What does it mean if the home has been on the market for a long time?
Is something wrong with the home?
Will the seller will accept a lower offer?
Home Buyers have been taught to believe that the longer a home has been on the market the more willing a seller should be to accept a lower offer. This may or may not be true. All of this depends on the motivation for selling and there are may reasons for selling:
- Can they no longer afford the house? Is it a short-sale?
- Are they moving? If so, is the move optional?
- Did they get a job transfer?
- Do they want to downsize? Do they want to up-size?
- Is there a divorce? A death? Children
leaving home? Family growing? Expecting a child? Parents coming to live with them? A new marriage?
- Do they need to move for health reasons?
- Is it an investment property that they want to sell? if so, do they have to sell? Are they trying to do a 1031 exchange?
The major factors that impact the days on market (DOM) for homes are price, marketing, location, condition, and motivation. The average days on market for homes in Colorado Springs, according to PPAR, is 85 days for single family homes and 97 days for townhomes/condos. (See my previous post about Days on Market in Different Colorado Springs Neighborhoods.)
- PRICE: Not all homes are priced right when they are listed which can cause sellers to do several rounds of price adjustments before they finally get to the correct price. Incorrect pricing is the number one reason why a home's DOM's ends up being longer than the average DOM.
- MARKETING: Insufficient marketing and poor marketing will lengthen the amount of time a home is on the market. With 85 - 90% of buyers starting their search on the Internet, homes that are not on numerous websites such as Trulia, Zillow, Realtor.com, Yahoo Real Estate, are NOT being exposed to the largest pool of buyers possible. Also, numerous photos and quality photos are needed to peek buyers' interest in the home. If the home has NO photos or bad photos, buyers move on and look at the next home that was returned in their search results.
- LOCATION: A bad location may increase days on market. A home on a busy street, a home next to a commercial property or next to an apartment complex, a home in a airport flight path area; all of these could be considered bad locations. Fewer buyers are going to be interested in these homes, consequently there are fewer showings and it will take longer before the right buyer comes along.
- CONDITION: Many buyers want to move right in and immediately start enjoying their new home. they also want updated homes. Outdated appliances, old light fixtures, original kitchen cabinets, old linoleum, worn carpet, all of these things may work fine for the current owners; but may not appeal to many buyers. A home that hasn't been updated will experience longer days on market because fewer buyers will be interested in the property.
- MOTIVATION: Non-motivated sellers want to sell and show their homes according to their terms and their schedule. Showings occur when its convenient for sellers and not when its convenient for the buyers. Any reduction in the number of showings will increase the days on market.
Days on Market is a statistic. A statistic that an experienced Realtor will be able to be able to help interpret on a property by property basis. Colorado Home buyers shouldn't assume that more Days on Market will equal a lower price.
Original articles published on Colorado Springs Vintage Homes: How does days on market affect home prices in Colorado Springs?
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Posted by KAT
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Kathy - nice post. I like the way you put it all in perspective and make it so easy for buyers and sellers to understand.