Sale-to-list (STL) ratio = sale price ÷ list price. Six recent competitive sales have STL ratios of 0.97, 1.00, 0.99, 1.02, 1.01 and 1.04. What is their arithmetic mean STL ratio, to three decimal places?
Correct Answer
A) 1.005
The six ratios sum to 6.03, and 6.03 ÷ 6 = 1.005, an average sale price 0.5% above list. Dividing by 5 instead of 6 gives 1.206, 1.010 reports only two decimals, and 0.995 reverses the direction of the premium. Keep the stated numerator and denominator distinct; this statistic alone does not prove a market trend or a property-specific adjustment.
Why This Is the Correct Answer
Option A is correct because the six ratios sum to 0.97 + 1.00 + 0.99 + 1.02 + 1.01 + 1.04 = 6.03. Dividing by 6 gives 1.005. This means sales averaged about 0.5 percent above list price.
Why the Other Options Are Wrong
Option B: 1.206
Option B, 1.206, divides the sum by 5 instead of 6: 6.03/5 = 1.206. There are six sales, so the mean is 6.03/6 = 1.005.
Option C: 1.010
Option C, 1.010, reports the mean to only two decimals (1.01) instead of three. The question asks for three decimal places, and 6.03/6 = 1.005.
Option D: 0.995
Option D, 0.995, reverses the direction of the premium: 1 − 0.005 = 0.995. The mean is above 1, at 6.03/6 = 1.005, meaning sales averaged slightly above list.
Sum, then count
The mean is the total of all values divided by how many values there are. Count the items carefully before dividing.
How to use: Use this check on any average question to confirm the divisor.
Exam Tip
Count the data points before dividing and round only to the precision requested. Check whether your result should be above or below 1.
Common Mistakes to Avoid
- -Dividing by the wrong number of observations
- -Rounding to fewer decimals than requested
- -Reversing an above-list result into a below-list figure
Concept Deep Dive
Analysis
This question tests calculating an arithmetic mean correctly. Add all six sale-to-list ratios and divide by the number of sales, six. The sum is 6.03, and 6.03/6 = 1.005, reported to three decimals as asked.
Background Knowledge
The sale-to-list ratio compares a sale price to its list price; a ratio above 1.00 means the property sold above list. The arithmetic mean is the sum of the values divided by their count. Market reports often show a median sale-to-list figure, and a single statistic alone does not prove a trend or a property-specific adjustment.
Real-World Application
An appraiser lists six recent competitive sales and computes an average sale-to-list ratio of 1.005. This suggests homes are selling close to or slightly above asking. The appraiser also reviews the median and price trends before concluding on market conditions.
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