Days on Market: Objective Fact or Subjective Nuisance?

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Days on Market: Objective Fact or Subjective Nuisance?

I do not like the Days on Market statistic. Never have. Oh, that doesn't mean that I don't use it to my Days on the Market Statistics advantage when representing a buyer, but it has always struck me as an unfair competitive edge provided to one party. Some might argue that it is an objective measure of a home's place in the market, but I disagree.

To a large extent, we are all lemmings. We like the safety in numbers. If other buyers have passed on a home for 100 days, we assume that they know something that we don't. Forget the fact that the right buyer might simply not have come along yet, the original list price might have been too high, it is difficult to view, or the innumerable other possible reasons for the house not selling yet. It is an objective measure of subjective factors.

Do we demand that buyers disclose how long they have been searching for a property? Wouldn't this provide some insight into the buyer's level of motivation or likelihood to consummate a transaction? How about the buyer being forced to divulge whether or not they have breached a contract to purchase another property? Not an inability to obtain financing, mind you, but an honest to goodness breach of contract. A good agent should seek as much insight into the other party's position as possible. I just don't find it a particularly fair practice to force sellers to divulge, for all of the world to see, how long they have been attempting to sell their home. Especially right next to all of the material facts in the listing that detail the physical property. 4 Bedrooms, 3000 square feet, pool ... 200 days on market.

We certainly wouldn't have all of the nuisance issues with agents attempting to manipulate the statistic if we didn't mandate it and place such critical importance on it. Now we have Cumulative Days on Market stats as well as Agent Days on Market stats here in Arizona that are designed to prevent such manipulation. I suppose that Owner Days on Market is next for the agent that takes over a FSBO? I would just as soon flush the whole thing.

Genie in the Lamp It's a genie that isn't going back in the bottle anytime soon, but I'm very curious to hear your thoughts. Days on Market: Material fact or unfair advantage?

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Posted by Paul Slaybaugh, Scottsdale AZ Real Estate on 08/08/2007 12:01 PM

Comments (17)

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Originally posted at: The Scottsdale Real Estate Files: Days on Market: Objective Fact or Subjective Nuisance?

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17 Comments on Days on Market: Objective Fact or Subjective Nuisance?

AUG

2007

I believe that Days On the Market are important in helping us gain an understanding of the condition of our market.

Of course, I'm a buyers' agent.

What I find amusing is when buyers look at DOM as an indicator of how desperate a seller is. I recently had a listing that was overpriced and stayed on the market for a year. The sellers refued to lower the price and eventually just took it off the market. But as time went on, prospective buyers would think that because ut had been on the market for so long, that the sellers were very eager to deal on price. Just the opposite was true!

Valid point, Lenn. Thanks for you comment. Not sure that we should heap the burden for understanding the market onto our sellers' backs, but interesting perspective.

I find that to often be the case as well, Al. To me, there is a big difference between disclosing pertinent information about the house and disclosing information about the market's reaction to the house.

I think that DOM is a factor that should be taken into consideration whether representing a buyer or seller. If the primary goal for a seller is to sell a house, and if it sits on the market well over the average DOM, then I think it is priced incorrectly for what the current market is willing to pay for it. If a buyer knows that a house has been on the market a substantial amount of time, they should try to use that to their advantage to get the best deal. I think the motivation of the seller directly affects the number of days the home will sit on the market. A well-priced home will sell. Pertaining to Al's comment, sellers who are not willing to come down on price when their house sits and sits and sits, are clearly not motivated to sell, and in my opinion, are not worth the resources spent. If a broker's objective is to list houses, it doesn't matter if the sellers are motivated or not, nor how long they sit on the market; but if a broker's objective is to sell houses (especially for the best price the seller can get) it is best to price a home competitively from the beginning, because houses tend to get the best offers in the first two weeks they're on the market anyway. Anyway, that's my two cents!

I agree with most of what you say regarding how to leverage the DOM statistics, Bridget. I still don't agree with a seller being saddled with it. Offering that a buyer should "try to use it to their advantage to get the best deal" bolsters my assertion that it is a built-in advantage for the buyer.

AUG

2007

Paul - I think that it's often times a misleading statistic for a couple of reasons. First of all, in my area, the days on the market don't stop accruing until the agent changes the status to Under Contract. Until then, when there is an accepted offer and the inspection reports are being done, the home is still considered on the market. By the way, we are in one of the only areas that I know of that don't take part in the contract process at all. It's all done by attorneys, which delays the process even further. The other part of the statistic that I don't like is that a home may be on the market for 6 months and then expire. AS soon as it comes back on the market, the days on market gets reset to zero. A new buyer in the market may think that it's a brand new listing, when in fact, it is actually 180 days old already. Buyers have also started using it as a discounting tool. The longer the days on market, the more the seller will drop his/her price. Lastly, with today's informed buyer, it doesn't really matter too much because the ones that are checking new listings each day already know that something has been on the market for a while, and even the novice can figure it out by the ML#'s first 3 digits. Good post, and food for thought about doing something to make this less important, or at the very least, an even playing field.

Great points, Adam. Most buyers and agents are savvy enough nowadays to know how long a property has been for sale. If the seller is forced to reveal how long he has been searching for a buyer, shouldn't there be some form of reciprocity? If so, what info could the buyer provide that might similarly affect the course of negotiation? I say just junk the DOM stats.

AUG

2007

Garbage in garbage out...we can change that number in a heartbeat, just depends on which side you and your client are on. Like you said use it to your advantage.

Dick Beals

AUG

2007

Amen, Dick & Sandy. Thank you for your comments.

AUG

2007

I also think they are important in deciding price either to set a home at or to put an offer in on a home. If a home has been on the market 90 days with no price reductions, I know I can usually offer a lot less, but it also tells me how determined they really are to sell the home.

Thanks for the input, Todd. Doesn't the importance you place on the statistic reinforce the assertion that it is a competitive advantage for the buyer, though? I form the same assumptions, and draw conclusions from DOM. I would be remiss if I didn't. It just strikes me as forcing the seller to lead with his (her) chin.

OCT

2007

Hello Paul, Nice post. Here is what I have to say about Days on Market.

I dislike it as well.

Why aren't the Days on Market total displayed online?

Hi David, thank you for your comments. After I wrote this piece, our local MLS stopped listing the DOM directly on the agent property report. There is now a link to a complete archive report. At least this puts this DOM stats in the same place as the entire listing history so that price reductions are noted. Rather than just seeing 200 days on the market, the changes in status and price are present to give a fuller picture.

DOM is not as accurate as one might expect. Example...a property goes on the market for 90 days, gets a contract but falls through after 19 days into the process, it is then reactivated, there is no activity for another 90 days. The seller pulls the listing, waits for 30 days and list with another agent, it sell after being relisted for 10 days. How long has this property really been on the market?

Amen, Paul. And now that seller has a stigmatized property on his hands. Thank you for adding your thoughts.

Paul,

We have 2 MLS's here. They both publish the dom on the agent print out. Both have a link that can easliy be used "against the seller". This link will add up the "true" DOM for that listing and display all the brokers the seller has tried out. Really what good does it do in our market to see the DOM? Currently we are approaching 400 plus days on most of our 96,000+ listings. Does this help motivate the buyer? Does this help the seller understand they are over priced? I think not.

The reason many homes are NOT selling is that there is much concern from buyers about their future.

Will they be employed? Will they be able to feed their family.

I say DO AWAY WITH THE DOM NOW!

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Paul Slaybaugh, Scottsdale AZ Real Estate

Scottsdale, AZ

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