Strategies to Understand

It is important for sellers to understand certain strategies and formulas in the listing and selling process to net you the most money.  

List-to-Sell Ratio

First, make sure you know your REALTOR®’S List-to-Sell Price ratio.   The final sale price (what a buyer pays for the home) divided by the last list price expressed as a percentage. If it's above 100%, the home sold for more than the list price. If it's less than 100%, the home sold for less than the list price. Looking at sale-to-list percentages can help buyers and sellers get a sense of how to negotiate on pricing.

Let’s say a REALTOR®’s List-to-Sell Ratio is 93%.   That means if you list your property with this REALTOR® you should expect to net 93% or better of your listing price.   (This is provided that you will list your home within 5% of the Comparable Market Analysis suggested list price.)

Before you list with a REALTOR that offers you a lower fee rate, make sure you have done the math to know if in fact a lower commission will net you more. If the REALTOR has a lower list-to-sell ratio you may find out that you actually net less.   Do the math:   Take the list price X the list-to-sell ratio – the commission = probable net amount you will walk away with.   Check it out.

Absorption Rate

Knowing the area absorption rate is important for you as a seller to know to give you some idea of how long it might take to sell your home.

The absorption rate is the rate at which available homes are sold in a specific real estate market during a given time period. It is calculated by dividing the total number of available homes by the average number of sales per month. The figure shows how many months it will take to exhaust the supply of homes on the market. A high absorption rate may indicate that the supply of available homes will shrink rapidly, increasing the odds that a homeowner will sell a piece of property in a shorter period of time.

Example of Absorption Rate Calculation - Let's say that we take the number of settled sales for the last six months in a certain area, and it is 120. We then check the current number of active listings, and it is 520 in that area. First, divide the 120 sales by 6 months, to get a rate of 20 closings per month. Then, divide the 520 active listings by 20 to arrive at 26 months to move that inventory; that's the absorption rate

Day on the Market (DOM)

Knowing the average days on the market for all properties sold in a given time period is helpful information to you as a seller to know what to expect for the time frame to get your home/land sold.    If the average days on the market is 129 days (which it was in this area for October, 2013) and your home has a contract on it in 90 days – you and your REALTOR® are ahead of the averages!  On the other hand, if your home has been on the market for 150 days and you have not had an offer, it is time to talk with your REALTOR® about what you can do to spruce up the property, lower the price and/or talk about the marketing plan.  Remember, homes do not sell for two reasons – priced incorrectly or poor marketing