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Absorption Rate >> A Must Added to Every CMA
Yesterday I commented on a post I read and mentioned I do a complete market analysis which includes average days on the market, average sales price and average selling price per square foot every two weeks for my listings.  In addition, I mentioned I add an "Absorption Rate" to every report.  The combination of the two has prompted many sellers to voluntarily reduce their asking price. 
Several AR members emailed me and wanted a copy of the absorption rate I use.  The one I use is below and I hope it is helpful.
Example of Absorption Rate application:
Your Right Price Analysis on a seller's home supports a Price Point of $539,000.
The sellers inform you that they want to list their property with you for $589,999.
To explain the effect of current market activity and validate the Price Point derived from your RPA, you create an Absorption Rate (AR) Analysis as follows:
First, determine the number of like-kind homes that have sold in the last 12-months at their expected price of $589,999.
8 Properties sold and closed in the last 12 months
Second, divide this number by 12 to determine the number of properties absorbed by the market on a monthly basis.
8 divided by 12 = .67 absorption rate
Third, you search ... more

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