The list price. What does it mean?

Much has been said about the list price of homes. Some call it misleading, others unclear. Because what should you offer based on the list price?

Ultimately, everyone will continue to have a different opinion on this. From the buyer's perspective, it is of course best if the seller simply states what they want for the property. That way, they won't pay too much. But from the seller's perspective, they may pay too little. And the sellers are the ones who decide.

In the Netherlands, it is customary to set a list price. The buyer can then make an offer below the list price, offer the list price, or even make an offer above the list price. In a free market, it is then up to the negotiators to determine the final sale price.

At the time of sale, the sales agent determines the list price together with the sellers. The sales agent looks at comparable homes in the street and/or neighborhood and will include these in their final recommendation. In a heated market, it is quite common in the Netherlands to set the list price below the value of the home. If you don't do this, you run the risk of potential buyers labeling the home as too expensive before they have even visited it. And fewer viewings can have a selling impact on the selling price. Although, the seller can also hope for a stroke of luck and deliberately set the asking price too high, in the hope that someone will still outbid them. Fortunately, this does not happen very often. So it is a game in which the line can be thin for the seller. In a normal market, we see that the list price is slightly higher. Sometimes even above the expected selling price.

Development of the list price

One criticism is that changes in list prices are not transparent. This is partly true. Because, voilà, here is a website that provides insight into the latest price changes. And Funda often also indicates what the previous asking price was.

But it is true that sellers and real estate agents are not eager to spontaneously share the history of the list price with prospects. There is a fear that buyers will then think that the property is unsellable, which is not good for the selling price. And this is by no means always the case.

Why lowering the list price?

We rarely see list prices increase, but list prices may decrease for the following reasons:

1) The sellers initially wanted to try to get more out of the property by setting a higher list price. However, this resulted in too few viewings. The fewer viewings, the less chance of finding the right buyer. It is therefore not always advisable to bid (significantly) above the list price for this type of property.

2) The selling agent made an error in their assessment and overvalued the property. This can be remedied by lowering the price, which will attract the necessary viewings. It has often been the case that there were almost no interested parties, but that a reduction of € 25,000,- in the list price suddenly attracted a huge number of people and the property was then sold within a week.

3) The property was listed for sale during a period when there were few buyers. For example, due to holidays or fierce competition at that particular time. Sellers become insecure or want to bring it back into the spotlight so that it appears at the top of Funda again.

4) The market changes, for example due to rising mortgage interest rates. Price adjustments are a consequence of this.

5) The property has particular disadvantages, causing many buyers to hesitate. This makes a price adjustment necessary.

This means that when prices have changed, it is not always worthwhile to bid below the list price, whereas this was certainly the case before the price change.

Conclusion

The list price is intended to achieve the best possible end result for the seller. That makes sense. In an overheated market, this may seem disadvantageous to the buyer. Be aware that the list price is not the same as the value of the property.

Transparency about list price changes can also have major disadvantages and unnecessarily blow away buyers. I consider this a sensitive subject that should be approached with responsibility. There can be many reasons for list price reductions.

But what is the best indicator to know whether you can underbid or overbid? In our opinion, it is not the list price. There is also no such thing as an average house that sells for exactly 10% above the list price. You are welcome to attend a Warming-up session or a bidding strategy session. Here, we can explain everything in detail, so you can be fully prepared. Even for the home you currently have in mind! If you already subscriped for 'your personal coach', then you're lucky, it's included.