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List to Sale Price Ratio

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Laughing Heir

Thread Starter
Senior Member
Joined
Oct 16, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
Can anyone clarify the proper way to calculate this with a spreadsheet?

If you use the stats my MLS provides it appears to divide the list price, as of the date the property went pending, by the sales price.

I think the proper application would be to divide the original asking price by sales price - am I wrong?

I really don't trust the formulae in the applets used by our MLS b/c the median sales price is sometimes miscalculated (oddly enough it reports it as a higher amount).

Where my logic is fouling up is when I go to apply the LP2SP% to an competing property for an adjustment. If I use my way of figuring this ratio I'm applying a LP2SP% from the orig. asking price to what may be an already reduced asking price.

Just want to be sure it's apples to apples and I'm not using a silly wild *** guess.
 

Ultraviolet

Senior Member
Joined
Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
I look at both and compare them. In some areas there's a big difference and it's a good way to see if unrealistic listing prices are extending days on market or if properties are listed at market prices and there's just no sales activity.

Sellers are still a bit stubborn in some areas here and list properties way above where they should be and then they sit for months. Once the price comes down to what's real they sell pretty quickly. IMO that's the true reflection of market activity.

Does that help?
 

Laughing Heir

Thread Starter
Senior Member
Joined
Oct 16, 2007
Professional Status
Certified General Appraiser
State
Pennsylvania
TY Ultraviolet. I just posted a long response, but due to my newbieness (I double-posted) it's lost in cyberspace somewhere.

I can certainly apply what you have suggested in my analysis and will probably teach my super something!

You'd probably love my market, it might be one of the most boring in America. We never really saw the boom or bust (so far). We were actually just rated the 4th most affordable market in the nation - so maybe someday I'll know what a lot of the appraisers here have already seen.

What I'm trying to get at with my question is which way is more appropriate for making an adjustment on the form(s) grid when utilizing an active/pending listing. For example, the one I am working on right now I am providing two pendings for some unweighted data. If we use SP/OLP it yields 93% over the prior 12 months. The other way tells me that the LP2SP is 97%. Both sales are pending at $230,000; the first way predicts it will close at $214,000 and the other at $223,000.

A pretty large variance! I just wanted to see what others would see fit to do.

Thanks again!
 

Mark to market

Junior Member
Joined
Nov 14, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
To get the % difference of list price and selling price I use
1 – (sales price /list price)
 

Ultraviolet

Senior Member
Joined
Dec 31, 2002
Professional Status
Retired Appraiser
State
Arizona
Ok, Laughing - now I see what you're trying to figure out! :new_llying:

What does the listing history of the sales you're using tell you? How long were the pendings on the market before contract? Does the listing history of either one look "odd" when compared to your sales? I would use the one that applies to the greatest number of sales you're analyzing. In general, I'd say that if there's that big of a variance then using the list price at the last reduction is probably more accurate. Going back to what I said originally, as soon as the price was realistic someone made an offer.

I also call the agent and talk them into ballparking the contract within a certain percentage of of the list price. "I know you can't disclose the contract price, but did it sell within X percent of the final list price?" They're usually pretty cooperative and that takes the guesswork out of it! :)

That's just my thinking, though. I'm sure others have different ways and with the assignments I've had lately I don't really know that I'm qualified to give advice of ANY kind !!! :laugh:

Hopefully this makes sense to you.
 

stephen fogel

Freshman Member
Joined
Feb 27, 2006
Professional Status
Licensed Appraiser
State
Ohio
I look at both and compare them. In some areas there's a big difference and it's a good way to see if unrealistic listing prices are extending days on market or if properties are listed at market prices and there's just no sales activity.

Sellers are still a bit stubborn in some areas here and list properties way above where they should be and then they sit for months. Once the price comes down to what's real they sell pretty quickly. IMO that's the true reflection of market activity.

Does that help?

Pretty much my thoughts. You need to pay the most attention to final listing price and MT as many properties are listed to high to begin with... Was just asked to include two recent listings in an appraisal becuase of decling market with an listing/sales price adjustment....I used 10-12 nearby solds within 90 days including comparables used in report... Find those few that appear to be normal for market... get the ratio and move on...To many factors that relate to final sales price to list price...you cound spend hours on this issue....keep it simple:huh: ....
 

ZZGAMAZZ

Senior Member
Joined
Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
My take is that you can't figure it out because it can't be done, at least not in the SC approach.

As other have mentioned, it's appropriate/necessary to contact the respective listing agents to determine the selling price of properties that are pending sale, while simultaneously inquiring about concessions. (In fact, the l/a's representing all of the comps must be contacted in order to determine the impact on m.v. of sales concessions...)

However, there is no certainty that the property that is pending sale will sell at the anticipated s/p, or whether it will ever sell. That's inherently true and even more so because of the prevailing, constrained lending guidelines.

Active listings and pending sales can/should be included in the SC grad, to depict the current, local market, but with the disclaimer that they were not used to establish the opinion of value but to provide an "upper limit" on the opinion of value of the subject.

The type of analysis that you're suggesting would be perfectly at home in the Market Analysis.

At least that's my perspective and it appears to be supported by several recent threads on the AF.
 

Vegan702

Senior Member
Joined
Feb 24, 2005
Professional Status
Certified Residential Appraiser
State
Nevada
I take the final sales price/list price. To use the first list price might not be helpful as they could have been over listed and not truly on the market, whereas the final list price or close to final list price is most likely the more accurate price that it should have been listed at, assuming a length of time has passed between the first listing and the closing date.
 
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