What does “sold to original list price ratio” mean in real estate?

What does “sold to original list price ratio” mean in real estate?

What does “sold to original list price ratio” mean in real estate?  Sold Price to Original List Price Ratio represents the ratios for the gross sales price to the original list price for individual listings.  

Example scenario to help illustrate:

Listing A: List Price = 100,000; Sold Price = 90,000; Ratio = 90%

Listing B: List Price = 200,000; Sold Price = 150,000; Ratio = 75%

Listing C: List Price = 1,000,000; Sold Price = 700,000; Ratio = 70%

The “sold to original list price ratio” is an indicator of pricing accuracy and market trends. The closer to 100% the better listing agents are doing at explaining market conditions to their sellers in order for them to choose the appropriate price, otherwise known as market value.  

On the other hand, if a seller is convinced his/her property is “worth more” than the professional Realtors data suggests the property can be overpriced which can cause the property to sit on the market. If the property does eventually sell, the sold to original list price ratio will clearly show the market value of the property and in some cases even lower than if it had been priced accurately at market value from the original list date.

Properties priced at or below market value will, in the right market conditions, generate a full price, 100% sold to original list price ratio, or just over original list price. 105% sold to original list price ratio for example.

Intentionally pricing a property below market value to create a bidding war is not a favorable way to market a property in my opinion. Buyers appreciate value when they see it playing unnecessary games to artificially increase a price will often backfire.

Let me also point out price takes into account location, condition and amenities. A potential $300K property that needs $50K in improvements to make it livable is not a $300K property.  If it’s a fixer-upper and your agent marketing it as move in ready, buyers will be disappointed and  walk away.  

How will I know if my property is priced correctly? You’ll have showings and before you know it a contract!

OH one more thought!

If you priced  the property correctly you’ll not only hit your target with price but with audience. Each price range draws it’s own buyer pool. Don’t miss them by pricing out of range with the property.

What does “sold to original list price ratio”mean in real estate?