Absorption Rate Key to Successful Pricing

By
Real Estate Agent with Jack White Real Estate 15598

Telling the sellers the price they want to hear might get you the listing, but it won't sell the house. Have you been to a listing appointment where you felt intimidated by the sellers pressuring you on the price they want to get for their property? The absolute best antidote and basis for an honest discussion about price is statistics - the number of homes on the market in their price range and how long it will take "statistically" for the market to absorbed those houses.

The right price depends in large part on the current absorption rate in your market. Here is how you find that:

•·     First, determine the number of homes closed in your market over a specific period - say, 12 months. You can get this data from the MLS.

•·     Next, divide the number of homes by the number of months in the period - in this case, 12. This calculation gives a per month absorption rate.

•·     Last, divide the rate into the number of current listings. this yields the months' supply of homes.

Six months' supply is considered a balanced market - when the number of listings roughly equals the number of buyers. Numbers over six percent represent a buyers' market and those below a sellers' market.

I usually also show them a graph for a seller's market area that depicts the amount or percentage rate sellers had to reduce their asking price in order to find a buyer. Wouldn't you rather be at the right price to start off with, Mr. and Mrs. Seller, than have to wait for months before adjusting to the market reality?

Posted by

Marianne 907-529-6602

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Topic:
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Alaska Anchorage County
Tags:
selling your home
home selling
buyers market
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absorption rate
listing appointment
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Rainmaker
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Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Wise advice * I advise that would-be property management clients to price the rental RIGHT or risk loosing the rental cycle and continuing with upkeep * utilities, yard maintenance, etc. * until it is rented for a LOWER than the own I am suggesting.

Jan 26, 2010 06:44 AM #1
Rainer
100,267
Marianne Grant, Realtor
Jack White Real Estate - Anchorage, AK
CRS 907-529-6602

Thank you, Wallace, for your comment. Have an excellent year. Marianne

Jan 26, 2010 07:36 AM #2
Ambassador
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Absorpotion rate is no important, and also, if you don't price correctly, you might end up actually selling for less in the end from becoming stale on the market.

Jan 27, 2010 03:21 PM #3
Rainer
100,267
Marianne Grant, Realtor
Jack White Real Estate - Anchorage, AK
CRS 907-529-6602

Hi again, Christine,

If nothing else, you will come across as knowledgeable and informed when you can show sellers how long it might take statistically speaking to sell their home. My next point then is: let's beat the statistics and the competing homes by pricing yours RIGHT from the start!  Nice to see you again, Christine.  Marianne

Jan 27, 2010 03:29 PM #4
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Rainer
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Marianne Grant, Realtor

CRS 907-529-6602
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