Please ensure Javascript is enabled for purposes of website accessibility

How to Calculate the Ratio of a Selling Price to an Asking Price

By Motley Fool Staff – Updated Dec 27, 2016 at 4:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This metric conveys important information about a sales negotiation. Here's how you calculate it.

Every home seller's dream is to close the sale quickly and get a final price that's at least as high as the asking price. Conversely, a home buyer wants to negotiate the figure down as far below the asking price as possible.

In numerical terms, a seller wants a sale-to-asking price ratio of something like 105%, while a buyer would prefer a ratio that's closer to 90%.

Exactly where the two parties meet on that spectrum depends on many variables, the biggest being overall market conditions. Recently, buyers have held good leverage in these negotiations: On average, they bought homes for 98% of the asking price in 2015, according to the National Association of Realtors.

So how do you calculate that ratio of selling price to asking price?

The calculation
Figuring out this ratio, also known as the sale-to-list ratio, is a simple three-step process:

  1. Divide the selling price by the asking price.
  2. Multiply the result by 100 to make it a percentage.

As an example, let's say the selling price is $289,000, the median selling price for a new home in the U.S. in December, 2015. Meanwhile, the the seller originally listed the home for $300,000. The calculation to figure out the sale-to-list ratio looks like this:

$289,000/$300,000 = 0.963

0.963 x 100 = 96.3%.

In this case, the sale-to-list ratio is 96.3%.

Why it matters
That number gives us a good indication that the buyer held more leverage than the seller in this situation. If that weren't the case -- if, for example, multiple potential buyers had bid on the property -- it's likely that the sale price would have landed at or above the asking price. That scenario would have yielded a ratio of 100% or higher.

The ratio of selling price to asking price is a useful metric not only in home sales, but in any situation where value is determined by negotiations between buyers and sellers. How far the ratio deviates from 100% -- and in what direction – tells you important information about the motivations of the two parties, as well as the market dynamics surrounding their agreed-upon sale.

Ready to put your dollars to work for you? Hop over to The Motley Fool's Broker Center and get started today.

This article is part of The Motley Fool's Knowledge Center, which was created based on the collected wisdom of a fantastic community of investors. We'd love to hear your questions, thoughts, and opinions on the Knowledge Center in general or this page in particular. Your input will help us help the world invest, better! Email us at [email protected]. Thanks -- and Fool on!

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now


Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.