What Is Absorption? + Secrets to Multiplying Your Referrals + much more...

885,391 daily readers and growing! April 24, 2016 What Is Absorption? Dear Reader, Want to impress your clients and stand out in a sea of average agents? Who doesn’t?! What if I told you that you could learn a simple calculation that would set you apart from 95% of the other agents? Sound too good to be true? It's not. Here's a little tool I train agents with as a part of my Ultimate Listing Presentation seminar. But it's not just for listing agents. Knowing your market cold is the first step to becoming an authority -- the guy everyone goes to when they have a complex question about real estate -- and without this tool you probably don't know your market as well as you think you ado. Allow me to introduce you to Absorption Rate. Before your mind wanders off into numbness, let me also tell you that this is one of the most practical metrics or measurements you can learn for your market or for subsets of your market. And better yet, it will only take you a few minutes to learn it. Although the manufacturing segment of the economy has been using this metric for decades, real estate, for the most part still doesn’t. OK, so what is Absorption Rate? Simply put, it is the rate at which a market absorbs or eliminates inventory. Markets are always changing: new inventory is being added and old inventory is being sold or absorbed. Absorption rate helps you to take that fluid, ever-changing market and bring it into a measurable snapshot that you can use to advise your clients. When I was still in college I took a class on managerial calculus (I know… YICK!) and one of the only things I remember from the class was a small section on inventory modeling. It seems that one of the practical uses for higher mathematics was to allow industry to determine the precise level of inventory to stock. Stock too much, and the company tied up cash or debt in sitting inventory and carrying costs. Too little, and the company would lose sales by not having the products on hand. Now let’s take the logical step and apply it to real estate. Have you ever wondered why the average Days on Market (DOM) number from your local MLS never feels right? Why the MLS always seems to paint a rosier picture than reality? That’s because it’s not right! Sometimes it’s off by a little; other times it’s off by a mile. But it’s never accurate. Before writing this article, I thought I would pull the latest DOM figures from my local MLS and compare that statistic with the actual calculated DOM. The latest number as reported in my MLS is 77 days. However, when I calculated DOM using the absorption method, the actual average DOM is 240! And believe me, your MLS is off as well — maybe not by as much as mine, but it is typically off by more than 50%. So why the huge disparity? Because the MLS calculates the average DOM as the average days on market for the listings that actually sold. What it leaves out of its calculation altogether are homes that were withdrawn, listings that expired, listings that were withdrawn for a day and then re-listed to restart the clock, or those that were never put in the MLS until they sold (like new construction where they might list only one home in a subdivision, but actually have 20 for sale). And all of those affect the reported DOM. Not so when using the Absorption Rate method. You'll know exactly how many days it takes inventory, on average, to turn over. Or let's suppose you had a builder as a listing client. Using absorption rates for various price points, you could wisely advise him on which price points to focus on in order to maximize his sales. Or suppose you were going on a listing appointment and you were able to advise your client of the number of month’s inventory of homes like his that are currently on the market. Would that information be valuable in winning the listing? Of course it would be! What if you were working with a buyer, negotiating for his dream house. Imagine if you were able to communicate to the seller’s agent that there was over a year’s worth of inventory currently on hand for that particular price or type of home? You could easily give the listing agent the information he needed (and probably didn’t know) to help him persuade his client to consider your buyer’s offer. Well, believe it or not, it’s easier than you might think to have those numbers. All you need to know is how many of a certain price or type of property sold in the last twelve months, and how many of that same price or type of property is currently on the market. For example, let’s say that in the last 12 months there were 8,000 homes of a certain price or type sold. Currently, there are 2,000 on the market. That means that the current inventory level turned over, or sold, four times in a year. (8,000 / 2,000 = 4.0) Now, divide 12 (the number of months in a year) by 4.0 (the inventory turnover rate) and you have 3.0 (the absorption rate) to put it into months. The absorption rate is 3.0 months. That means is there is currently a 3.0 month inventory of properties of that certain price or type on the market. See how easy that was? But I’ll make it even easier. Our company created the following Absorption Rate Calculator for you to use and it does all the math for you. Just plug in the two numbers, press the button, and voila… the absorption rate! Now how cool is that?! Let me know what you think. If you want to try out my calculator, it's completely free. Just click the image above or go to: http://guerillarealty.com/absorption-rate-for-dummies/ By the way, if you haven’t yet tried my Ultimate Website (with LCM technology), I’d encourage you to check it out. Agents who use it are generating an average of 2-3 new inbound leads every day without spending additional money on advertising. It costs less than most websites and there is no long-term commitment or activation fee. Here is a link: http://guerillarealty.com. Get My Ultimate Website Now » As always, thanks for reading. Matt Jones Broker/President/CEO FavoriteAgent.com Matt Jones is the founder and CEO of FavoriteAgent.com, nationally syndicated columnist, broker, and best selling author. He has been profiled by major media outlets as an innovator and a pioneer in the industry, and CNN's Pulse on America claimed he and his company were "changing the way real estate is done in America."

I did not sign up for this #TRENDING Secrets to Multiplying Your Referrals » What systems do you have in place to double your business through referrals with each transaction? Top real estate agents implement great procedures to plant seeds for business referrals from the very Read more » Don't Use Email To Manage Transactions » As hackers continue to use fraudulent online messages to steal money from unsuspecting home buyers, Read more » Virtual Reality Could Revolutionize Real Estate Soon » The realization of Virtual Reality (VR) is set to have a big impact on real estate, offering buyers Read more » Now is a Great Time to Sell, Unless You are Also a Buyer » It's easy to typecast the players in the real estate market into two distinct roles: buyers and Read more » Selling in the Winter Works to an Investor's Advantage » When it comes to buying or selling a home, conventional wisdom dictates that winter is lousy timing. Read more » New Objective School Rankings for Your Real Estate Search » For young families moving to a new city one of the biggest challenges isn't just finding a suitable Read more » ECONOMY Owners Overvaluing Their Homes » Home owners are still slightly overvaluing their homes compared to appraisers' estimates, according to the latest Quicken Loans Home Price Perception Index. In December, average appraised values were Read more » 30% of Homes Lost Value Over Last Year » Not all American homes are rising in value. Read more » Four Real Estate Trends for 2016 » Whether you are buying, selling, or renting, there's no escaping Federal Reserve's anticipated Read more » Which Candidate Is Most Likely to Help the Housing Market? » We surveyed home sellers in late January to get their take on the market. Because it's an election Read more » Homebuying Could Become Unaffordable Within Two Years » With the right economic conditions, in two years, home affordability could get close to the same Read more » Want to Help the Middle Class? Build More Houses » America's future is happening first here, in Seattle. Just this year, Seattle technology jobs Read more » TECHNOLOGY Choosing the Best Anti-virus Software » What to choose when you have too many options? Read more » Microsoft Kills Internet Explorer 8, 9 and 10 » Internet Explorer has long been the bane of many Web developers' existence, but here's some news to Read more » Don't Use Email To Manage Transactions » As hackers continue to use fraudulent online messages to steal money from unsuspecting home buyers, Read more » Virtual Reality Could Revolutionize Real Estate Soon » The realization of Virtual Reality (VR) is set to have a big impact on real estate, offering buyers Read more » New Objective School Rankings for Your Real Estate Search » For young families moving to a new city one of the biggest challenges isn't just finding a suitable Read more » LAW Goldman Sachs Reaches $5B Settlement Amid Toxic Bonds Controversy » Goldman Sachs said Thursday that it reached a $5 billion settlement over claims related to toxic mortgage bonds sold to investors in the run up to the financial crisis. Read more » Judge Admits New Evidence in Realtor Murder Case » A Pulaski County Circuit Court judge ruled Wednesday that prosecutors could submit evidence obtained Read more » Agent Files $100k Suit Against Restaurant for Racial Discrimination » A Washington man has filed a $100,000 lawsuit against Elmer's, a diner chain up in the Northwest, Read more » Agent Charged With Terroristic Threats Misses Court » A Hot Springs realtor facing a terroristic threatening charge had a court date Thursday. Read more » Despite $1.2B Settlement, DOJ Still Pursuing Wells Fargo » Despite recently agreeing to a $1.2 billion settlement with the federal government to resolve claims Read more » Cancer Patient Sues Real Estate Couple for $500k » A Surrey cancer patient who claims a couple of local real estate agents cheated her out of $500,000 Read more » MARKETING How to Host an Open House Like a Pro » Open house is that certain time wherein you are opening your home for viewing. This means that you need to show off the features that will definitely attract people into buying your home. How can you Read more » 7 Ways Your Body Language Can Get People to Like You » Let your body do the talking Read more » Write an Ad That Sells » Imagine sitting at your kitchen table, having your cup of coffee and you break open your laptop and Read more » Should You Be Posting Your Listings on Social Media? » Social media is a great means of marketing your real estate listings. Unfortunately, not all real Read more » Use Virtual Geo- Farming to Generate Business » Geo-farming has long been a core strategy in the real estate professional's wheelhouse. Selecting a Read more » Create an Instagram Ad That People Like » Getting on the Instagram bandwagon Read more » INVESTING 3 Things for Investors to Consider With Apartment Complexes » Investing in real state is not a simple investment to make. It requires a lot of money, especially if you wanted extra in return. There are many ways and options which you may choose to invest, but Read more » Best Investment of 2016? Global Real Estate » According to Forbes, 2016 will likely have equities flat to negative. There are many factors Read more » How to Start in Real Estate Investing » When brothers Kelly and Chris Edwards bought their first house in Raleigh, North Carolina, in 2002, Read more » Selling in the Winter Works to an Investor's Advantage » When it comes to buying or selling a home, conventional wisdom dictates that winter is lousy timing. Read more » HOW-TO Home Selling Tips During a Divorce » Next to the possible arrangement for their children, a couple who has decided to live separate lives will definitely have to attend to their properties. Serena Elavia shares in FOX Business the Read more » 5 Biggest Turnoffs for Homebuyers » If you are on the selling end, there is nothing more important than you need to know than what make Read more »

5 Lies You've Been Told About Productivity » How being overly productive is counterproductive Read more » Customers-for-life Still Eluding Many Brokerages » One of the most common goals adopted almost universally by real estate brokerages is also the Read more » Make Sense of Online Advertising Metrics » The sheer amount of online marketing campaign data and website analytics is staggering. These Read more »

Help Your Buyer Find the Right Compromises » Your home shoppers may have a long wish list, but when it comes to finding a home – particularly Read more »

This is the NewsGeni.us e-Brief, a collection of the best real estate news and advice in one place. To cancel your subscription, follow this link http://www.newsgeni.us/unsub.php?email=dsoldit.blogpost@blogger.com&s=2135.

©2016 NewsGeni.us, 212 Northstone Pl, Fayetteville, NC 28314. All rights reserved.