Fridrich & Clark Realty, LLC

Absorption Rate = how long it will take to sell the current inventory of homes at the present rate of sale

Simply put, the Absorption Rate in your neighborhood and price range quantifies the market and helps you and your professional Fridrich & Clark Realtor calculate the odds of selling your home in current market conditions.  As a buyer, the Absorption Rate provides you with powerful negotiation information.

Absoprtion Rates are computed based on the number of comparable homes currently on the market, bounced against how many comparable homes were sold in the same market over a specific period of time.  Just as in every other industry, real estate prices are a function of supply and demand.  The applicable Absorption Rate for your home will give you valuable information to help you and your Realtor price your home for effective sale.  In addition, Absorption Rates can give a buyer a basis for determining a reasonable offer on a home.  Whether you are a seller or a buyer, your Realtor's knowledge of Absorption Rates is vital.  Fridrich & Clark Realtors have had extensive training in calculating, localizing, and interpreting Absorption Rates, and their market knowledge will provide the most current Absorption Rate applicable to you as a seller or buyer.

Absorption Rate calculation is not an exact science.  An Absorption Rate represents a snapshot in time, and, as trends change, the Absorption Rate may go up or down.

Absorption Rate Pricing is a way to look at the inventory of unsold homes in your price range and neighborhood and to assist you with successfully marketing yiour home.  Here's an example of how your Realtor may calculate the Absorption Rate for your location and price range:

REMEMBER, THE FOLLOWING FIGURES AREN'T REAL - JUST AN EXAMPLE - for this example, we will use comparable properties in the price range of $450,000 to $500,000:

Number of Properties sold in the last 12 months = 61
Number of Current Properties on the Market = 72
61 Properties sold divided by 12 months = 5.08 per month
72 Properties on the Market divided by the rate of 5 = 14 Months' Supply
AT THE CURRENT RATE IN THIS EXAMPLE, IT WILL TAKE ON AVERAGE 14.4 MONTHS TO SELL YOUR HOME.

SO - what does this mean?  Conventional wisdom says that:
If there is more than six months of inventory on the market, it's a "Buyers' market."
If there is less than six months of inventory on the market, it's a "Sellers' market."

Your Fridrich & Clark Realtor may recommend that together you calculate Absorption Rate over a shorter period of time - maybe 3 months or 6 months, and your Realtor may recommend that the Absorption Rate be frequently recalculated to track market trends.  Understanding the market and where it is headed is part of our job as real estate professionals.