I. For Sellers
- In a seller’s market (high absorption rate), where demand exceeds supply, sellers have the advantage. They can typically sell their properties more quickly and at potentially higher prices due to limited inventory and high demand.
- Monitoring absorption rate helps sellers gauge the level of competition and adjust pricing and marketing strategies accordingly. In a high absorption rate environment, sellers may be more aggressive with pricing, knowing that demand is strong and properties are likely to sell quickly.
II. For Buyers
- In a buyer’s market (low absorption rate), where supply exceeds demand, buyers have more negotiating power. There are more properties available on the market, and sellers may be more willing to negotiate on price and terms to attract buyers.
- Absorption rate helps buyers understand market conditions and make informed decisions. A low absorption rate suggests less competition and potentially more opportunities for buyers to find properties that meet their criteria at lower prices or with more favorable terms.
Absorption Rate: Formula, How to Calculate, Examples & Importance