Absorption Rate: Easy as 1-2-3!

The absorption rate, or, the length of time it would take to sell the existing active inventory of homes currently listed for sale in a given area, is a valuable tool for sellers and agents, that can help assess the proper price range for a given property.
It can also help manage expectations.
Local MLS data provides all the information that agents need to calculate the absorption rate using a very basic approach. Other sites that give the same information is Realty Trac and other subscribed websites.
Here’s the formula:
1- take the number of homes that are now listed on the market (active listings) in a given area.
2- Take the number of homes that sold in the previous 30 days, and divide the inventory by that number.
3- The resulting figure is the absorption rate in months.
For example: if 50 homes sold in the last 30 days and there are 600 homes now listed for sale, the absorption rate is 12 months.
By tracking the absorption rate over time, an agent and seller can get a better perspective on the market and be better equipped to make better decisions about pricing and expectations.
For more information on absorption rates or other useful tools I use to give my clients strategic advice and guidance to selling their home, feel free to call me at 510 881 1761 or email me at dsouza@deansouza.com .
Focused on the Success of Your Move…
Bye for now,
Dean Souza
Keller Williams-Castro Valley
Ca Lic#: 00967442

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February 2011

Dean Souza

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