Though it's been a topic of discussion for some time now, Days On Market (DOM) has really been picking up steam lately. There are debates going on all over the place at the moment regarding the practice of resetting DOM and whether DOM should be used at all.
The practice of resetting DOM is a fairly common one used by agents to make a listing "fresh" in the minds of other agents and consumers (mainly consumers). Since there is a negative stigma surrounding properties that have an above-average DOM, sellers and agents feel as though they need to engage in this practice to remain competitive, even if it means breaking the rules.
There are different sets of rules and guidelines regarding whether you can reset DOM and, if so, when and how. These rules are set by the local Multiple Listing Service (MLS) in that particular area, but most MLS' make it fairly easy to engage in this practice.
The other debate is over whether DOM should be eliminated altogether. Yes, DOM does help illustrate real estate market trends and is used for that purpose on the back end by agents, brokers, economists, the media, etc. But should it be used by buyers and sellers? What purpose does it serve? What are the pros and cons of DOM? These are all questions that need to looked at and answered honestly.
I personally think that DOM is a complete sham. Yes, it's useful on the back end to track trends in the real estate market conditions. But we should keep it there, on the back-end. Having it on the front-end is completely irelevant and detrimental to sellers and buyers.
For example, I've had buyers who wanted to preview property "A" because it was "new on the market" (7 DOM) while they did not want to preview property "B" because it had been on the market for over 4 months and "was obviously overpriced or something was wrong with it".
The reality of it was that property "B" was in mediocre condition and overpriced while property "A" was exactly what they were looking for and actually priced under market value since they dropped the price a about a week before. In fact, despite property "A" appearing as though it had only been on the market for 7 days, it had been listed on the market for over 7 months, but the agent/broker had gamed the MLS system and reset the DOM.
Because of DOM, the buyer wanted to eliminate a property that was ideal for them and priced under market value while proceeding with a property that was not ideal for them and overpriced. This would have hurt the buyer as well as the honest seller/agent who adjusted the price to under market value just days before.
Real estate is the only (non-perishable) commodity that uses this type of system. You don't walk into Best Buy and ask how long a particular digital camera has been on their shelf and use that as a determining factor whether to buy it or not. You just know by looking at the price and features whether it's worth that price to you or not.
This is why I feel that DOM hurts buyers and sellers and should be eliminated on the front-end.
I realize that even if eliminating DOM on the front end was on the agenda of local MLS', it would take some time to enact. That is why I think that, in the mean time, every MLS should make resetting DOM extremely difficult and heavily fine those that try to game the system.
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