Usually, buyers want to know how many days a house has been on the market. The phrase "days on market" (DOM) refers to the number of days a listing is active in multiple listing services (MLS) before entering pending status. Pending status is when the seller accepts an offer, but the transaction hasn't yet closed.
Many factors influence the days a property remains on the market. Economic factors, competition, and showing criteria are some of the elements. Many real estate agents use a tactic called "relisting" to make homes with higher days on the market appear more attractive to buyers.
- Average Days on the Market is the measurement used to show how long a home spends on the market in an area.
- Homes that spend more than the average days on the market tend to raise questions from buyers about overpricing or problems.
- Agents can reset the number of days by relisting, but an experienced agent can figure out a home's cumulative days on the market.
Average Days on Market
Many agents will refer to DOM as "average days on market," a number that's arrived at by adding all the days on the market of each listing and dividing that by the number of listings. In a buyer's market, the DOM is generally higher because inventory takes longer to sell. In a seller's market, the DOM is usually fewer.
Agents use the last one to six months of sold listings to determine the average DOM. For instance, six listings entered pending status on December 2nd. Three of those listings were on the market for five days, one was on the market for 21 days, and two were listed for 30 days before offers were accepted.
If you add the days on the market for all the listings, you end up with 96 days. Divide 96 days by six listings to determine the average of 16 days a house spends on the market.
DOM Matters to Sellers
Which is more important? The 16 average days on the market or the number of days on the market of each listing?
If you're a seller in a market with an average of 16 days, and your home has been on the market for 17 days, you have fallen into the lower 50% of homes sold over the previous month.
Studies have shown that the longer a home is on the market, the less likely the owner is to get their asking price.
How Buyers View the DOM
When buyers see extended days on the market, they usually come to one of a few conclusions:
- The seller is becoming desperate to sell and may accept a lower offer.
- The seller is asking significantly more than the home is worth.
- There might be something wrong with the home, a defect that caused other buyers to pass it up.
While these conclusions may or may not be accurate, a home can linger on the market for several reasons besides needing costly repairs or work to meet standards. The most common reason for extensive days on the market is overpricing. The agent might have misled the seller into believing the home was worth more than the market can bear, in order to get the listing.
One common seller mistake is to believe that a house is worth more than it is. Appraisals constantly come back below the owner's perceived value—especially if the owner has made improvements to the home in hopes of a good return.
Sellers can get stuck on a price, willing to wait out the market until it catches up to their ideal price point. This typically happens when the market is in favor of buyers.
If the home has just one photograph in the MLS, buyers will likely pass over the listing and look instead at homes with multiple pictures.
The home might be unavailable or unsuitable for showing. If a tenant occupies the property, it can be difficult to obtain an appointment from them. Sometimes sellers put homes on the market before they're ready to let buyers see them.
Some sellers think a buyer will abide by strict showing times, convenient for the seller. Buyers tend to tour homes according to their schedules. If your home isn't available when the buyer can see it, they probably won't see it.
Buying agents must show all listings that a buyer expresses an interest in, but many agents avoid showing homes that don't pay the same commission as other competing properties.
Relisting to Reset the DOM
A common practice among real estate agents is to withdraw a listing from MLS after a certain number of days and list it again as a newly listed home. Agents relist to show zero days on the market because they know that buyers gravitate toward new listings.
Many buyers dislike this practice because it's misleading. It's not an accurate picture of the number of DOM, and if buyers become aware of it, it may adversely affect the sale of the home.
Sometimes listings expire. Many agents take a listing for 90 days, and a new agent snaps up the listing as soon as the clock winds down.
It's not unusual for a home to sell within five days after coming back on the market as a new listing after being on the market for 60 to 90 days (if they do not uncover the relisting or ignore it).
How to Determine the Cumulative Days on the Market
Some MLS systems do not let agents withdraw a listing and enter it as a new listing without first canceling or expiring it. In either case, it's relatively easy for an experienced agent to determine the number of days on the market. It's not always as easy for a buyer.
One way you can find the total days on the market is to enter the property's address into MLS to find duplicate, expired, or withdrawn listings. Some MLS systems have changed the way listings are reported and will include cumulative days on the market in the listing itself.
The internet can also provide you with answers. You can enter the property address into a search engine—usually, its previous online listings will be returned.
If you're working with a neighborhood specialist, they should have a fairly good idea of whether the home has been listed before, how long it was listed, and by whom.
There might have been a price reduction, so the agent will feel justified in telling you only the days on market at the new price. Ask whether the listing has expired, been withdrawn, or canceled and then relisted.
Finally, ask some of the neighbors. They know everything that goes on in their areas, and they're almost always happy to tell you how long a home has been on the market, what the previous owners were like, and how good they were in taking care of the home.