Why Are Absorption Rates so Important?

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Today’s topic is all about the absorption rate in Rochester. Although this sounds like a rather technical term, it actually has a significant impact on your home’s value.

In fact, nothing impacts the value of your home or the real estate market nearly as much as the absorption rate. For instance, it determines whether inventory favors buyers or sellers. As agents, we need to understand what they are. If you interview a potential agent for hire, you must ask them about what the absorption rates are not only in your city, but for your neighborhood and type of property.

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The absorption rate has a significant impact on your home’s value.

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Absorption rates are calculated by current inventory levels and the amount of monthly sales for prospective properties in specific areas. Oftentimes, we categorize properties into different price ranges. We see a direct relationship on the average days on the market and list-to-sales ratio with absorption rates as well. Typically, the lower the inventory, the more it favors sellers. Vice versa, higher inventory favors buyers.

It’s important to examine recent data when determining home value. Otherwise, you’ll be comparing outdated numbers to your property and missing out on an accurate estimate.

If you’re thinking about buying or selling a Rochester home, give me a call or send me an email! I’d be happy to talk about absorption rates or anything else real estate with you.

How Can You Avoid Becoming a Pinball Listing?

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If you ever watch Bill O’Reilly on Fox News, you’ve probably heard him say, “Don’t be a pinhead!” In real estate, the advice to sellers is similar: “Don’t be a pinball!” When selling a home, you can become a pinball listing, which is something you desperately want to avoid. 

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Avoid becoming a pinball listing!

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If your home is not priced correctly and is in bad condition, you’re setting yourself up for failure. You will become a pinball listing: buyers will come and go, but no one will submit an offer. Buyers will see your home and bounce to another listing.

As a seller, it’s important to understand that either other listings are going to make your home look good or your home will make other listings look good. Which would you rather be: the home that wows buyers and gets multiple offers or the pinball listing? I think the answer is clear.

If you have questions about how you can avoid being a pinball listing, or if you need real estate assistance of any kind, please don’t hesitate to reach out to us. We would love to hear from you!

Will You Get Your Renovation Money Back When Selling in Rochester?

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Today’s topic comes from a question from our Facebook page, posted by Jennifer from Rochester. She asks, “Should I expect to get out of my home the costs of what I’ve put into it?”

In other words, she wants to know if she will she get all the money back that she’s spent on renovations and upgrades throughout the life of the home.

The answer to this question is maybe: it depends on the improvements you’ve made to your home.

Imagine two homes. The first home was built by the builder, and it needs a well that cost $20,000; the builder sold the home for $400,000. The second home, built by the same builder, ran into a problem with the well that resulted in it costing $40,000 to install. Just because the builder ran into an issue the second time around, and had to pump more money into it as a result, doesn’t mean the second home is worth more money; it’s still worth $400,000.

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Value is not determined by what you put into the home, but what the buyer gets out of it.

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The principle of substitution says that value is not determined by what a seller has put into the property, but what a buyer gets out of it. In the case of these two homes, they get exactly the same thing, water, even though it was more costly to install the well in the second home.

Keep this in mind when you go to sell your home. It’s not always as simple as spending money to make money when it comes to home renovations, so it’s best to check with a professional before making any big decisions. 

If you have any questions about this topic, or if you need real estate assistance of any kind, please don’t hesitate to reach out to us. We would love to hear from you!