Why Sellers Should Understand Months of Inventory

These are great facts and I think data excluded many time in a listing presentation..nice job

Absorption is absolutely essential to pricing a home to SELL. 

I know it's hot in FL during the summer and that's why inventory may be down. But if I were looking to sell, I'd put my home on the market when the inventory is the lowest.

Carol, Market inventory and absorption rates are crucial items to look at when marketing a home for sale.

Carol  This should prove to be an interesting and useful tool

I agree that this information should be used on all listing presentations.  You need to set expectations clearly up front about how many homes are selling and how you are going to help the sellers be the next one sold.  Sometimes this data is helpful in extending a listing contract beyone the old standard of 6 months.

Well said..thank you for sharing

Carol -- Absorption rates are critical to pricing.  You really have some wild fluctuations. I post the absorption rate trending monthly which is a valuable analysis tool.

Carol, I'm a absorption rate NUT...I feel it is so important to educate our sellers.  Great article and so easy to understand for those that are new to "absorption" rates.

Thanks for the information.  Good read today, lots of helpful comment as well.

Patricia/SEacoast NH & ME

Good afternoon, Carol. Real estate values are in a constant state of flux and the Months of Inventory is a nice tool to help determine which direction prices are likely to swing... higher or lower.

You are correct, but there are times where MOI is very misleading.  I am in Austin and our MOI in my farm area up to $800k is between 4 and 7.  Must be a good market right?  Wrong.  I am in an area where listings have stabilized and demand has yet to hit the market.  So the lack of inventory distorts the reality.  We are at our lowest inventory levels in 16 years.  The downside for me, is that there are too few listings to sell.  We are just an anomaly.

Carol I love how you have correlated the raw numbers to seasonality. Very astute on your part.

Interesting numbers. How do you account for the volatility from February through April? In '09 MOI fell by half in March then spiked by four times in April. In '10 it was the opposite result -- inventory jumped in March, then fell drastically in April.

This is such a tough concept for sellers.  I had a listing appointment where there was 3 years of inventory on the market.  The place as a mess...I gave them two prices - one for fixing it up and one for leaving it as -is...and suggested a generous  coop as well for the buyers agent.  They listed with somone else - at the higher price doing none of the work suggested with the lower coop....all I can say to the LA is "Good LUCK!"

Carol, this is a great and easily understandable way of presenting the absorption data to your sellers.  It should also proove to be a great listing tool.

Carol, we were out at the beach today showing homes in Oceanwalk ~ what a coincidence that you wrote this piece on Neptune Beach! This is a very interesting analysis - I also love Absorption Rate for helping Sellers understand that they must price their homes aggressively if they want to sell. Congrats on the Gold Star :)

Dear Carol,

Brad (#16) makes a good point - "set expectations up front".

Since every Seller thinks his/her house is the best and most valuable, understanding your lesson about inventory will really help them.  

Thanks for the interesting post.

Have a happy day - 
Lynn

Great analysis and advice to make months of inventory part of selling strategy. Thank you for sharing your experience with us.