For the same closed-sale sample, the median sale price is $408,000 and median final list price is $425,000. What is the ratio of these two medians? This is not necessarily the median of individual sale/list ratios.
Correct Answer
C) 0.96 ratio
Ratio of the two sample medians = $408,000/$425,000 = 0.960. Use the same population, period and price/listing definition throughout. Common errors: inverting the ratio (list ÷ sale) gives 1.04 ratio; reporting the discount instead of the ratio gives 0.04 ratio; dividing by the sum of the two medians gives 0.49 ratio.
Why This Is the Correct Answer
Option C is correct because $408,000 / $425,000 = 0.960, so the ratio of the two medians is 0.96. Sale price goes in the numerator and list price in the denominator. As the stem notes, this ratio of medians is not necessarily the same as the median of individual sale-to-list ratios.
Why the Other Options Are Wrong
Option A: 0.04 ratio
Option A, 0.04, is the discount from list rather than the ratio: ($425,000 - $408,000) / $425,000 = 0.04. The ratio itself is $408,000 / $425,000 = 0.96.
Option B: 0.49 ratio
Option B, 0.49, comes from dividing the sale median by the sum of both medians: $408,000 / ($408,000 + $425,000) = 0.49. The correct ratio is $408,000 / $425,000 = 0.96.
Option D: 1.04 ratio
Option D, 1.04, inverts the ratio: $425,000 / $408,000 = 1.04. Sale price belongs in the numerator, giving $408,000 / $425,000 = 0.96.
Sold on Top
In a sale-to-list ratio, the sale price sits on top, so a market selling below asking produces a ratio under 1.
How to use: Use 'sold on top' to set up the ratio and to sanity-check that a below-asking market gives a figure under 1.
Exam Tip
Before calculating, decide whether the answer should be above or below 1; here sales are below list, so any ratio over 1 is inverted.
Common Mistakes to Avoid
- -Inverting the ratio to list over sale
- -Reporting the percentage discount as the ratio
- -Assuming the ratio of medians equals the median of individual ratios
Concept Deep Dive
Analysis
This question tests building a sale-to-list ratio from two medians. The ratio is median sale price divided by median list price: $408,000 / $425,000 = 0.96. The distractors come from inverting the ratio, reporting the discount, or dividing by the sum of both medians.
Background Knowledge
The sale-to-list ratio shows how close sale prices come to asking prices and is a common sign of market strength. Form 1004MC reports median sale price as a percentage of list price. A ratio of the two medians can differ from the median of the individual property ratios, so appraisers should be clear about which figure they report.
Real-World Application
An appraiser completing a market conditions analysis finds a median sale price of $408,000 against a median list price of $425,000. The resulting 96 percent figure suggests buyers are negotiating modest discounts from asking prices.
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