How Days On Market Affects Buyer Offers
What Does Days On Market (DOM) Really Mean to Homeowners?
Days on Market or DOM is a real estate statistic that can be very misleading for both homeowners and home buyers. On the surface, this is just the number of days a particular property has been listed on the multiple listing service (MLS) without being sold.
Sounds simple, yes?
Not so fast. For instance, 50 days on market could sound like a long time in a particular zip code, price range or dwelling type (single family home, condo, etc.). The same 50 days means something completely different in a different zip and price range.
For example let’s look at all single family homes in the Scottsdale zip code of 85251. The average days on market *for that zip code and all homes overall* for the six months ending 3/23/2018 was 70.
Now let’s look at how price influences that number:
- $200,000 to $300,000 DOM was 59
- $300,000 to $400,000 DOM was 68
- $400,000 to $500,000 DOM was 77
- $500,000 to $600,000 DOM was86
Are you seeing a pattern here? Yes! Price influences how long it takes a home to sell.
There are many factors other than price that influence Days On Market. Here are just a few:
- Zip Code – Location Location Location. Great neighborhood vs not as great affects Days On Market.
- Condition of the home or homes nearby – We have all seen the “ugly house next door” problem and unfortunately, it DOES impact Days on Market.
- Listing Status. A listing is in Active status when it is entered into the MLS. This is when the Days On Market counter starts. When a contract is accepted by the seller, the agent can place the house on Pending status which stops the DOM counter and Buyers Agents can no longer show it. The seller can, however, choose to keep marketing the house for backup offers in case the accepted offer “falls out”, which can happen.
To keep marketing the listing, the agent can place the house in UCB (under contract but accepting backup offers) or CBS(contingent on the buyer selling their own home) status which keeps the DOM meter running.
- Listing price is too high. Most sellers think their home is worth more than all the neighbors’ homes. It might take the seller several weeks or even months to “get real” about their home’s actual worth and what the market will bear.
Some sellers just want to “throw a hook in the water” to see if someone bites before reducing their price to attract buyers. I do NOT recommend that strategy because it signals to buyers that the home has been on the market longer and is not selling, triggering lower offers.
- Poor Marketing. This is my favorite. Many agents have no marketing plan other than to put the house on the MLS with a few poor quality photos and hope a buyer stumbles onto it. Yes, this happens all too often. Just look at any search site to see the haphazard way most listings are put together.Hire a Realtor who can represent your home to Buyers in a way that will get it sold quickly and for the right price. Be SURE to ask for their Digital Marketing Plan since they have to market where the buyers are, which is ONLINE!
I hope you can see by now that the “Days On Market” number is really not very significant except to see very general trends in a market.
Use it to see if homes (in general) are selling faster this year than last year in your city or state but not to see how long it will take to sell YOUR house. For that, you will need a Realtor who knows how to obtain and interpret the data in your neighborhood and give you a fair assessment of value and selling time.
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December 30, 2019