With Absorption Rate and Demand Ratio pricing, you'll be able to pindown your exact price to attract offers, and you'll know how long it will take to sell your property.

If you have questions about selling or buying property (home, lots, land or commercial),
speak with Scott for market insight:

Call Scott:
941-882-5494 Ext 701
813-324-1005 Ext 701

THE REAL ESTATE MARKET TODAY

At the time this article is being updated (11-06-22), the real estate markets accross Southwest Florida are showing signs of stalling. Nationally, the real estate market is predicted to have sharp declines.

Here's data from one of the markets that we analyzed:

• Expired listings are up 400% year over year

(Based on comparing the prior 180-day period to the same months a year ago.)

400% increase is only 5% compared to the sold listings in the same period of 2022.

Keep in mind that prior to the recent price boom, the number of expired listings for a 6 month absorption rate was significantly higher. At one point, it was as high as 26% -to- 38% depending on location.

Getting your listing price correct from the start is a far better approach than "listing to see what happens". You should avoid the potential of chasing the market down.



• 39% of the current Active listings lowered their price between 09/01/2022 -to- 11/06/2022.


• The number of days a property is on the market has increased.


• Demand Ratios have decreased.



A year ago, we would get 20 to 30 offers on a property. Today, we get offers but far fewer competing offers, if any.

Professional investors understand the risk. Feel free to call Scott to discuss what institutional investors have already done to hedge against a declining market. Call Scott - Phone: 941-882-5494 Ext 701


Compared to the pre-pandemic market, as a seller, you are still in a very good position. Buyers can do well too as long as they understand the market using the data we provide.

USING YOUR AREA'S ABSORPTION RATE TO SET PRICE:

The Absorption rate is a measure of supply and demand. If used correctly, you will know how to position yourself as a buyer or seller better than the majority of your competitors.

This is the fun part of pinning down your price. It's not just that the house down the block sold for X. It's understanding the activity in your area and how your price fits in.

If there are 124 homes for sale like yours, and there are only 27 buyers a month on average buying a home like yours, it would take 4 1/2 months (the Absorption Rate) to sell all listed homes. Even worse, the odds are in fact, 79% AGAINST being in contract in 30 days. This doesn't account for new homes entering the market.

DEMAND RATIOS:

Demand Ratios show how enthusiastic buyers are in a given market.
To be clear, IT IS NOT A SUPPLY AND DEMAND RATIO.
When used in conjunction with the Absorption Rate, we are able to accurately forecast the strength of enthusiasm in a given area or community 2 months out based on where in your price range you choose list. We can tell you how long you can expect to be on the market before you're in contract. Our formulas are pretty sophisticated. We're not guessing at time frames or price.

PRICING:

If you're around a two month supply of homes (enough buyers per month to purchase all currently available houses within two months), then you will see more buyers willing to pay a higher price. This is the point that homes increase the most. You should price your house at or near the top of your price range.

During the recent housing boom, Demand Ratios where as high as we've ever seen. We were able to recommend listing prices higher than the data showed as the top of the range. For us, it wasn't a guess.

If the Absorption Rate is around 4 1/2 months, you're technically in a seller's market, but it is still highly competitive. In a 4 month Absorption Rate range, you need to offer more value in either finishes, additional features or price.

To understand how your house will fit into the market, you'll need the full list of Sold and Active homes (as close to the description of your property) to get a good look at price ranges for your house. Once you know the activity and odds of selling, then it's simple. You decide if you want to accelerate the sale of your home by entering the market at a lower price point than the condition of your home warrants, or go for the high price taking into account how many buyers per month are willing to pay your price versus other properties. If the Absorption Rate is 2 months, lean toward the high end of your price range.

Using your area’s Absorption Rate and Demand Ratios correctly, you’ll know with 100% confidence that you're priced right from the get go! You may choose to price your home higher or lower than what the data tells you, but you'll be doing it understanding exactly your position in the market related to price.

COMPARATIVE MARKET ANALYSIS ISN'T ENOUGH:

Everyone uses a CMA (Comparative Market Analysis) to find a few homes that are similar enough to the subject property for you to decide, "my house is worth X"

The problem with only using a CMA is that you'll statistically get price wrong 24-to-38% of the time. It's like having blurry vision instead of 20/20.

Market Activity & Price (prepared a few years ago. Other than the % shown, info is still accurate:

ABSORPTION RATE AND THE BIG PICTURE - DOES THE BIG PICTURE MATTER?

Ask the seller whose property has been on the market for 5 months with no offers. It’s likely they don’t understand how they fit in the market. Yes it matters!

Avoid the “let’s set the price at X and see what happens” approach to listing your home.

In a typical market, 26% -to- 38% OF SINGLE FAMILY HOMES LISTED FOR SALE fail to sell (depending on location)

26% is a big enough number to pay attention to the method used for pricing your house for sale.

ADVICE:

If you meet an agent who explains how your property fits into the market based on the Absorption Rate and Demand Ratios, you likely found a pro agent who is more interested in helping you make good decisions. Hire that agent! These agents will give you an accurate price opinion instead of giving you an inflated price just so they can list your house.

(If an agent doesn’t explain your home’s position based on Absorption Rate, pass and find another agent.)

This article was written by Scott Polisar, Broker of SunQuest Real Estate, for people who want to sell their home and who want more insight into setting the correct listing price. When you meet with a Broker, the CMA is usually what you will look at when discussing price. If your area's Absorption Rate is presented to you, it's usually just shown to illustrate whether you are in a buyer or sellers market (supply & demand).

If used correctly, the Analysis part of the Absorption Rate is more important than simply knowing the months to clear inventory. It will show you how to price your home to sell in any market.

If you want to know the Absorption Rate in your area, or to discuss the potential sale of your property,
call Scott:
941-882-5494 Ext 701
813-324-1005 Ext 701

As a Seller or Buyer, you want an Agent who calls you back, communicates, follows-up on everything, and knows how to create an interest in your home. That's how it is when you work with Scott!