Appreciation rates can (and many times do) change for previous quarters (and years) when graphs are updated. As a home sells the FHFA takes the appreciation based on the sale price minus the original price and distributes that money evenly over all the years it was owned. Click to read more about how this can change the look of the Focus 1st Appreciation Graphs and more.

In most cases, after looking at the data that the real estate agent has read into the Visual Pricing System, when we have problems, I almost always go back to the original search. In many cases, the search completed by the real estate agent is based on the number of bedrooms/bathrooms, total square feet, or something like that. In “most" cases, we recommend against those type of searches. Why?

This is part 1, of a three-part series on the, “Fatal Flaw with Absorption Rate Pricing.” Now in this part 1 session, we will be discussing what Absorption Rate Pricing is, how to calculate the Absorption Rate Pricing and how to use it. Before we do, let’s talk about why use Absorption Rate Pricing and what the intent of it is.

In summary, Absorption Rate Pricing is looking at the Absorption Rate and the months’ supply to determine if the market is increasing or declining. So what is the fatal flaw with Absorption Rate Pricing?

As we discussed earlier, the goal of the Absorption Rate Pricing is that you will need to “project” the sales for the next few months, and then determine how the subject property compares to the competition so that you can determine your opportunity to sell your listing.

So, if the Absorption Rate Pricing Analysis that we discussed isn’t dependable, what do we recommend?

We want to make sure that folks know that when you are using the trend line (or what we sometimes refer to as the Fair Market Value Line), it is not the same as pricing using price per square feet. And that Scattergrams are not just pricing homes based off of square footage.

At Focus 1st, we always state and stand by the idea that buyer’s are very intelligent people. With that being said, it is important to go into the next step while always keeping in mind to look at the subject property through the buyer’s eyes.