Sellers & buyers – what you need to know about median sales prices

Median sales prices are quoted all the time.

They are used as proof that a market is improving or not.

There is just one problem.

That median sales price that is being quoted is probably not accurate.

What?

Why would news sources or the Chamber of Commerce, the local MLS or whoever, quote a median sales price that isn’t accurate?

Because the median sales price quoted typically fails to include how that median sales price was computed and it doesn’t include all sales.

Does that median sales price utilize data only from sales reported by the local MLS?

Are any of the following sales included in that quoted median sales price?

# 1 For sale by owner.

# 2 Estate or probate sales.

# 3 Bankruptcy sales.

# 4 Sales that aren’t “arms length,” such as sales between family members or sales where there was consideration in addition to the property.

# 5 Foreclosure sales.

# 6 Short sales.

# 7 Judicial sales.

# 8 Bulk sales.

Unless you know exactly which sales were and were not included in the median sales figure being quoted, you are operating with unreliable data.

Use Google to search for the median sales price in your city. If you will look far enough you will find several different figures being quoted and they will probably vary by a significant amount.

That is because they are including or excluding different types of sales.

The moral of the story is, don’t make assumptions or take action until you have the detailed information and insight that a veteran broker can provide.