A competitive closed sale price is $380,000 and its final list price was $400,000. What sale-to-final-list-price ratio results? A ratio below 1 does not by itself quantify concessions or a time trend.
Correct Answer
C) 0.95 ratio
Sale-to-list ratio=$380,000/$400,000=0.95. Use the same population, period and price/listing definition throughout. Common errors: inverting the ratio (list ÷ sale) gives 1.05 ratio; reporting the discount instead of the ratio gives 0.05 ratio; dividing by sale plus list gives 0.49 ratio.
Why This Is the Correct Answer
Option C is correct because the ratio is $380,000 / $400,000 = 0.95. The sale closed at 95 percent of its final list price.
Why the Other Options Are Wrong
Option A: 0.05 ratio
Option A is wrong because 0.05 is the discount, not the ratio: ($400,000 - $380,000) / $400,000 = 0.05. The sale-to-list ratio is $380,000 / $400,000 = 0.95.
Option B: 0.49 ratio
Option B is wrong because 0.49 comes from dividing by sale plus list: $380,000 / ($380,000 + $400,000) = $380,000 / $780,000 = about 0.49. The correct ratio divides by the list price only: $380,000 / $400,000 = 0.95.
Option D: 1.05 ratio
Option D is wrong because 1.05 comes from inverting the ratio: $400,000 / $380,000 = about 1.05, which is list over sale. The sale-to-list ratio is $380,000 / $400,000 = 0.95.
Name order is fraction order
Sale-to-list means sale on top and list on the bottom, in the order the name gives them.
How to use: Use the name order to set up any ratio named X-to-Y as X divided by Y.
Exam Tip
A ratio of a sale below list should be just under 1; an answer above 1 suggests the ratio was inverted.
Common Mistakes to Avoid
- -Inverting the ratio to list over sale
- -Reporting the discount instead of the ratio
- -Treating a ratio below 1 as a measured concession or time trend
Concept Deep Dive
Analysis
This question tests the sale-to-final-list-price ratio. The sale price goes in the numerator and the final list price in the denominator, and the result is a ratio, not a discount percentage.
Background Knowledge
The sale-to-list price ratio shows how close sales close to list price and is one indicator of negotiation and market conditions. A ratio below 1 means the sale closed below list, but it does not by itself quantify concessions or a time trend. Ratios should use a consistent list-price definition, such as original or final list.
Real-World Application
An appraiser notes a comparable sold for $380,000 after a final list price of $400,000. The 0.95 ratio indicates a 5 percent negotiated reduction from final list, which the appraiser considers with other sales but does not treat as a concession amount by itself.
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