An appraiser notes that the market's list-to-sale price ratio has risen from 96% to 100%. This indicates:
Correct Answer
C) Strengthening conditions with less negotiating room
The list-to-sale price ratio compares the final sale price to the original list price. A ratio of 100% means properties are selling for exactly their asking price, indicating no negotiated discount. Why this is correct: The original explanation states that sellers getting their asking price means buyers have stopped negotiating. This is a classic indicator of a seller's market where demand is strong, properties sell quickly, and buyers have little leverage to negotiate below the list price, reflecting strengthening market conditions. Why the other choices are wrong: The choice "No meaningful change in the underlying conditions" is wrong because a shift from 96% to 100% is a significant change, showing a transition from a market with discounts to one without. The choice "A weakening market favoring buyers" is wrong because a weakening buyer's market would typically show a declining ratio, with larger discounts off the list price. The choice "That listings are being overpriced" is wrong because if listings were systematically overpriced, the ratio would fall below 100% as sales prices fail to meet asking prices. Exam tip: Remember, a 100% list-to-sale ratio means zero negotiation discount—a clear, early signal of a tightening, seller-favorable market.
Why This Is the Correct Answer
The list-to-sale price ratio compares the final sale price to the original list price. A ratio of 100% means properties are selling for exactly their asking price, indicating no negotiated discount. Why this is correct: The original explanation states that sellers getting their asking price means buyers have stopped negotiating. This is a classic indicator of a seller's market where demand is strong, properties sell quickly, and buyers have little leverage to negotiate below the list price, reflecting strengthening market conditions. Why the other choices are wrong: The choice "No meaningful change in the underlying conditions" is wrong because a shift from 96% to 100% is a significant change, showing a transition from a market with discounts to one without. The choice "A weakening market favoring buyers" is wrong because a weakening buyer's market would typically show a declining ratio, with larger discounts off the list price. The choice "That listings are being overpriced" is wrong because if listings were systematically overpriced, the ratio would fall below 100% as sales prices fail to meet asking prices. Exam tip: Remember, a 100% list-to-sale ratio means zero negotiation discount—a clear, early signal of a tightening, seller-favorable market.
More real-estate-market Questions
A market-conditions adjustment should be applied to a comparable:
Building permit data is most useful to an appraiser as:
In the neighborhood life cycle, what characterizes the decline stage?
'Filtering' describes the process by which:
Under the principle of substitution, the maximum value of a property tends to be set by:
Why does an appraiser analyze the market area before analyzing the subject property?
In which phase of the real estate cycle do rising vacancies first meet a still-growing construction pipeline?
Which measure most directly signals demand strength in a housing market?
The principle of consistent use prohibits:
Frictional vacancy in a rental market refers to:
People Also Study
Valuation Principles & Procedures
25% of exam
Property Description & Analysis
20% of exam
Market Analysis & Highest/Best Use
15% of exam
Appraisal Math & Statistics
15% of exam
USPAP (Ethics & Standards)
15% of exam