How to calculate your Turnover and Absorption Rates

How to calculate your Turnover and Absorption Rates This article will help you calculate how many prospecting conversations you need to be having to achieve your transaction goals.

The most important number to know about your market is the turnover rate. By definition, this is the rate, in years, by which people move and sell their house.

The absorption rate will identify what percentage of people in your community will buy and/or sell within the next year.

This number directly applies to your overall prospecting goal, as in order to know how many people you need to prospect, you need to know how many will be interested in Real Estate!

Turnover Rate

This template makes it super easy to calculate:

Step 1) Figure out what geographic area you’re going to calculate this for. It could be a specific neighbourhood, zip code, town, or city.

Step 2) Find out how many total homes sold in that area, in the last 12 months. You can use Zillow or your MLS for these statistics.

Step 3) Figure out how many sellable households there were in that area by searching the zip code on unitedstateszipcodes.org and scrolling down to the “Real Estate and Housing” section.

Remember, the total number of homes includes rental properties and you cannot buy and sell those individual units. So, you must remove rental properties from the total households to get the total number of sellable households in your market.

Step 4) Once you calculate these numbers, the equation below calculates the turnover rate:

  • Total Sellable / Total Sold

= Turnover Rate

With your turnover rate, you now can identify the selling tendencies of the community itself and your share of this business.

The turnover rate is used in several Parkbench calculators. These calculators are used to identify how Parkbench fits into your overall business plan.

Absorption Rate

To figure out the absorption rate follow these steps:

Step 1) Figure out what geographic area you’re going to calculate this for. It could be a specific neighbourhood, zip code, town, or city.

Step 2) Find out how many total homes sold in that area, in the last 12 months. You can use Zillow or your MLS for these statistics.

Step 3) Figure out how many sellable households there were in that area by searching the zip code on unitedstateszipcodes.org and scrolling down to the “Real Estate and Housing” section.

Remember, the total number of homes includes rental properties and you cannot buy and sell those individual units. So, you must remove rental properties from the total households to get the total number of sellable households in your market.

Step 4) Once you calculate these numbers, the equation below calculates the absorption rate:

  • Total Sold / Total Sellable X 100

= Absorption rate (%)

This percentage will reflect the number of people out of 100 who are likely going to be buying and/or selling within the next year.

Now that you know the turnover rate, you know how many people you need to prospect in order to find 1 HOT buyer and/or seller lead.

Final Thoughts

Now you can calculate how big your database needs to be so you can have consistent deal flow every single year.

If this number goes up or down over time, you also know to change your marketing and advertising efforts accordingly. 

For example, if the market slows down, you need to prospect more and advertise more. If the market speeds up, however, you can adjust your spending to achieve your goals, or work just as hard to make more money!

Now, you will want to calculate the turnover rate for all the areas that you want to target.

Then, once you’re done, which area do you think you might want to prospect and advertise more in?

The one with the lowest turnover rate!

For more information feel free to reach out to the Parkbench Support Team at  

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