From Movoto Real Estate
NEW YORK (Movoto Real Estate) — Navigating the world of real estate can be a quagmire in and of itself without getting crippled by confusing terms. While most buyers and sellers can grasp the significance of a home’s list price and the size of house, other terms might leave them scratching their heads.
Whether you’re a first-time homebuyer or a seasoned investor, below are five real estate terms you should know.
1. Sale-price-to-list-price ratio
In many ways real estate is a numbers game, and the better a person understands the numbers the more likely they will make a smart decision. The sale-to-list-price ratio is a way for people to gauge how well their agent understands a local market.
What is the sale-to-list ratio? For the mathematically inclined, it is the final sale price (what a homebuyer actually pays for a home) divided by the list price and expressed as a percentage.
If the figure is above 100%, the house sold for more than the list price. Conversely, if the figure is below 100%, the home sold for less than the list price.
We know this can be difficult to understand, so here is an example: If a home was listed for $100,000 and sold for $80,000, the sale-to-list ratio would be 80% ($80,000/$100,000).
The value of the sale-to-list ratio comes when you look at an agent’s sale-to-list ratio. An agent’s sale-to-list ratio should be near 100%. If the percentage is low, it means the agent routinely lists homes for more than they sell for. If the number is high, the agent might have a track record of negotiating for a higher price tag.