Real Estate Absorption Rates and Why They are Important

Recently I had an agent in my office ask me about absorption rates. They had heard of them before, but weren’t sure how to calculate them or what the calculations meant once they had the “absorption rate.” I assembled a quick presentation to explain the purpose of absorption rates and how to calculate them.

They are extremely important because if you are seller in a “buyers market”, you need to price your home aggressively to get it to sell. However, if you are a seller in a “sellers market”, you know that you have a little more leverage in pricing your home at a higher price because the demand is there to support that price.

Take a look at the presentation below for additional information. Before putting your house on the market, you should definitely ask your real estate broker to calculate absorption rates. I personally think its even more important than a traditional “comparative market analysis” or CMA that most brokers prepare when listing a home for sale.

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