[omarguti]

Trying to figure out correct method of calculating the following: SP/LP Ratio or sales price to list price ratio. When provided certain data for real estate transactions, lenders are asking for the ratio between the actual sale price & the listing price of the property. Example is a property that was listed at $100,000 sold for $95,000, thus its ratio is 95%. When you group together a number of sales in a certain area or neighborhood, lenders want a median ratio. Question is can one find the median sale price and the median listing price in neighborhood & calculate ratio or must the ratio be calculated for each individual property & find the median as the correct answer? Both ways always produce differenct answers & I just want to know which method would be correct.

[morgaine300]

You may want to ask over here:
https://www.askmehelpdesk.com/real-estate/

My guess would be that you'd want to calculate the ratios first and then find the median of those. First, they're calling it a "median ratio," which to me means the median of the ratio, not the ratio of two medians. Second, by using the median of one and the median of the other, you could be throwing it completely off if one of those medians happens to be out of kilter with the norm. Now that's just from a statistical point of view, though I'm not exactly a statistician. From a bank point of view, seems like they'd be interested in ratios of individual sales.

Below is an example of my second reasoning... the 86 ratio of the medians doesn't make any sense and doesn't fit the norm.