What Does Sale-to-List Price Actually Tell You About a Real Estate Agent?
If you're interviewing real estate agents to sell your home, you'll probably hear a lot of numbers.
“I’ve sold 23 homes in the last 3 years.”
“I’ve been in the business for 14 years.”
“I sold $8.4M last year.”
Those numbers can be useful. But there's another number that deserves more attention.
Sale-to-list price ratio.
It tells you how much a home actually sold for compared with the price it was originally listed for. It can reveal something about how an agent prices and negotiates that you won't see from a sales count alone.
What is a sale-to-list price ratio?
It's pretty straight forward.
If a home is listed for $1,000,000 and sells for $980,000, the sale-to-list ratio is 98%.
If it sells for $1,010,000, the ratio is 101%.
The higher the percentage, the closer (or higher) the final sale price was compared with the original asking price.
But there's an important detail: You want to look at the original list price, not the final reduced list price.
Why? Imagine an agent lists a house for $1,100,000. It sits for two months.
The price is reduced to $1,000,000. It eventually sells for $990,000.
If you only compare the $990,000 sale price to the final $1,000,000 asking price, the result looks pretty good: 99% of asking.
But the seller originally hoped to get $1.1 million. Compared with the original asking price, the sale was only: 90% of asking.
Why does this matter when choosing an agent?
One of the most important jobs a listing agent has is helping a seller determine the right price.
Price too high, and the house may sit. Price too low, and the seller may leave money on the table.
And once a listing sits on the market for a long time, the seller can lose some of the leverage they had when the property was new. That's why sale-to-list performance can be an interesting piece of an agent's track record.
It doesn't tell you everything. But it tells you something.
Note: Don't compare an agent's number to the entire San Diego market
A 101% sale-to-list ratio might mean something very different in one neighborhood than another.
A luxury home in La Jolla isn't competing for buyers in the same market as a home in La Mesa.
The question our agent reports answer is: How did this agent perform compared with similar homes in the same market?”
This is just one of the numbers that mater when choosing a real estate agent to list your home.