Days on Market

Do the "Days on Market" gauge more than how long a house has been on the market?

What does it really Mean?

There are several things I look at after narrowing a search of homes or investment property to look at. Once I have narrowed my search using the simple search criteria of the number of bedrooms, location and price range, I try to gauge the motivation of the seller to see where my offer should be.  There are a few indicators that might give me a clue: how long the house has been on the marketthe history of the listing and who the owner is.

DOM , and CDOM.  DOM (Days on market) is a stat that indicates how long the subject has been on the market uninterrupted. CDOM is a cumulative number that will encompass the past two years of days on market, whether consecutive or not.

When I study the history of the property listed I can learn how many times it has been listed, what the price changes have been, if any, and who the listing agent(s) have been. If I dive a bit further into the history I can discover who the owners are and have been, what building permits (hence permitted improvements) have been done, and if there have been other transfers (like to an estate). I can also see if the home is homesteaded (which means the home is probably owner occupied).

There are number of reasons,  none mutually exclusive, that can cause a house to be on the market for a long time.   For your  reference, our market hit a low median CDOM of 115 days back in April, 2009. Our current  median CDOM is 162. (June 2017)

1.      Current market conditions.  (Low demand, interest rate hikes, poor economy, etc).  If there is downward price pressure as there is today, sellers are slow to react to the pressure and properties may languish on the market.

2.      The home is not easy to show to prospective buyers.

a.      Tenant occupied

b.      Too much advance notice required

c.      The agent does not answer his phone or otherwise makes the home difficult to show.

By the way. No joke on point 2C above. I show a large number of homes every week.  I’ll pick 6 homes in a day to see. I’ll get no return phone call from at least 1. Last week I actually had an agent call me back FIVE days later. My client already offered on another home.  Another agent was out of the country and had no one covering for him.  Talk to any good agent and they will confirm that the lack of response from some agents is endemic. (Please don’t pick an agent because he only has a few listings and will not be too busy to handle yours.

 

3.      The home is under renovation or is being built. In this case there are a number stages that the home is viewed in and the long DOM will not indicate that 90 days ago it was a shell home and now it is completed for example.

4.      The home shows poorly. Dark, cluttered, tenant occupied, pet smells, poor maintenance, owners don’t leave during a showing, poor staging or no staging at all; these are some of a long list of showing s mistakes that are easily cured.

5.      Poor presentation on websites, poor pictures. For a few hundred dollars, a professional photographer can light up and record the property so it will draw more prospects. A video will also help.

6.      The home is not financeable. Either it will not pass a four point inspection or it will not qualify for FHA financing for other reasons ( like it is in a non-warrantable condominium complex). This will limit the prospects.

7.      Location not in a convenient location to show. This is especially true there are a larger number homes that compete price-wise. In fact, all these points are MORE critical when there is competition, Realtors and prospects see the homes that are easy to see.

8.      Price is too high.  Simple. But I like to see programmed price reductions every 30 days. It will give an indication to prospects  that the seller is motivated. You or your agent should shop the competition in your price range regularly to keep updated. In fact before I list a property I will look at all homes that my prospects will look at when they see my listing in order to determine the nest listing price.

9.      Seller Motivation. Most agents dis-like taking a listing from someone that just wants to “test the market”, after all they only get paid to sell. But long days on the market may mean that the seller is not motivated to negotiate.

10.   Seller paid too much for his home. “But I can’t take less, after all I paid $200,000”. I often ask these l clients if they got the house for free would they give it away?  Of course, not, the market sets the price not the cost. You could also label this one as Unreasonable Expectations. By the way did you know that is is unethical for a Realtor to take a listing that is knowingly over priced without informing the seller of his professional opinion about the price?

11.   The house is unique and appeals to fewer buyers.  All comps show the house is priced right, but the style or layout of the house may only appeal to a limited number of buyers.

Properties that are new to the market, on the other hand, may be less negotiable. If you have been stalking a certain  neighborhood and you already know what you want and see it come up on you hot sheet, you will know if the price is right. Don’t wait.

I mentioned it helps to know who the owner is, this is because different owners may have gauge-able  motivations. A bank owned property versus an investor, versus and long time o home owner.

Have a great summer and good shopping. Please let m,e know if I can help

Gregg