Why the "sold to list" price ratio is deceiving

Here's a Madison home that sold on April 5th.



The list price at the time of the sale was $219,900. The sold price was also $219,900. That equates to a "sold to list" ratio of 100%.

Not bad.

But there's more to the story...

This listing was originally priced at $247,900. Then it underwent a series of price reductions - from $247,900 to $239,900 to $229,900 to $219,900.

The sold price ended up at just 89% of the original price for this listing ($219,900/$247,900 = 89%).

Unfortunately the "sold to list" price statistic is not the measure that it appears to be because it is based solely on the most recent list price. It doesn't use the original price for the listing (or for that matter the original price of any previously expired listing).

Whether we are in a seller's market or a buyer's market, the "sold to list" price ratio for the market as a whole will always be around 97%. That's because homes tend to sell when they are priced right, no matter the market.

Some sellers select a competitive list price at the very beginning of their listing. Others drop their price one or more times before they reach the right price point. Either way, most sellers usually find the right price, and when they do, they tend to end up accepting an offer that is reasonably close to the list.