WARNING: Ignorant Buyers and Sellers Lose!

When I’m looking at a market to see if it’s leaning toward buyers, sellers — or neither — I look to the absorption rate. This means how long would it take to deplete the inventory at the rate that homes have gone under contract in the last 30 days. (Huh?)

Here’s my simple equation — if there are 100 homes on the market in a particular area (county, zip code, etc.), and 50 houses went under contract in that same area in the last 30 days, the absorption rate would be 2.0. Meaning, at the rate they’re going under contract, it would take 2 months to absorb the current inventory if no other homes come on the market.

Buyers Beware! Sellers Swear! What kind of market are you in!?!

Absorption rates tell a story — is it a buyer market, seller market or a market in equilibrium. A seller’s market is any absorption rate BELOW 3 months supply. A normal market would be BETWEEN 3-5 months supply; and a buyers market is any market ABOVE 5 months. (The accompanying graph from Cardinal Realty in Iowa City, is a perfect example graphically of how this works.)

The interesting thing in measuring these rates is that you can have a buyer AND seller market occurring at the same time, depending on the type and price of properties.

So what does that mean to you? Simple – when the market starts to shift, get aligned on your pricing (for sellers – bite the bullet and drop it!); for buyers, it means you can now come below asking price and get some closing cost assistance. But it’s all about the absorption rate in your price range, location, and property type.

Until next time…

Anthony Carr

Anthony Carr is a seasoned Associate Broker and Mentor with RE/MAX West End in Falls Church, Virginia, a powerful office serving the whole VA|MD|DC market. First licensed in 1995, Anthony has operated as a successful real estate agent, regional sales trainer, regional director of education as well as a managing broker in the robust market of Washington, D.C. Today, he operates a successful real estate business, helping buyers, sellers and investors grow their wealth by helping them realize their real estate goals. As an associate broker in Virginia, Maryland and Washington DC, his passion is mentoring buyers and sellers through the home selling/purchasing process. His clients have noted his steady approach to any situation that might pop up in a transaction that can be fraught with pitfalls! He has trained and coached thousands of agents in the DC area through his position as Director of Education with one of the country's largest independently owned real estate companies, and was the sales manager for the largest real estate team at the time, before deciding to focus on his own business - and putting into place all that he had coached others to do! And - it's paid off! Working with Anthony and his team, you'll benefit from the deep experience he has corralled from his diverse career - a negotiation expert,  published author, blogger and problem solver. Anthony authored the book “Real Estate Investing Made Simple: A commonsense approach to building wealth”; and was a contributing writer to the book, “The Best Real Estate Advice I Ever Received,” published by the Trump Organization. As a columnist for RealtyTimes.com, Anthony wrote hundreds of articles that were published worldwide. A sought-after expert in the industry, he has appeared in national news outlets such as the Los Angeles Times, The Washington Times, Woman’s World magazine and numerous webcasts. He has also been featured several times on CNN’s Open House broadcast. Anthony was the editor of The Washington Times' Friday Home Guide in the 1990s and served 8 years as the Director of Communications for the Northern Virginia Association of Realtors. So when you choose to work with Anthony, you have one of the most experienced, knowledgeable and steady agents in the business. He is married to his bride Corinne; father to Andrew, Austin, Rachel and Robyn; and Pop-Pop to three energetic grand kids!

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