What is a "sales ratio" in real estate?

A "sales ratio" in real estate is defined as the relationship between the full and true value of a property and its selling price. This ratio is an important metric used by appraisers and assessors to evaluate the market's valuation of properties. By comparing the assessed value of a property—often referred to as the full and true value—with the actual selling price, professionals can gauge how accurately properties are being assessed in relation to the current market.

This ratio provides insights into market trends, helping to identify whether properties are typically selling above, below, or at their assessed values. A higher sales ratio might indicate that properties are undervalued, while a lower ratio could signal overvaluation or a depreciating market. Understanding the sales ratio is crucial for ensuring fair property taxation and accurate appraisals, which ultimately supports balanced real estate market assessments.