Current inventory in a market consists of 50 pending listings and 150 active listings, with each listing counted in only one status. What is the pending-sales share of current inventory?
Correct Answer
A) 0.25
Pending share=50/(50+150)=50/200=0.25. Use the same population, period and price/listing definition throughout. Common errors: dividing by active listings only gives 0.33; reporting the active share instead of the pending share gives 0.75; inverting the ratio gives 4.00.
Why This Is the Correct Answer
Option A is correct because the pending share is 50 / (50 + 150) = 50 / 200 = 0.25. The share divides pending listings by the combined pending and active inventory, and the two statuses do not overlap.
Why the Other Options Are Wrong
Option B: 0.33
Option B is wrong because 0.33 comes from dividing by active listings only: 50 / 150 = about 0.33. Current inventory is pending plus active, so the share uses both in the denominator, giving 50 / 200 = 0.25.
Option C: 0.75
Option C is wrong because 0.75 is the active share, not the pending share: 150 / 200 = 0.75. The question asks for the pending share, 50 / 200 = 0.25.
Option D: 4.00
Option D is wrong because 4.00 comes from inverting the ratio: 200 / 50 = 4.00. The pending share is pending over total, 50 / 200 = 0.25.
Part over whole
A share is the part over the whole, so pending goes over pending plus active.
How to use: Use part over whole on any share-of-inventory question.
Exam Tip
Use the full inventory as the denominator; a share must fall between 0 and 1, which rules out an answer like 4.00.
Common Mistakes to Avoid
- -Dividing pending by active only
- -Reporting the active share instead of the pending share
- -Inverting the ratio
Concept Deep Dive
Analysis
This question tests the pending-sales share of inventory: pending listings divided by pending plus active. The key is to use the full inventory as the denominator rather than active listings alone.
Background Knowledge
Pending sales are listings under contract that have not yet closed, and analyzing them helps show current demand ahead of closed sales data. A higher pending share of inventory can suggest that listings are going under contract more quickly. The ratio is meaningful only when statuses are mutually exclusive and defined consistently.
Real-World Application
An appraiser checks current listing data and finds 50 pending and 150 active listings in the subject's segment. A 25 percent pending share helps the appraiser gauge current buyer activity alongside closed sales.
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