Why do we put such stock in the Average Days on Market (DOM) statistic in our MLS's? I suppose it might be meaningful if YOUR average DOM is much less than the overall DOM, but otherwise, I believe it's a totally 
meaningless number.
If I were to run a market analysis of all the 1920's Bungalows that have sold in my market (NW Denver) in the last three months... (okay, wait a sec, I'm going to do that right now... BRB).
Okay, I ran my analysis. Had to go back six months 'cause the last three have been kinda quiet around here.
The DOM of my subject search ranged from 2 days to 171 days. The average DOM was 53. However, out of 21 properties, seven sold in under a week (five of those in less than 3 days), eleven in less than three weeks, while five took over 100 days to sell. Only three of the 21 properties had a DOM of anywhere close to 53.
So, when a seller asks me what the average Days on Market is in Northwest Denver, I tell them "I don't know" and explain why. I then explain why my goal is to sell their home in 30 days or less (obviously it's perfectly do-able in my market), and how I'm going to do that.
But maybe that's just my market. Do you feel that the DOM statistic is meaningful in yours? If so, please explain!
RELATED BLOGS
Houses aren't pet rocks!
I'm the best listing agent I know. Are you?
Seller's Regret - Which would you prefer?
For Sale Signs Don't Pay the Bills - 74 Ways to Sell Your Listings in Any Market
On Special $14.95!
No, in Atlanta we have a statistics that is called "Total days on market!" It is an accumulation of days on market on previously. I believe they are critical to grasp market trends.
Yes, I could see where that would be meaningful!
Jen, DOM is one part of an overall analysis of the market for your Seller. In markets which are slower, it can help give a Seller a realistic look at how long it will take their home to sell and if it has not sold by that date, then its another indicator that they are overpriced. Also, DOM helps determine absorption rates for a market and this not only tells you what kind of market your in, but how strong of a Buyers/Sellers market you are in.
I tell my customers when posed that question that the DOM is a product of both agent and seller's effort. The home must be priced right (seller's responsibility) and marketed aggressively (agent). Also I tell them that the DOM doesnot reflect the time period that a home was reduced to when it sold, if it had been prior listed over the last few months and re-listed again, etc. Good luck!
I think DOM is meaningful in that it reflects at least two things: the demand for a specific property and the response of the market to the overal marketability of the property, ie, pricing strategy, staging, negotiation, overal professionalism of this agent, etc).
When DOM was increasing, it was helpful to show the overall trend happening in the market within the specific location and price range of the seller's home. But generally speaking, DOM can be skewed by listings being cancelled and relisted (for example) so the stats can become meaningless if you aren't careful. And if a house is over or under-priced, that isn't an accurate reflection of the market or DOM either.
I have to agree that DOM has its place. Sellers want to know how soon their house is likely to sell because they often have other obligations, a new house, bills to pay, etc. DOM may be even more important to the BUYER. When my buyers look at a list of homes and they see they have all sat there for half a year or more, it is plain to see that the properties are overpriced. So, yes, it does have its place.
Okay, I hear ya. But if you have DOM stats all over the board, how is this figure meaningful to a seller in his planning process? As described above, the average DOM I came up with was 53, but hardly any of the solds had DOMs of anywhere near that number.
Good point here....plus with people de listing their homes and then throwing them back on as a new listing....you're right....does it really matter?
DOM in of itself is a bad way to judge the market because as marketing people we know the power it holds. We know that NEW things draw attention. This leads to agents wanting their listing to look NEW every so ofter. In my local MLS we call that "churning." In other words you are "churning" the same old listing back into the system to make it look new and that disrupts statistics and there is vurtually no way to stop an agent from doing it.As we know, when a listing first comes on the market is when it gets the most attention, and attention is what sells. Our MLS (Rappitoni) provider was able to help, they added what is called CDOM (cumulative days on the market) that continues the count if the listing was not off the market for 30 days. Our "days on the market" field looks like this:
DOM
22/285
Meaning is has currently been on the market 22 days, but a cumulative total of 285. This simple fix has stopped that the "take it off the market and put it back on to look new" issue. I also has helped us understand the REAL number of days it takes to sell.
Jennifer, you make a good point. I tell sellers what the average is, but then I tell them what we need to do to beat that.
I think the DOM is important if people want a short term listing. If it really takes 170 days to sell a home, do you want a 3 month listing? But then again, if it is priced correctly it will sell quickly... So the long marketing time is often a by product of lazy, weak listing agents that DONT say "no" to the over priced listing! so is that really reliable data? I think not!
Like a lot of stats in the MLS you can manipulate them to show any thing you want. You can leave out some comps to show a different amount of time on the market, the numbers are a guide, I am with you price your home to sell in 30 days or less regardless of the market conditions.
Jennifer, statistics can drive you crazy but you could run a comparison DOM in concert with a LP/SP ratio then the numbers will make more sense when explaining it to a Seller. Essentially it should show that homes that sell quicker are within maybe 96% or 97% of LP. The longer it takes you might see 88% of LP. Right pricing sells homes!
I tell them the home they are looking at DOM but as far as averages I say some sell in 2 days some sell in 180 days. Depends on location, price, condition, layout, and Holidays.
Jennifer, very good point! I will say"I don't know" next time they ask me.
Thanks
Jennifer, I just want to say that I'm new to active rain...and I have been searching for some groups that I like and this is by far one of the best groups for info and ideas that I have found...thanks for gathering some of the best bloggers on active rain I look forward to reading more....peace zane
Hey Zane - welcome! If you like this group, you might try my SWS forum - it's definitely the soulfulest of the soulful... www.sellwithsoul.com/forum.
Our DOM is important for our REO listings, Asset Managers, new companies we are getting our foot in the door with, etc...
When I show clients anything that may contain DOM, a CMA for example, I never talk about it unless the client brings up the question. Then I always tell clients that the DOM is a fairly WORTHLESS statistic that can be manipulated by Realtors...no need to explain the the "choir" here how to do that.
Heck I am guilty of the manipulation...just in the past 2 weeks I have re-listed several properties. New photos are used...to make sure the pics have snow on the ground rather than green leaves on the trees.
I'm with Denise on this one. The (average) DOM in your case, and in many others, is not at all a good indication of the average sales time of a particular type or size of home. There are too many other variables anyway, such as location, condition of the home, list price, and layout of the home.
What you really need to find out is how the 7 homes sold in under a week, and why 5 similar homes took over 100 days to sell. So when a seller asks you what the average Days on Market is in Northwest Denver, you can tell them it ranges from less than a week to more than 100 days depending on this, and this, and this. Then you tell and show them how they can get their home sold in 30 days or less. That's where the information is important, not in the actual numbers.
Troy - Very well said!!!
DOM are useful in the sense of of a market as a whole. They are important to see where the trend is headed. From 2005 to 2007 days on market climbed showing a slowing market. I also tell clients tha what they can expect to sell their home.
I really agree with Troy's comment. There is something to be said in terms of analyzing more in terms of why some of them sold fast and others did not. I would imagine that the majority of that is pricing which could illustrate a great point to the seller. And then the same analysis to the ones that took longer. Either way, I think the DOM is an important number as it helps agents to know what is a safe amount of time to have on the listing contract. This may not apply as much in your area but if the average house takes 5 mos to sell, an agent should not take a 3 month listing contract. I also agree with Jim's comment - we also have a PMP statistic which shows TOTAL days on market from prior listings as well which I think is also helpful info...
In our market the MLS has DOM and CDOM. The "C" is for cumulative days on the market and includes all listings for a property over the past several months stopping Realtors and sellers from canceling and re-listing to keep the DOM low.