From the Inbox:
A couple of days ago I received a great question from a reader that I thought I would share:
Is there still a stigma attached to the DOM considering many homes are taking much longer to sell and how many days are too many.
“DOM” = Days on Market = how many days a home has been listed for sale.
Some home buyers (and real estate agents) are convinced that a home that has been on the market “a long time” has something wrong with it. As our astute questioner points out though, homes are generally taking much longer to sell these days. Is that accounted for in these buyers and agents minds? How much is “a long time”?
Answer: I have no idea.
Personally, I’ve never put as much weight on DOM as many do. Why not? Because there are are several reasons that a home may languish on the market, or show a “high” DOM when there is nothing (structurally or cosmetically) wrong with the home.
It could be overpriced. Now that is “wrong”, but it’s wrongness in the pricing and marketing of the home — there may be nothing wrong with the home itself.
There are lots of reasons a
home can have high DOM
Maybe it was in and out of escrow, with the DOM piling up. Maybe due to something wrong with the buyers, not the home.
Maybe some knucklehead had it in the MLS in the wrong subdivision, or the wrong price, or the wrong zip code — so no buyer ever knew it was for sale. Think that doesn’t happen? Trust me, it happens all the time.
And sadly, there are those out there that will play games with the MLS to artificially “reset” the DOM. Our MLS does a relatively good job of preventing that (though there are ways. Unethical ways, but ways none-the-less). I’ve heard there are MLS’s out there where resetting the DOM is but a few clicks away.
And yes, sometimes a home stays on the market because there is something wrong with it. Usually market dynamics will take care of those homes and they will either: 1) come down in price until the price-point accounts for the defect and the market considers it a reasonable deal; 2) the defect is addressed’ or 3) the home is taken off the market. I suppose I should add 4) the home is purchased by an unsuspecting buyer that doesn’t get a home inspection (a really, really bad idea. But it happens.)
Some of these things are fairly easy to detect in a thorough listing history review. But the high DOM stigma has often already latched on regardless of the reason or if that reason truly reflects on the home itself.
So *I* don’t think DOM is worth a hill of beans. But I’m not a home buyer. The fact is, many home buyers seem to care. And some care a lot. I’ve had buyers who wanted to know the DOM before they wanted to know the price. There is a common perception that sellers whose homes have been on the market “a long time” will be more willing to negotiate, giving the buyer a better deal.
But consider this… Maybe, just maybe, the DOM is high because the sellers are not willing to negotiate.
To answer the specific questions, is there still a stigma attached to DOM? Yes, in many people’s eyes. Right or wrong, DOM will always be a concern to some. How many days are too many? Beats me. I suspect it’s entirely dependent on the buyer and/or the influence of the buyer’s agent.
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{ 15 comments… read them below or add one }
I love rocky point and all of mexico but the real estate in Mexico is so different the dom issue is ridiculious and has cost me many real estate deals people want to pay nothing for proprty with DOM but anyway you have to price it right at the beginning or you will suffer
I think Russell Shaw said it best; problem is, I can’t find the post he wrote, so I have to paraphrase him in saying something to the effect of … do you care how many days on market certain non perishable goods are sitting on a shelf if they happen to be great buys?
I hope Russell stops by to “elaborate” on this.. LOL
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I usually look at DOM to see, as you mentioned, whether we’re dealing with sellers who are working with ZERO equity and simply can’t go lower without going short sale, or sellers unwilling to lose invisible equity they believe they still have and sticking with a non-competitive price.
And sometimes it’s just worthless.
You also brought up a good point that some agents don’t do their homework to make sure that the property is listed in a way that makes it easy to market.
Take this property:
4633 S Redrock Court
Gilbert, AZ 85297
If you toss it into Google Maps, or use the MLS Search feature on this site, you’ll see it’s not listed correctly.
On the MLS search tool, it ends up being 2 miles or so south of where it is. That’s wrong.
On Google Maps, they guesstimate as to the location more appropriately, but are still off by a street or two.
D.O.M is a good tool for those of us who can’t see realtor comments. But even then you need to examine similar comps and trends in the neighborhood to see what the DOM can tell ya
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I definitely feel that the days on market is a factor. Its common sense that when someone says that anything has been trying to sell for a long time the question that arises is there must be a reason.
Not in good shape, price to high.
Now when it comes to real estate their is no difference. If I tell you I have a home that is perfect and then I tell you it has been trying to sell for 10 months then subconsciously the brain says UH, I wonder why?
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Yeah I’d have to say that there seems to be a stigma with days on market - but as you mentioned, there are several reasons why days on market could be higher than they should be.
I’d hope an agent/buyer did a little more research than viewing the days on market before making an “interested or not” decision on a property, but I’ll bet it happens all the time.
Excellent summary, Jay. I agree that the number isn’t all that relevant without further information, although it is a good flag to say ‘yoohooo, something’s up here.’ Our local MLS is considering changes to it’s advertisement of DOM and associated rules, and I can’t help but wonder why we are going to the trouble. Regardless of how it’s handled, buyer’s agents have some ’splaining to do. If your client is considering an offer, you should be looking deeper in to the pricing etc whether the DOM is 25, 300 or 450.
A home with many days on market certainly raises (perhaps unfounded) suspicions in consumers. I’ve seen homes taken off the market and put back on just to reduce the days on market count.
I agree with Jim and Russell, if a home is a good one, it shouldn’t matter how long it has been on the market.
Jay, I disagree. No Surprise there. DOM makes all the difference. I tell someone what the house is worth and they list with someone who tells them 20 or even $50,000 more (sometimes even more than that). Anyway, the other agent gets the listing and then “works” them down to market value. The owner wastes time and looses money because it ends up selling for even less than what I told him.
And, when I am a buyers agent - I always suggest a price based on the DOM and how many times it has been with different agents. Where he started means nothing to me and the buyers I represent. The offer is based on today’s value.
Happy House Hunting! It’s an Investor’s Market.
My MLS allows manipulation of the Days on Market but anyone with two brain cells can find out how long the house has really been on the market.
The reason why agents manipulate it in my area is because our email notification system only emails listings to clients when there has been a change - new price, new listing, etc. New buyers and even agents will overlook properties on the market for a long time. Priority is always given to the newer listings - so if you’re a listing agent you have an obligation to expose your listing to as many people as possible.
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Since when is lying (or, manipulation of facts) an obligation to anyone. Maybe, George Bush mentality is what’s wrong with our country today.
If I am the buyer and learn about DOM of a particular unit being sold, I would be skeptic about it, so I think it does affect the buying decision of people who are interested.
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So, how many days is “too many” before DOM becomes a red flag? If I said, “This home has been on the market for 120 days” a lot of people would say, “Wow, wonder what’s wrong with it?”
But what if the average DOM in this area is 119 days? (which it is).
Jay, You know a 120 days in a normal market is standard. So, I don’t encourage the so called low ball offer from any buyers I may be working with at that time. However, if it’s a 120 day and you are the second or third agent ()I want to count all days on the market) - I’m betting the owner may be willing to talk.
Besides, the Avg. DOM doesn’t mean much if the inventory of similar available homes has grown to a ten year high. Economics 101 - supply and demand. How many offers have they gotten and how many have they turned down? If they want to mov, they better start talking or your going to spend a lot of money advertising something that will never sell. Good Luck and Happy House Hunting.
Jay - I can’t tell you how many times a buyer client asks me how long the home has been on the market, as if it does make a difference. Everytime it’s a home with longer DOM, they want to offer less, regardless of whether the home has recently been reduced.
You ask, if the average DOM are 119 and the home has been on the market for 120, is it really too long? Averages are just that - you take a seller who is stuck on “their” price and on the market for 200 days, average that with a seller who is priced well and sells in 45 days, and the seller who sells in 20 days - then there is price point; averages don’t tell the whole story.
Paula - excellent point on averages. One of the most overused and misunderstood statistics out there…
Greg wrote - “Besides, the Avg. DOM doesn’t mean much if the inventory of similar available homes has grown to a ten year high.”
That was pretty much my point. In our current market, DOM is pretty much meaningless. BUT, it clearly means something to a lot of buyers and agents.