Relisting Homes to Change Average Days on Market
Usually, buyers want to know how many days a house has been on the market. Days on Market (DOM) refers to the number of days a listing is active in multiple listing services (MLS) before it enters into pending status. Pending status is when an offer has been accepted by the seller but the transaction hasn't yet closed.
There are many factors that influence the days a property remains on the market. Economic influences, competition, and showing criteria are some of the factors. 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 Market
Many agents will refer to DOM as "average days on market," a number that's arrived at by adding all the days on 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 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 individual 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 percent of homes that 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 true, a home can linger on the market for several reasons besides needing costly repairs or work to meet standards:
- It's overpriced: The most common reason for extensive days on the market is overpricing. In an effort to get the listing, the agent might have misled the seller into believing the home was worth more than the market can bear.
- One common seller mistake is to believe a house is worth more than it actually 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.
- The effect of the market: 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.
- The home is unavailable for showing or unsuitable to show: If the property is occupied by a tenant, it can be difficult to obtain an appointment from the tenant. Sometimes sellers put homes on the market before they're actually ready to let buyers see them.
- Restrictive showing times: Some sellers think a buyer will abide by strict showing times, convenient for the seller. Buyers tend to tour homes according to their own schedules. If your home isn't available at the time the buyer can see it, they probably won't see it.
- Issues with agents: Buying agents are required to 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.
- If the home has just one photograph in the MLS, buyers are likely to pass over the listing and look instead at homes that have multiple photographs.
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.
It's not unusual for a home to sell within five days after coming back on the market as a new listing after it was previously on the market for 60 to 90 days (if they do not uncover the relisting, or ignore it).
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.
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 address of the property into MLS to find a 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 if 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.