Market absorption in real estate is actually a very important statistic, both for buyers and sellers, for a number of reasons. It’s important that buyers and sellers understand fully what market absorption is, how it’s calculated, and how it can impact them.
If you’ll be buying or selling a home, make sure you read on to find out what market absorption is, how it’s calculated, and the potential affects it can have on your real estate transaction.

What Is Market Absorption Rate?
The number of months it would take to sell the homes that are currently listed for sale if no other homes were listed for sale in the interim. This is the easiest way to define what market absorption is in real estate.
For example, if the current market absorption rate in Abeokuta real estate market is 4.5, this means it would take four and a half months to sell all the remaining homes that are listed for sale assuming no other properties were listed.
Some sellers could care less about their current local market absorption, which is actually a mistake. A highly recommended real estate interview question to ask prospective real estate agents when hiring an agent relates to the current market absorption. A top producing Realtor who has experience in the local market will have a strong grasp of what the current market absorption is at all times.

How Is Market Absorption Calculated?
How Is Market Absorption Calculated in Real Estate?
While some buyers and sellers don’t care to know how market absorption is calculated, there are a lot that do care. Below is a detailed explanation on how market absorption is calculated in real estate.
To calculate market absorption in real estate it is pretty simple. There are two pieces of data that are needed. The first piece of data that is needed to calculate market absorption is the number of homes sold in a specified area in a month. The final piece of data that is needed is the number of active homes that are for sale in a specified area.
Below is an example of how to calculate market absorption for real estate market.in Lagos.
Number of homes sold in Lagos in December 2015 = 35 homes
Number of active homes for sale in Lagos = 124 homes
To find out what the market absorption rate in Lagos is, simply divide the number of active homes in Lagos (124) by the number of sold homes in Lagos in the month in question i.e. December (35).
The calculation looks as follows: 124 / 35 = 3.54 – The current market absorption rate in Lagos real estate market is 3.54, which means if no other homes were listed for sale in Lagos, it would take about three and a half months to sell all the remaining homes for sale.

How Does Market Absorption Affect Home Buyers?
It’s pretty well known that market absorption affects home sellers, but it’s rarely discussed how the market absorption rate affects buyers. There are a handful of ways that market absorption affects buyers.
If a specific area or neighborhood that a buyer is attempting to purchase a home in is experiencing a low market absorption rate, it can be difficult for a buyer to find a suitable property. If an area or neighborhood is experiencing low market absorption rates, the market is sometimes referred to a sellers’ market.
It can be tricky for a buyer to successfully buy a home in a sellers’ market. A few of the best tips for buying a home in a sellers’ market include;

Get pre-approved, not pre-qualified – There is a difference between a mortgage pre-approval and pre-qualification
• Hire a top buyer’s real estate agent
• Be realistic and flexible
• Be ready to buy
Another potential impact that the market absorption rate can have on a buyer relates to the price they will pay for a home. If a buyer is searching for a home in an area that has a low market absorption rate, the chances they will be in a multiple offer scenario increase which typically will lead to a buyer paying more for a home.
A buyer who is aware of what the market absorption rate is in the market they are looking to purchase a home in gives themselves an advantage over other buyers. For example, if a buyer knows that the market absorption rate is indicating a buyers’ market, it’s possible they will be able to request additional items in their offer such as requesting seller concessions from a homeowner.


How Does Market Absorption Affect Home Sellers?
Find Out How Market Absorption Rate Affects Home Sellers
As mentioned above, market absorption can have a large impact on home sellers. The market absorption rate in a market is a great indicator to help a real estate agent as well as a seller determine the current state of a real estate market.

To be cont'd

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