The Real Estate Absorption Rate: Why You Should Care
The absorption rate tells how many homes are selling in a given period of time.
As a home seller in Austin, Texas, why should you care?
This gorgeous home is NOT for sale, but it is one of the nicer ones in it's area.
Absorption for Real Estate, Explained
I’ll do the math for you.
Let’s pick a simple example:
- In the last 4 months, 20 houses have sold in your area. 20/4 = 5
- That means 5 houses per month are selling.
- The real estate absorption rate for your area is 5 houses per month.
- If 50 houses are for sale, it should take 10 months to sell them.
Do you want to wait 10 months to sell your home?
Pricing Your Austin House to Sell
Probably not.
If you want your house to sell, it needs to be one of the best deals in the area. Otherwise, it will get passed over for other properties that are a better deal. By better deal, I mean better combination of location, condition and price.
It is that simple.
If your home is priced in the middle of the pack, it probably won’t sell this month. It probably won’t sell next month either. Or the next month.
As homes sell, new ones come on the market. If they are better priced for what they offer, they will sell before yours.
Talk to Your Listing Agent
When you meet with your Austin Listing Agent to get your home ready to sell, you need to discuss the absorption rate before you decide on the right listing price.
Remember, you want to sell your home, not just list it.
To do that, you need to price it right for the market in your area.
It’s that simple.
About Alison
Alison
I understandhow to calculate absorption rates and odds of selling.
How do you use these to get your sellers to agree to a list price.
I am a realtor with irongate in springboro ohio
my email is ciraaf@att.net
Tony Ciramella
Hi Tony – that really is the question and the challenge, isn’t it!
I try to work with sellers to get them to see that if only 3 or 4 houses are likely to sell, and theirs isn’t one of the best combination of price/condition/location houses, it’s going to sit and sit and sit, and not sell.
And we know, from experience and from the market stats, that houses that sit, end up selling for less.
In our market, the most traffic goes through in the first few weeks of a new listing. If the listing isn’t getting traffic, it’s over priced, and the price needs to come down.
It is essential for sellers to understand that “waiting for the right buyer” won’t get their house to sell for their asking price. Pricing it right for the market is what will get it under contract – even if the list price isn’t what they had hoped to get.
Can you share some of your experiences with us, too?