What Do You Need to Know about Sales Price to List Price Ratio?

by Mike Yeo on February 18, 2011

Sales to List Price ratios indicate the power of negotiation for a specific area. It also an indication of the strength of a current market condition for the area.

It is fair to assume that only correctly priced homes SELL and when they SELL, they fetch close to Listing price. Days on Market is an indicator on how close to List Price the Sellers will receive. The shorter days on market, the closer. Here in the Frisco, Plano, North Dallas areas, we could say that listings 45 days or less is considered “relatively” fresh on the market and Sellers could expect to get (in general) about 98% or better.

Now, this is based on the ASSUMPTION that the house was correctly priced to begin with. We do not take into consideration when Sellers pad their initial asking price with “negotiation room”. In the real estate world, negotiation room makes the listing overpriced.

How Does This Affect You as a Buyer?

If you are interested in purchasing a home that is just listed on the market (30 days or less), you could almost assume that you would pay close to list price, assuming that your Realtor(R) said it is priced correctly. No matter how “low” your initial offer price is, it is safe to assume you will almost always end up close to an average sales to list price ratio.

Often times, Buyers ask “How low will the Seller go?” Depending on the days on market, the Sales to List price ratio is a good indication of what a typical Seller may take.

How Does This Affect You as a Seller?

It is fair to assume that you would get close to asking price if you receive a contract in 30 days or less in this market area. Pricing is critical to your success. While the numbers look promising (98% or better), this statistics only apply to homes that SOLD, and by that, it also meant correctly priced homes. Many more homes stay on the market for over 180 days and beyond.

All this said and done, each transaction is unique. Each party to the transaction is unique and more importantly, even with the same individual, circumstances may change. Hence, what the buyer or seller may give or take are also different at different points in their lives. Averages and statistics are just what they are – indicators.

Different areas and different neighborhoods have their average and expected sales to list price ratios. Contact me if you want to find out what is the average in your neighborhood.

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Loreena Yeo
Frisco TX Realtor® / Broker of 3:16 team REALTY
(214) 783-2210

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Copyright © 2010 by Loreena Yeo (3:16 team REALTY)
Originally Posted on What Do You Need to Know about Sales Price to List Price Ratio?

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