Take a look at some interestinG facts when looking at homes

Key takeaways

• Nationally, listings with the phrase “priced to sell” or something similar in the description come with an average discount of 8.5%, or just under $38,000 off the median-priced home.

• The discount ranges from 23.1% in Little Rock, AR, to just 3.2% in Orlando, FL, across the 38 markets where there is a statistically meaningful discount.

• The share of listings with “priced to sell” in the description ranges from just 1.9% on Long Island, NY, to 6.7% in Sarasota, FL.

• Metros with a higher share of “priced to sell” homes on the market tend to have smaller discounts compared wit metros with a lower share, likely reflecting the need of sellers to offer a discount when other “priced to sell” homes are rare. 

Nationally, value phrases are worth an 8.5% discount

Homebuyers wanting to spend less on a home this fall have more than just falling mortgage rates to look forward to. That’s because we’ve found that 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.

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 than similar homes with similar configurations in similar neighborhoods. What’s more, we’ve found substantial regional variation in the discount associated with such phrases as well as the density of listings with them, and that much of this variation can be explained by the share of listings with such listing terms. This suggests that buyers in markets with few listings that are “priced to sell” might be more sensitive to the characteristics that are associated with a lower than usual listing price, such as home condition, than buyers in markets where such listings are more common. 

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 all the single-family homes listed for sale on Realtor.com in the U.S. on Aug. 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 footage, 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 metros. For demonstrative purposes, we use the median listing price from Aug. 10, 2024, to show, on average, the discount in dollars on the median-priced home.