WHAT IS AN ABSORPTION RATE IN REAL ESTATE?

Have you heard people talk about the absorption rate

when they are talking about real estate? 

What is an absorption rate...and what does it have to do with you?

 To find the absorption rate...the number of currently listed properties is divided by the average number of sales for a specific time frame. 

For example:  

In Lewiston/Auburn, Maine in the middle of January 2012

there were 367 single family residential properties listed for sale.  

On average 30.25 single family residential properties sold per month

 in the area over the past year.  

So if we divide the current inventory (367 homes) by the average sold (30.25 per month) we get the estimated time it will take to sell the current inventory on the market (Absorption Rate).

If there are no new listings and property continues to sell at the current rate,

there are roughly 12 months or 1 year of inventory on the market in Lewiston/Auburn.

WHAT DOES IT MEAN TO YOU?

The higher the absorption rate,

 the longer it will take to clear the current inventory from the market.

As a seller...if there is an absorption rate of 12.13 or roughly 12 months of inventory on the market, you will want to be more aggressive by not only pricing the home properly,

 but by staging and preparing your home  to get your property noticed and sold

 than if there is only an absorption rate of 3 or 4. 

As a buyer...you may have more bargaining power if the absorption rate is higher.  Sellers may be competing against higher inventory for buyers and more willing to negotiate. 

If you are interested in finding out the absorption rate for your area in Maine,

e-mail us for your FREE REPORT!