CONSIDER AREA ABSORPTION RATE BEFORE PRICING YOUR HOME FOR SALE

By
Real Estate Agent with eXp Realty Lic#6502-278999

They key to a successful sale must take into consideration the current neighborhood absorption rate.

In a sellers market, absorption rate may have played a factor into a sale but not as much. What is an absorption rate you ask? Well, it's a tool that your real estate agent SHOULD take into consideration when pricing your home but many do not!

If you were in need of getting your home sold in less than 6 months, it may be less than a 50-50%. With current market conditions telling us that the average time to get a home sold in the Metro-Detroit area is about 7 months, there is more to pricing a home than simply pulling sales that took place in a neighborhood recently. You must consider the fact that on average many neighborhoods have seen a decline anywhere from 1-3% PER MONTH. So pricing your home is especially important. Taking into consideration the neighborhood absorption rate is key. What this means is that if you currently had 12 properties in a neighborhood that were activily for sale and there have only been 6 sales take place over the past 6 months then what you would do is take the 6 sales and divide it into the 12 that are available to get a 12 month supply of homes. If you had 6 sales over the past six months with only 2 homes that were currently available, you would end up with a 2 month supply of homes and could therefore be more agressive in your asking price.

Once you have taken into consideration, the neighborhood absorption rate you can better assess your chances of actually selling and where your pricing needs to be. Another very important step to take is to actually run each of the available homes for sale and find their TRUE, UNAJUSTED HISTORY. (Some homes are marketed by one agent, then taken off the market and re-listed with another agent.) This tends to throw off the true marketing time. By looking at the entire marketing time, you will also prepare yourself with all the available facts. Lastly, in a declining market like what we face locally in Metro-Detroit, you only need to look at the number of available properties in a neighborhood. Base 90% of your pricing strategy on actual sale OR you will find yourself chasing the market and constantly having to adjust your price. This strategy will only hurt you and you will end up having to accept an offer for even less than if you had just priced it aggressivily in the first place.

Of course none of the above will make any difference whatsoever if you list your home with just any agent. Consider interviewing several agents. NEVER hire an agent based upon a fee that they charge. Rather, sellers should focus on the value that an agent brings to the table which includes actual market knowledge, and sales as well as a unique marketing plan that gives you (the seller) a total marketing plan which will give your home worldwide exposure and increase the demand.

Posted by

Carlo Gobba is an Associate Broker with RE/MAX Classic at 36700 Woodward #100 Bloomfield Hills, Michigan 48304 and email: Carlo@CarloGobba.com with offices all over Southeast Michigan to serve you.

Listing and Selling homes is what I am Passionate about and it shows. Buy and sell through me to receive my unique Guarantee: "Your Home SOLD In UNDER 120 Days at a price acceptable to you OR, I'll Pay You!" www.SoldInUNDER120.com

The market is complex and you need a great agent on your side, So connect with Carlo Gobba today! Carlo Gobba is "A HouseSold Name!"-sm

Comments (1)

Bryan Watkins
LRA Real Estate Group - Mesa, AZ

Carlo, good points. If people think it is expensive to hire a professional agent who charges a good fee, they should see what can happen if they hire an amateur agent. Ouch. that can be expensive. How is the absorption rate today in Bloomfield Hills?

May 11, 2010 05:22 PM

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