Monday, September 29, 2014

Absorption Rates

Hello all,

"Absorption Rates"

To continue the conversation of a changing inventory market using absorption rates to help explain the state of the market can be a useful tool with your sellers. To calculate absorption rates in an area you need to go back 12 months and get the total closed sales, you then divide that number by 12 to get the closed sales per month. Next find the number of active listings and divide that by the number of sales per month to find the number of months worth of inventory there is in that area. Here are two examples:

Area = 20874 Zip Code (Macro) Number of closed sales past 12 months = 768. 768 divided by 12 = 64 which is the closed sales per month. Number of active listings in 20874 is 254, 254 divided by 64 = 3.9 which is the number of months the market would take to absorb all of the properties if nothing else came on the market. 

Area= Churchill Town Sector which is a subdivision in 20874 (Micro) Number of closed sales past 12 months = 131. 131 divided by 12 = 11 which is the closed sales per month. Number of active listings = 47, 47 divided by 11 = 4.2 months worth of inventory.

Where this becomes useful with your sellers is the dialogue you can create with it. "You see Mr. & Mrs. Seller with the data we just went through in Churchill Town Sector there will be 11 sales in the next 30 days, to be one of those properties to sell we need to be in the top 11 based on condition and price". So if you have a listing that is overpriced or not in the best condition you can show them what they need to do and where they need to be to sell based on the competition. If you need further help with this on a particular property don't hesitate to ask.

Enjoy the coffee,

Monday Morning Coffee
"A man will find that as he alters his thoughts toward things and other people, things and other people will alter towards him.... Let a man radically alter his thoughts, and he will be astonished at the rapid transformation it will effect in the material conditions of his life. Men do not attract that which they want, but that which they are.... The divinity that shapes our ends is in ourselves. It is our very self.... All that a man achieves is the direct result of his own thoughts.... A man can only rise, conquer and achieve by lifting up his thoughts. He can only remain weak and abject and miserable by refusing to lift up his thoughts." 
~ James Allen, "As A Man Thinketh"
It's so simple . . . the advice given in the above quote . . . and so true. Each of us has the power to elevate the value and quality of our life, simply by "lifting up" our thoughts, by placing our hands firmly on the wheel of positive thinking. Earl Nightingale gave an example in one of his taped programs. He said imagine that you are the operator of a huge piece of earth-moving equipment. You are perched in a small cab, hands on the wheel, and have the ability to move vast amounts of earth. Would you take your hands off the wheel and let it run itself into a ditch?
Your mind, and hence your thoughts, mirror that steering wheel. Through positive thoughts, you guide your life in a direction that produces positive actions, resulting in positive re-actions from others. Refusing to keep your hands on the wheel will quickly deliver you into life's ditches.
Life today is complex. It brings with it many opportunities for negative thinking. They range from the personal early morning "Hurry up, we're going to be late!" to the mid-day business crisis of "The deal isn't going to close!" Another quote goes like this: "Think you can, think you can't, either way you're right!" Again, it's your choice, isn't it?
The next time you feel frustration and doubt creeping into your vocabulary, think of a time when you felt really good about a similar situation . . . then replace the negative thought with a positive statement. As another wise individual once said, "Our lives are what our thoughts make of it."

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