Days on market ... An Algebra problem?
Number 2 question from prospective buyers is ... "How long has this property been on the market?" (Number 1 question is ... "How much?")
Question for all is, do the number of days on market really matter?
Do the days on market really mean something to the buyer?
To the seller?
To the REALTOR®?
If the home is new on the market, the buyer says "Everyone starts out high. Must be over priced."
If the home has been on the market awhile, say over "X" number of days, the buyer says "No wonder it's NOT sold. Must be over priced?"
Let's talk about "X".
If the average DOM is "X", does the buyer know that? Does the agent know? Does the seller even know that "X" exists on the MLS listing display? Is the average DOM "really the average?" or just a number?
The DOM is used in many CMA's to determine a value. Do you adjust the analysis to reflect the DOM? If so, is it easy to do, or is there heavy math involved? Do you tell the seller that many "good" listing agents re-list their listings after "X" amount of days to re-start the clock? As a sellers agent, if the DOM clock doesn't re-set, are the MLS rules fair to your seller? Are you promoting the best interests of the seller?
What do your MLS rules say? Do the DOM re-set when the listing is cancelled and re-listed? If so, has this helped to "trick" the buyers into thinking the property was newly listed?
Does the buyer agent have a responsibility to investigate and disclose the actual amount of days on market to the buyer?
In our MLS, the DOM stays running unless the property is off the market for at least 30 days. The DOM re-starts even if the seller changes Brokers or if it expires.
NAR reports the DOM monthly. How is your MLS playing the game?
Other posts about days on market
Our MLS will reset when entered as a 'new' listing, but we have a 'history' tab at the bottom that we can click and see the entire history of a house, even for a few years back. That is not shown on buyer reports, it is a Realtor-only function, and only for screen viewing. It doesn't print out on any reports.
I agree that it doesn't mean too much to say this house has been on the market 2 months. On the other hand, seeing that it's been on and off the market multiple times in the last year may help. Buyers seem most interested in this number on bank-owned properties.
I also love the question, "why are they selling?"
DAVID -
Good subject matter...it certainly matters to potential lenders providing financing.
It helps evaluate the accuracy of the collateral value offered in the subject property appraisal.
Underwriters use it as a compensating factor to balance the subjective nature of the appraisal process.
David,
The Ann Arbor Area Board of Realtors simply calculates the number of days the current ML# has been assigned to a property. So, if the listing agent has a propensity to relist the property everytime there is a price change, the DOM resets.
As for why a property is on the market for a period of time longer than average DOM, price is the reason. Property defects can be made up through a lower price, even if the 800 sf bungalow is one foot off the setback behind the corner gas station.....at the right price, someone will purchase that house!
You bring up some good questions, David. I've given this post a gold star in the MLS Issues Group.
You wrote that in your MLS, "the DOM stays running unless the property is off the market for at least 30 days" but really, even if the property is off the market for 30 days, it wouldn't be difficult for a buyer's agent to determine the true DOM.
A "smart" DOM calculation is a big step in the right direction. One could always compute the true days on market of a individual listing. Market stats, however, become very cumbersome if you have to adjust the DOM of each individual listing. It's nice to easily show a seller the average DOM without having it skewed downward by the broker switches, re-lists, and the infamous "cancel/re-list/presto new fresh listing" trick.
I hear our other local MLS, MiRealSource, will be following suit in this regard.
You've hit one of my sore spots.
DOM is close to meaningless, unless you can tell me that you have a good number for the subject and all the comps.
You can't tell me that in our MLS. Too much listing laundering.
Hi David -
Our MLS system now gives both DOM and CDOM (continuous days on market) - In combination with price variences over time, I find these helpful as an appraiser to determine whether a sale might be distressed or marked high, etc. If the DOM or CDOM are lengthy or short, I note this in the appraisal report.
I have also looked at this data when purchasing houses to determine whether it might be prudent to offer less for a property or be aware of any possible sale fails, etc.
It would be incredible if this information was also absorbed into AVMs to determine whether a sale might be thrown out as an 'abnormal' transaction (this might also go for FSBOs, etc.. but that's a whole other post) -
Sara