28,645.00
4.8 %
Minneapolis-St. Paul-Bloomington, MN-WI
-5.5 %
$394,900
$21,856.00
2.4 %
San Diego-Carlsbad, CA
-5.8 %
$949,995
$54,969.00
3.6 %
Methodology
To determine whether for-sale listings being described as “priced to sell” are actually discounted, we tested whether there is an effect on listing prices with this and similar phrases using a hedonic pricing model. First, we looked at the all single-family homes listed for sale on Realtor.com in the U.S. on August 10, 2024 and identified which ones were described with the words “priced to sell,” “bargain,” “under valued,” “fixer upper,” “contractor special,” “handyman special,” and “under priced.”
We then estimated a hedonic model to determine the effect of the bargain term on the home’s listing price while controlling for the number of bedrooms, number of bathrooms, square feet, lot size, age, and zip code of each property. This allowed us to estimate how much of a discount properties with such terms were listed for, on average, than similar properties within the same metro without a bargain term. We used a 5% level for statistical significance for interpreting the listing term coefficient.
Only metros where the listing term coefficient was significant were considered true “priced to sell” markets. Among the 100 largest U.S. metros that we examined, just 38 made the cut. We then calculated the average listing price discount for each of these 38 metros. For demonstrative purposes, we use the median listing price from August 10, 2024 to show, on average, the discount in dollars on the median priced home.
About Realtor.com®
Realtor.com® is an open real estate marketplace built for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today’s on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
Media Contact: Mallory Micetich, [email protected]
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SOURCE Realtor.com
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