Flagstaff Blog - Real Estate and All Things Flagstaff: March 2009

Understand the Absorption Rate

Here's the definition of "Absorption Rate, thanks to another Active Rain agent.

This is an essential calculation that I perform every month for the Flagstaff real estate market. It's also a good idea to do it for any neighborhood where you're about to buy or list a home. Here's the report for February 2009 sales in Flagstaff.

Via Robin Scott - Broker CRS ABR SRS Austin Texas REALTOR® (Amelia Bullock Realtors):

Only a limited number of properties will sell in any market and the absorption rate will give you an idea of what your chances are. This calculation will tell you how many months it may take to sell your home and here is how it works:

In your market area

DETERMINE HOW MANY HOUSE SOLD IN THE LAST 12 MONTHS

DIVIDE THE SOLDS BY 12 (12months) and THAT WILL TELL YOU HOW MANY HOMES SELL IN A MONTH (ABSORPTION RATE)

DETERMINE HOW MANY ACTIVE LISTING ARE ON THE MARKET

DIVIDE THE NUMBER OF ACTIVES BY THE MONTHLY ABSORPTION RATE AND YOU WILL GET THE NUMBER OF MONTHS IT WILL TAKE TO ABSORB ALL THE PROPERTY THAT IS CURRENTLY FOR SALE.

If that number- the monthly absorption -  is too high, you will need to undercut the competition by making sure the home is show worthy and pricing the property lower than the average price from the beginning. It doesn't help to price it high to see if it will sell and then reduce the price. You will always be chasing the market down. If it's priced right you will be more likely to get an offer sooner and save money by selling rather than hanging on as you continue to make payments and lower the price to catch up. the key to selling a house is the price. PRICE IT RIGHT.

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Robin Scott, Broker. Certified Residential Specialist, Accredited Buyer's Representative, Seller's Representative Specialist. Amelia Bullock Realtors. 512.589.7988.

2 comments • Ann Heitland, Associate Broker, CRS, GRI , ABR ~ Flagstaff Real Estate/Community • March 14 2009 12:38AM

Help Sellers in this Recession

Excellent post, Rosemary. Just the other day I heard one of our fellow Flagstaff agents perpetuating the myth that when it heats up in Phoenix this year, our market will come back. Such happy talk is not client service.

Via Rosemary Harris (Century21 Flagstaff Realty):

So many times we hear "I don't want to give my house away." If I had a dollar for each time, right? Well sellers who said this to me 8 months ago have lost even more money in the downward spiral. Some sellers still believe that the market will magically rebound in spring or some other given time. Fact is no one knows when the market will stabilize. Its not likely to happen in the next year. After that there will still be plenty of people who will be foreclosed upon as their value has decreased to below what they owe.

Sellers should be given the true facts about the market and not an inflated value in order to secure the listing. It does not benefit the seller to be on the market with no activity. In fact you could say it is a disservice. I am not advocating "giving away" property. We are to represent the seller to the best of our ability and get them the highest price possible. POSSIBLE, that is the key. Portray the market as it is.

Things will change, we are all transitioning to working in a difficult market.

0 comments • Ann Heitland, Associate Broker, CRS, GRI , ABR ~ Flagstaff Real Estate/Community • March 08 2009 02:44PM