Sale-to-List Ratio: The Purchase Price Vs. Asking Price Meter

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In the intricate dance of buying and selling homes, the “sale to list ratio” might be considered the metronome that sets the beat.

In this post, we provide a clear explanation of what a sale-to-list ratio is, why it matters to both sellers and buyers, and how you can use this real estate meter as you make important decisions about selling your home.

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What is a sale-to-list ratio?

The sale-to-list ratio is a housing market metric that measures the final sale price of a home against its original listing price, expressed as a percentage. This ratio reveals how close (or far) the selling price was to the asking price, serving as a barometer for market dynamics.

A ratio above 100% typically indicates a seller’s market, where homes often sell for more than their listed prices. Conversely, a ratio below 100% suggests a buyer’s market, with homes selling for less than their listing prices.

In addition, the sale-to-list ratio can be used as a tool to gauge buyer and seller activity in your neighborhood so you can set realistic expectations for your own home sale. It can also be used to measure the performance of a real estate agent.

Let’s look at some real-life examples of sale-to-list ratios to see how this plays out in different scenarios.

Examples of sale-to-list ratios

The two scenarios below illustrate different outcomes in the sale-to-list ratio, providing a clearer understanding of how this market compass works.

  1. Example when a home sells for less than asking price:
  • Listing price of home: $400,000
  • Final sale price: $385,000 ($15,000 below asking price)
  • Calculate the ratio: $385,000 divided by $400,000 = 0.9625
  • Find the percentage: 0.9625 x 100 = 96.25%

This home sold for 96.25% of the seller’s original list price. This means the buyer or the buyer’s agent was able to leverage the selling price down in negotiations.

  1. Example when a home sells for more than asking price:
  • Listing price of home: $400,000
  • Final sale price: $415,000 ($15,000 above asking price)
  • Calculate the ratio: $415,000 divided by $400,000 = 1.0375
  • Find the percentage: 1.0375 x 100 = 103.75%

This home sold for 103.75% of the seller’s original list price. This means the seller or the seller’s agent was able to increase the selling price, perhaps due to having multiple offers or a bidding war.

This housing meter can have several different names:

  • Sale-to-list ratio
  • List-to-sale ratio
  • List-to-sell ratio

Why does the sale-to-list ratio matter in home sales?

Whether a home sells for more or less than its listed price, this ratio provides valuable insights for sellers and buyers alike. But as a seller, it’s perhaps the most important litmus test for selecting an effective real estate agent.

“If the agent doesn’t have a good list-to-sale ratio, you probably shouldn’t be working with them,” says Erin Wheelock, a top-performing New York real estate agent with 17 years of experience. “If the agent has a really good list-to-sale ratio, then you should listen to them because it means they’re helping their sellers accomplish their goals.”

Let’s explore why this ratio matters from both perspectives.

For home sellers

  • Pricing strategy: The sale-to-list ratio provides sellers with a realistic view of how their home compares to others in the market, helping to set a competitive and realistic asking price.
  • Market insight: A higher sale-to-list ratio indicates a seller’s market, suggesting the possibility of pricing the home more aggressively. Conversely, a lower ratio points to a buyer’s market, where more flexible pricing may be necessary.
  • Negotiation leverage: Understanding the typical sale-to-list ratio in your area can strengthen your negotiation position, allowing you to anticipate how much you might need to adjust from your listing price.
  • Selecting the best listing agent: For sellers, choosing an agent with a strong track record of achieving high sale-to-list ratios can mean securing the best possible sale price for your home, which translates to higher proceeds.

For home buyers

  • Budgeting and offers: For buyers, the sale-to-list ratio helps in assessing the market’s competitiveness and planning offers accordingly. Knowing the average ratio can guide buyers on whether to offer above, at, or below the asking price.
  • Market conditions: This ratio offers insight into the overall market condition, helping buyers understand the dynamics at play, such as whether they are entering a buyer’s or seller’s market.
  • Negotiation strategy: Buyers can use the sale-to-list ratio to formulate their negotiation strategy, potentially saving money by understanding the seller’s flexibility in pricing.
  • Selecting the best buyer’s agent: While sale-to-list ratios are typically used as a benchmark indicator by sellers seeking top-selling agents, a buyer’s agent with a favorable ratio is likely skilled at negotiating. They are more equipped to craft competitive offers that align with market realities.

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Why might a seller not receive their asking price?

Selling a home can be as much an art as a science, with various factors influencing the final sale price. Here are the top reasons sellers may receive less than their asking price:

  • Overpricing: Setting the price too high from the start can deter potential buyers, leading to a longer time on the market and eventually, a lower sale price.
  • Market conditions: In a buyer’s market, where supply exceeds demand, sellers may find themselves accepting lower offers to compete with an abundance of available properties.
  • Home condition: Homes that require significant repairs or lack modern updates may not fetch their asking price, as buyers factor in the costs of improvements they’ll need to make.
  • Poor marketing: Lackluster listing photos, inadequate property descriptions, or limited marketing efforts can reduce buyer interest and offers.
  • Negotiation skills: Sellers or their agents who are not adept at negotiation may end up conceding more to buyer demands, affecting the final sale price.
  • Economic factors: Broad economic issues, such as rising interest rates or economic downturns, can decrease buyer purchasing power and willingness to meet asking prices.

Why might a buyer pay more than the listing price?

In contrast, buyers may be willing to pay more than the listing price for several reasons, particularly in competitive markets:

  • Multiple offers: In a seller’s market, where demand outstrips supply, bidding wars can drive the sale price above the listing price as buyers compete for a limited number of homes.
  • Desirable location: Properties in highly sought-after neighborhoods or with unique attributes (e.g., waterfront, view) often receive offers above the asking price due to their perceived value and scarcity.
  • Emotional attachment: Buyers who have fallen in love with a property may be willing to pay a premium to secure it, especially if it meets all their needs and wants.
  • Market trends: In rapidly appreciating markets, buyers might offer more than the asking price to outbid others, anticipating that the home’s value will continue to increase.
  • Seller concessions: Buyers might propose a higher price in exchange for specific seller concessions, such as assistance with closing costs or a fast closing date.
  • Turnkey readiness: Homes that are move-in ready, requiring no additional work or repairs, can command higher prices, as buyers are willing to pay extra for convenience.

How do I find the sale-to-list ratio in my market?

Finding the sale-to-list ratio in your local real estate market is a key step in preparing for a home sale or purchase. This metric gives you insight into market trends and can help inform your strategy. Here is how you can determine the sale-to-list ratio in your area:

1. Online real estate platforms

One way to find the sale-to-list ratio in your local market is through online real estate platforms.

“If a seller wants to look at things on their own, then they can research the market and see if there are a lot of price reductions [low list-to-sale ratio] on local sales,” Wheelock explains.

Home-search apps and websites often publish market statistics, including sale-to-list ratios. These platforms can offer a broad view of how homes are selling in different communities.

For example, you can Google a phrase like “sale-to-list ratio Houston TX,” and the results will include a list of websites like Zillow and that regularly monitor sale-to-list ratios in most markets throughout the country. Below is an example of how this data might look on Zillow’s Market Overview page.

2. Ask an agent about local sale-to-list ratios

Another way to determine the sale-to-list ratio in your area is to consult with a real estate agent. Local agents have access to the most current and comprehensive market data. They can provide you with detailed reports on recent home sales, including sale-to-list ratios for comparable properties in your target area. HomeLight can connect you with a top agent in your city.

“Hire the right agent, and they will guide you through it,” Wheelock says. “One of the things that my team does, and I know some other teams do, is they actually track weekly home sales as well as what’s going into contract and what’s coming on the market. That allows us to really see the data this week, next week, and the week before to see trends.”

3. Real estate market reports

Look for published market analysis reports from reputable real estate firms or associations. These reports often include sale-to-list ratio data and provide context on what the numbers mean for buyers and sellers. For example, the National Association of Realtors (NAR) regularly publishes housing statistic reports. NAR also partners with Tableau data to maintain an interactive State Housing Statistics map that provides links to state association pages, many of which have area list-to-sale ratios.

Time your home sale for higher sale-to-list ratios

Just like the seasons change, so does the real estate market, with certain times of the year offering more favorable conditions for sellers. Selling during a peak season in your area can lead to higher demand, resulting in a better sale-to-list ratio. HomeLight’s Best Time to Sell Calculator analyzes local market trends and historical sales data to recommend the best and worst months to sell your home.

“Talk to an agent who has a good sale-to-list ratio. If you’re with the right agent, they should be tracking these seasonal numbers and be able to properly guide you as a seller,” Wheelock says.

How can I get a positive sale-to-list ratio with my home sale?

The key to securing a favorable sale-to-list ratio lies in leveraging the expertise of a top-rated real estate agent with a proven track record for selling homes at or above the asking price.

“It’s so important to make sure you’re partnering with the right person,” Wheelock says, adding that a seasoned agent will keep their finger on the pulse of the market. “Are we getting more supply in the market, or are we getting more demand in the market? That’s really what affects pricing.”

A skilled agent brings to the table:

  • A deep understanding of the local market
  • Pricing strategies that attract serious buyers
  • Marketing techniques that highlight your home’s best features
  • Negotiation skills that close deals efficiently
  • Expert guidance on timing your sale
  • Tips on staging your home to appeal to potential buyers
  • The know-how to set a competitive price that meets your financial goals

HomeLight can introduce you to the high-performing agents in your market who can make all the difference in turning your home sale into a success story. Start your journey with an agent who stands out for their exceptional list-to-sale ratio performance.

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