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Line 2, Absorption Rate (Total Sales/Months)

The appraiser should report the result of dividing the number of comparable sales in the neighborhood for each time period by the number of months in the time period.  For the 7 – 12 Months period, the number of sales should be divided by six.  For the other two columns the number of sales should be divided by three.

The result will reflect the typical number of comparable homes sold within the subject’s neighborhood per month.  The higher the absorption rate the greater the sales activity of similar homes in the neighborhood.

The absorption rate is used in conjunction with the number of available comparable homes to gauge the months of housing inventory that currently exists (based on historic performance).

 

 

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