With the uncertainty of the direction of the real estate market on the top of everyone’s mind today, there is confusion on the part of all involved – sellers, real estate agents, buyers, appraisers and mortgage brokers – about how to determine the value of a home. There are clear signals that can be helpful in determining how much a home is worth and how long it will take to sell it. Market signals – and the absorption rate – should be monitored by both sellers and agents to keep abreast of a changing housing market. Market Value Sellers control the listing prices. An agent may advise, but in the end, the seller sets the price. The buyer determines what someone is willing to pay for the house and, in most cases that is based on the value that is determined by the market. Market value is the price that a seller is willing to sell for and that a buyer is willing to pay. Once a home is placed on the market, feedback from showings is a good market signal to pay attention to. If the feedback is consistent – "house needs too much work", "don’t like the location", "property is too flat (hilly, narrow, etc)" – that reads, "House is too high in comparison to other homes that I have seen for the same price." Either the objection can be remedied (make some repairs) or the price can be adjusted to reposition it in the marketplace. "Supply and Demand" regarding housing inventory is a key market signal. If there are more houses coming on the market and the sales are not keeping up then prices will soften unless that changes. Sellers and agents must monitor the market absorption rate or "MAR". To calculate the MAR of the housing market in your price range – divide the number of available listings by the number of sales during that month. That will tell you how many homes in your price range sold that month. Then look at the number of available listings. For example using an absorption rate of 5, it means that it will take 5 months to sell the existing inventory. The lower an absorption rate the less time it takes to sell a home – which means more buyers, fewer homes. If the absorption rate is high, then buyers have more choices and may be very fussy about the properties they’re purchasing. Homes that are updated, in "mint" condition, in more desirable locations or settings and priced competitively in comparison with other homes on the market, will sell first. Price of a home and market position must match. "Chasing a market down" is the worst selling strategy possible! Monitoring feedback from showings, available inventory to check market position and the market absorption rate will help a seller make an informed decision. It is the responsibility and obligation of the listing agent to provide the seller with the information needed. All the exposure and marketing in the world cannot overcome a house priced too high for current market conditions. For more information about the value of your home in today’s market contact Cheryl at 631-549-1993 or firstname.lastname@example.org.