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Absorption Rate – What’s the Market Like?

The Absorption Rate gives us the answer to the question “What’s the market like?” We get this question almost daily. In central Indiana, it’s HOT and we are still experiencing a Seller’s Market. How do we know that?

The Absorption rate is a metric used to determine what type of market we are in – Seller’s, Neutral or Buyer’s.

If you are considering selling, now is the time, but why do we say that?

Why Now?

Currently, the inventory level of homes for sale/Absorption Rate is just 1.6 months. That means, at the current rate of sales, we would run out of homes for sale in 1.6 months, if no other homes came on the market.

Visually, it looks like this:

How Does a low Absorption Rate Affect Sellers?

For Sellers, this means there is not as much competition and if you price your home in the sweet spot for its condition, you will likely sell – and pretty quickly!

Recently, within the last 2 to 3 weeks, our new listings are selling with multiple offers on the table within the first few days on the market. We actually had 9 offers on one of our new listings! This is great news for sellers. Getting the highest price in the quickest amount of time is a seller’s dream!

How do Buyers Handle this Market?

Buyers are doing all sorts of things to make their offer THE most attractive to a seller – not only in price, but with the terms of the contract (possession date, taxes, Settlement Fees, etc…)

In this market, buyers need an agent who is savvy at advising them of what it will take to get them their dream home. The final decision, of course, is the buyers but knowing your options is key to making an informed decision!

Good representation is essential in this type of a market. The Real Estate Pros team is well versed in negotiation to get the best deal possible for our buyers. We do this everyday, day in and day out. That type of experience and knowledge can make all the difference for a client.

Absorption Rate is Key

Now you know what the Absorption Rate is and how to handle it from both a buyer’s and seller’s perspective. It tells us what type of market we are in currently – a snapshot in time. Remember, knowledge is power!