Importance of Days on Market (DOM)

I keep hearing that a house has been on the market for X number of days so that makes it a better or a worse deal.  In our market, I will disagree with that assumption.  In fact, Days on Market (DOM) has become less of an indicator of a home than almost any other statistic.  There are homes that have been on the market for 1300 days that are better deals and better homes than ones that have been on the market for 13 days.  I know that this flies in the face of conventional real estate wisdom but it is the reality in the Charlotte County real estate market and I will explain why.

In the past, a home that was on the market for 100 or more days was regarded as “passed over” by the first wave of buyers.  When I lived in Kansas City, this was especially true.  There were numerous neighborhoods that were seen as upgrades/downgrades to other suburbs in the area.  When a new listing would come on the market in neighborhood A, potential lookers from neighborhoods B, C and D would swoop in after work or on the first weekend to look at the new listing.  If it was a good house for a good price, the property would sell.  If not, it meant that the pool of “active” lookers had been drained and now the house was a reliant on another set of less active buyers which was not good.  Our Charlotte County market never quite hit that profile because most of our buyers are from out of the area.  They are typically from Illinois, Wisconsin, New Jersey, Missouri, etc…  When a new listing hits the market, it takes weeks instead of days to get down here.   We have always been more reliant on a potential buyer coming down for 3-7 days, looking at the market and buying the best property for the best price during those 3-7 days.  With our buyers coming from out of the area, they tend to look at the whole market during their time here.  If a house has been on for 1,000 days or 10 days, the potential buyer is going to look at both because they were not here 1,000 days ago.  Both properties are new to them so the one that is priced the best and shows the best will be more attractive. 

The price slides of the past 4 years have put a high number of DOM on some of our seller’s properties.  If they priced the house a little high or even correctly in 2006 but it did not sell in the first 2 months, they were then too high because prices were dropping an average of 1-2% a month (thank gosh that that has leveled off).  Correctly priced homes were too high just 2 months later and if they did not continue to drop their price monthly, the DOM grew higher and higher.   Many of those sellers have now started to accept the market and made big price adjustments.   The DOM is high but the property is not any less desirable – they just did not have the right buyer fly in during their month of correct pricing before the market started a slippery slope downwards.

Long story short – do not let DOM determine whether a house is good or not in our local real estate market.  Some of the ones with high DOM are not well-priced, do not show well and are basically dogs.  However, some with high DOM represent motivated sellers who have been hit hard by the market and are now ready to make a deal.   Which of the two sellers do you think will be more negotiable – the one who has been on the market for 500 days or 5 days?

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