Days On Market: What Does it Mean to a Home Buyer?
When you’re ready to buy a home and actually make an offer, there are many factors to consider. Days on market or DOM is one of them and in many cases, it can be misunderstood.
What is Days on Market or DOM?
Days on Market is defined as how many days a home has been on the market for sale. The clock starts ticking from the moment the home is listed until the time the seller has accepted an offer and the home is put under contract.
According to California law, it will also include any time the home was on the market previously in the past 3 months.
Why should a Home Buyer pay attention to DOM?
The Greater Conejo Valley Real Estate Market shows that for homes sold in December, 2017, the average DOM was 65 DOM at 97% of asking price. It’s important to note that Help-U-Sell Full Service sold their listings for an average 27 DOM at 101% of asking price. We're also very proud of the fact that 50% of our listings sold in 10 days (versus 46 days for the market) last year and 73% sell within 30 days versus the markets 29%!
It is still a sellers market, but the current trend shows that, especially for upper range, the average DOM could be extended as buyers are starting to resist the constant rise in prices.
From the Seller’s perspective, the longer their home stays on the market without an offer, they tend to be more flexible when it comes to negotiating.
DOM is Just ONE Factor to Consider
On the Buyer’s side, when a new home comes on the market and is priced right, it will quickly gain a lot of attention, since many have been looking at the old inventory and may have been underbid or too inflexible when it came to repairs on other properties.
You may find yourself in a bidding war with other buyers who are ready to make an offer well over asking price.
This is not always the case, so you should consult with your real estate agent regarding the current market conditions and determine what the fair market value is of the house first.
If you find a home that you love and it’s been on the market for 45-60 days or longer, you are likely to have less competition and therefore your negotiating position might be stronger.
However, just because a property has been on the market for longer than average DOM, you may still have to compete with other buyers; especially if there have been recent repairs or price adjustments.
Why do some homes have a longer DOM?
There are several reasons why a home will stay on the market longer than average. Most often, it’s due to pricing. Almost every home can be sold at the right price. The right price is what a group of willing and able buyers are willing to pay. No matter what a seller believes what their home is worth, if no buyers are willing to step up and pay their price, the home is not priced properly.
Of course, price is not the only reason a property will languish on the market; it may not be prepared for sale, location, lack of amenities and features, etc. In many cases, any of these conditions usually result in one or more price reductions before a home sells.
Lastly, besides the above mentioned, there could be other reasons why a home may not be selling, such as the seller not allowing access for showings or improper marketing of the home by their listing agent.
DOM is only one data point to consider when you’re ready to make an offer on a property.
Combined with current market conditions, pricing, and other factors can determine your negotiation position on a property. Work with your local real estate agent to understand how the DOM can affect your offer along with other considerations. Understanding DOM from both a Buyer’s and Seller’s perspective can help you avoid disappointment especially if you end up in a multiple offer situation.