What you see on CNBC on the crawler are the sales and, essentially, the Level I quotes – the lowest amount at which someone is willing to sell and the highest amount at which someone is willing to buy. (When these two meet, buyer and seller are matched electronically and a sale of stock takes place.)
Level II not only would show the current market price as defined by Level I, but also the full depth and breadth of the market as expressed by open orders entered into the system by a NASDAQ market maker.
On any given day, there were buyers and sellers looking at the realistic prices and trading either at those levels or in the same ballpark. And on any given day there would be orders for a stock like Apple, currently trading at $393 and change, such as someone looking to be 1,000 shares for $1 or someone looking to sell 1,000 shares at $1,000.
Going out on a limb, neither offer is likely to be executed today – neither the ludicrous low-ball purchase or the equally ludicrous high-ball sale.
Real estate’s MLS can be viewed as something similar to Level II quotes, at least on the seller side of the book. Various websites have attempted to create a buyer’s side of the book but it’s never gained any sort of traction (likely because any buyer who has a seller agree to what they have set forth almost certainly will either think they can purchase for even less or there’s just something wrong about the whole thing.)
If you were so inclined, you could take the active listings for a given size house in a given neighborhood and list them like you see in the Level II quote screen above. And what you would see is that the homes most likely to sell are those at the top, much like the people selling Apple stock within a percent or two of the current price.
As you get further away from the top, the less likely a sale is going to happen – and you don’t want to be the hopeless schlep trying to get $1,000 for a $300 stock or $300,000 for a $200,000 house.
Active listings can and should be used to find a price point to sell, however, they need to be used in the context of competition, not a baseline setting. Just because one idiot wants to sell Apple at $1,000 doesn’t mean you, as someone who legitimately wants to sell, should follow his lead.
Pending listings are helpful in determining what price attracted a buyer but they do nothing to tell you what price the seller and buyer actually agreed upon.
When trying to price a home, you as a seller have got to start with the sold listings – the last trade, using the stock analogy. You don’t have to match that last price but you need to start with the neighborhood averages as your baseline and then find a comfortable spot in the Active listings where you’re likely to attract a buyer.
That often is lower than what else is on the market; in these market conditions, it also can be higher if there is a dearth of competition. I proved this last summer when I listed and sold a house priced five figures above the last sale because it still was the best-priced home with a pool on the market in that area. And it took all of 10 days to do it.
There is so much information available to buyers and sellers these days … listings on this site and Realtor.Com, listings on Trulia and Zillow (some of which actually are for sale), Zestimates and the like. But not all of it is particularly helpful and much can be detrimental to those serious about buying or selling.
It may not take a rocket scientist to price a home to sell but it does take someone who understands how markets work and what prices you see really matter.