Absorption Rate & Pending Sales

[C&L]

How do you take into account Pending Sales when formulating the absorption rate?
Count 'em as "active listing", count 'em as a "sale" or don't count 'em at all?

Thanks

 

[dobie]

How do you take into account Pending Sales when formulating the absorption rate?
Count 'em as "active listing", count 'em as a "sale" or don't count 'em at all?

Thanks

The more conservative approach would be to count them as actives. I would certainly not count them as sales.

 

[Szal US]

Agreed, they are not closed so they are not technically sales. Above the grid research section I list active and closed and in comments I list pendings and expireds. You CAN use pending in your absorption rates however and you would do well to include them as these are your most current market trends. Absorption is from list date to contract date, not closed date (if you have that amount of detail in your local MLS).

 

[hastalavista]

How are you using the term "absorption rate"?

 

[Mztk1]

Szal, once again, has it right in my book - geeze Szal that's three today and you only have 11 posts. We count days on the market up to contract date so technically when a house is contracted it is off the market, i.e., it is absorbed. I count closed and pendings in my absorption rate and though I should exclude the sales that closed on the back end because they contracted outside of the year, I don't get that into it unless I am doing a project analysis and feasibility analysis. My main goal in analysing absorption for a typical residential assignment is to determine if there is an oversupply in a given market. I can tell that pretty easily and a missed one here and there isn't going to change matters much.

 

[V. Nightshade]

I still will count true pending sales as sales, as they reflect a situation where all of the contingencies are released. However, I hardly see any pendings these days, so they don't really affect the statistics. However, I see lots of contingents which are mostly short sales. I've heard statistics that show that some small percentage (don't recall what) of these offers lead to closed sales, and therefore I don't use them as closed sales in my absorption rate calculation.

 

[C&L]

All very good points and advice. Thanks...!!

 

[Szal US]

LOL Klos, I only wish I discovered this forum years ago!