Republished here with permission from Hunt Realty Group. If you have questions about selling (or buying) your property (home, lots, land or commercial), call Scott - Phone:
941-882-5494 Ext 701
813-324-1005 Ext 701
REAL ESTATE HAS BEEN HOT FOR YEARS. Even so, right now, 26% of Single Family Homes Listed for Sale are sitting on the market unsold way beyond the normal timeframe or have expired within the last 180-days!
USING YOUR AREA'S ABSORPTION RATE TO SET PRICE:
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.
If you're around a two month supply of homes (enough buyers per month to purchase all currently available homes, then you will see more buyers willing to pay a higher price. This is the point that homes increase the most. 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 this Absorption Rate range, you need to offer more value in either finishes, additional feature(s), or price.
You'll need the full list of Sold and Active homes (like the description of yours) 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 properties price range.
Using your area’s Absorption Rate 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.
If you want to sell your property, and want to know the Absorption Rate as it pertains to your property, call Scott to discuss your potential sale - Phone: 941-882-5494 Ext 701
COMPARATIVE MARKET ANALYSIS ISN'T ENOUGH
Everyone uses a CMA (Comparative Market Analysis) to find a few homes that are similar enough to their property, and then Sellers 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:
Some Houses Seem To Fly Off The Market But In Reality, Most Don't.
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.
26% -to- 38% OF SINGLE FAMILY HOMES LISTED FOR SALE (depending on location) ARE FAILING TO SELL RIGHT NOW!
26% is a big enough number to pay attention to the method used for pricing your house for sale.
PDF COPY - Absorption Rate
If you meet an agent who explains how your property fits into the market based on the Absorption Rate, 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, Broker Associate with Hunt Realty Group, 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.