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Adobe Stock September 23, 2022 Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When you , naturally, you want to receive the highest possible price for it. If you’re a homebuyer, you’re looking to buy a home at the lowest possible price. Of course, the price point where both parties ultimately meet depends on market conditions and other factors. Buyers, sellers and real estate professionals can measure the difference between a home’s list price and what it actually sells for using what’s called the sale-to-list ratio. Understanding how this ratio works can help you identify negotiating trends, such as whether it’s a for the real estate in your area. Defining the sale-to-list ratio
As its name implies, the sale-to-list ratio (aka the sales-to-listing or list-to-sale ratio) measures the difference between the final purchase price and the original asking price of a property. You can determine the ratio by dividing the final sale price by the last list price and multiplying that number by 100 to express the ratio as a percentage. For example, let’s say a seller lists a house for $415,000 but ultimately sells the home for , the median price for a new home in the U.S. in July 2022, according to the National Association of Realtors. You can calculate the sale-to-list ratio for this property as follows: $403,800/$415,000 = 0.973 0.973 x 100 = 97.3 percent In this example, the sale-to-list ratio is 97.3 percent, meaning the home sold for 97.3 percent of its list price. This figure — the fact that it represents a sum below the asking price — indicates the in this negotiation. Conversely, when a home sells for more than its list price, the sale-to-list ratio will be over 100 percent. In that case, a number over 100 percent may reveal the seller held more leverage, perhaps receiving multiple offers for their property. Sale-to-list ratio Why you should care
Whether you’re a buyer or seller, looking at the ratio of the selling price to the asking price can help you gain insight into how to negotiate a transaction. You may find additional value by calculating the sale-to-list for a group of homes, which you can do by adding up each home’s ratio and using the average of the total. Arming yourself with this information may help you measure an agent’s performance. By calculating the sales-to-list ratio of a Realtor’s recent transactions, you can get a sense of whether the agent is getting the best deal for their clients or yielding too much negotiating power to their counterparts on the other side. Of course, you’ll need to compare the agent’s sale-to-list ratio with that of other local agents since the numbers could be skewed if you’re in a buyer’s or seller’s market. Let’s say the sale-to-list ratio in an area is 107 percent, with homes selling for 7 percent more than their listing price. As a home seller, you could conceivably 7 percent higher than comparable sales in the area and support that asking price with data — the sale-to-list ratio. If successful, you could get more money for your home, resulting in higher . Keep in mind, the sale-to-list ratio may not matter as much — or may be distorted — in a hot market where for properties are common. In such conditions, the buyer’s primary motivation is simply to get into the home and avoid being outbid. In a more temperate market, however, shrewd negotiators could use the metric to bolster their bids. “If there is a savvy buyer who is working with a sharp real estate broker, a homebuyer could approach certain home sellers with an aggressive offer that will be backed by data and not strictly based on the highest and best offer,” notes Joshua Massieh, a real estate broker based in San Diego, Calif. “As the market shifts, this data point will help sellers and buyers alike in translating the data and helping both parties achieve their goals.” Finding a local trusted agent
Buying or can be complex, but an experienced real estate agent can help you through the process. Additionally, a qualified agent can represent your interests and negotiate on your behalf. Here are a few ways to for your needs. Ask friends and family for a personal referral: According to a 2021 study by the National Association of Realtors (NAR), 47 percent of homebuyers found their agents through referrals from family members or friends. Similarly, 68 percent of home sellers found their agent through a referral or used an agent they worked with on a previous transaction. While a recommendation from a trusted friend or family member carries weight, you still must vet each agent’s experience and qualifications carefully to help ensure you make the right decision. Look for a Realtor: Realtors — with a capital R — are NAR members who have formally agreed to adhere to the association’s code of ethics, and have met its educational requirements. You can identify a member by the REALTOR listed after their name on the website or business card. While it’s no guarantee of a great pro, the often indicates a certain level of experience and dedication on the part of the agent. Check online reviews: Another option is to research online reviews for local real estate companies and agents in your area. You can usually find helpful reviews on Google or online marketplaces like Zillow and Redfin. Look for agents whose prior clients say are knowledgeable and available when needed. According to Massieh, the most important quality you should look for in a real estate agent is their experience level. “Transactions are jam-packed with legal jargon that no one understands except lawyers,” says Massieh. “Find a real estate professional that knows the contract like the back of their hand and someone who is not afraid to be aggressive with the other party.” Meet with an agent before hiring them to represent you. Don’t just ask about their track record of successful transactions — ask specifically about the sale-to-list ratio of those transactions. It can give you a sense of how good a deal they help clients score, be they sellers or buyers. SHARE: Tim is a freelance personal finance writer and blogger with a particular focus on credit cards and consumer lending. In 2002, he stumbled upon a copy of "The Millionaire Next Door," by Thomas J. Stanley and William D. Danko, which ignited a passion for learning and sharing fact-based money principles. Tim has a passion for demystifying personal finance and helping people live their best lives. Troy Segal is Bankrate's Senior Homeownership Editor, focusing on everything from upkeep and maintenance to building equity and enhancing value. Related Articles