Days-on-Market: A darn confusing number
Just so we’re all on the same page, Days on Market (DOM) refers to the number of days from Listing Date to Sale/Contract Date – not Close of Escrow date. San Mateo County’s MLS also uses Continuous Days on Market (CDOM), referring to the continuous number of days a listing has been on the market. The days on market number can be misleading even though it is prominently reported in comparative market analyses and MLS reports. Here are a few examples showing how it can be confusing:
Example A: A seller hires a Listing Agent; finds after 30 days that he needs to switch agents. New agent takes over and relists the property right away. Even though the new agent may have a different marketing plan and strategy for that property, the MLS will show the property as already on the market over 30 days just as the new listing agent is hitting the ground running… (true story, I was that new agent.)
Example B: A seller lists his home for $1.5 million. After 30 days of no showings, he reduces the price to $1.3 million. The agent knew the original list price was overpriced, but took the listing anyway…(that topic is for another blog)…Back to DOM….Now the home has been on the market for 2 weeks at $1.3 million and the seller gets an offer in this price range that he accepts. For accurate comparable purposes, how long was this home really on the market – 45 days…or..2 weeks?
Example C: A seller has his home listed and keeps it at the same price for 90 days with minimal activity. He decides to take it off the market (technically let’s call it Withdrawn – which means it’s still listed but not active in the MLS) for 30 days, stage it, repaint a couple of rooms, and spruce up the landscaping. The listing agent puts it back in the MLS at the same price; but during that time another house in the area comes up for sale for the same price but in a less desirable location within the neighborhood, and another house in the area sold but is still pending. In other words, the market changed… Will the days on market reflect what’s really going on in this market?
So how do we reconcile this vague number that so many people give credence to? You Represent Your Client! Period! Watch the market, watch the days, watch the competitors, watch it all! MLS systems were developed for the benefit of Realtors, not the general public – which must be why some public sites show the days on market and some don’t. However, property history will be researched if a buyer is working with a Buyer’s Agent worth his/her weight in gold commissions. And Listing Agents, with the permission of their seller clients, will do what what it takes under their fiduciary duty to get the property sold. As our industry becomes more transparent…which I think is a very good thing, by the way…days on market will continue to ride that line between interesting statistic vs. bogus number. Coldwell Banker colleagues and fellow bloggers Julie Joyce, CB Oakland/Piedmont office, and Arn Cenedella, CB Menlo Park El Camino office share their views on this subject here.
I guess this is not new as a worthy topic for industry folk to rant about, as I learned upon stumbling over an older post dated March 2007 by Russell Shaw on BloodhoundRealty.
One final note: The Front Steps blog reports that ABC News Nightline may read comments posted there about resetting the days on market (back to zero) to make the listing appear as though it’s new. Per the post there, the segment may air Monday or Tuesday.