Sale-to-list price ratio is the sale price divided by the list price, expressed as a percent. If it is less than 100%, the home sold for less than list price; 100% the home sold for list price; and above 100% for more than list price.
Here is an example:
If a seller is asking $400,000 and a buyer pays $385,000, than the sale-to-list price ratio is:
$385,000 / $400,000 = 0.9625 x 100 = 96.25%
96.25% is less than 100% so the home sold for less than list price.
Looking at one house’s S-to-L price ratio isn’t that helpful. But it can be used on a neighborhood level as well.
This is Dupont’s (specifically 20009 zip code) median sale to list price ratio:
As you can see, it has been 100% every month for the last six months. That means buyers purchase homes on average for their list price.
And here is Silver Spring’s (20901) median sale to list price ratio:
It was 99% in November, 98.9% in January, 99.5% in February, and 100% on December, March, and April.
Why do you want to know this number?
The sale-to-list price ratio can help you understand trends in neighborhoods and how much negotiating power you may have. For instance, in the above example of Dupont, the ratio is 100%. On average, as a buyer, you will need to pay the asking price. (Obviously there are a lot of factors that you need to consider. This example is intended to help you understand how to read this ratio.) And if we look at Silver Spring, it is much the same. Buyers didn’t pay less than 98.9% in the last 6 months. For a $400,000 house, that is $395,600. In both neighborhoods, you can readily see why lowball offers won’t be successful.
It further helps you plan your offer and negotiation strategy in regard to asking for seller credits. Typically, buyers closing costs are 2-5% of the purchase price. If you ask the seller to pay your closing costs and they are say 3%, you may be making your offer less competitive, even at asking price. You may need to offer above asking price in order to also ask for seller credits.
