Are Days on the Market an important statistic for the owner, for a home buyer or is it something that only real estate agents pay attention to?
The days on market statistic is an indication of market activity, the length of time on the market before a home sells. These statistics can be different from town to town, neighborhood to neighborhood and from one price range to another.
While most homes are also marketed on various internet websites, the list date and or the days on market are most often excluded in the information uploaded by the MLS and therefore not available to the public.
The days on market statistic might not be an absolute correct statistic as presented in the MLS for a particular active listing, closed sale or on MLS Statistical Reports! It is a statistic generated by the Multiple Listing System and reveals how many days a listed property (MLS #) has been active and available for sale. It is a number agents can view while searching properties on the Multiple Listing System and can provide to buyers and sellers.
While most all Multiple Listing Systems generate a days on market statistic, this number is associated to one MLS #. A property gets listed (MLS # 123456) on 4/24/11, goes under contract on 5/24/11 and closes on 7/24/11. The days on market is 30 as reported in the MLS. What if that property was previously listed for 6 months, expired as unsold in the MLS and was immediately relisted by the same broker? Immediately listed by another broker? The days on market is still 30! The previous listing would not be utilized in the days on market calculation unless the Multiple Listing System also generated a total days on market report calculated by property address and not MLS#.
There are agents in the MLS who work around the rules and manipulate the days on market statistics. Some agents intentionally withdraw listings from the MLS with owner approval after 30 days and immediately relist them as a new listing with only slight changes. These pseudo new listings are given a new MLS #, new list date and a new clock starts for the days on the market count. And when sold, the DOM date will be much lower than the actual time on the market and, again, tainting the MLS DOM statistics.
Yes, there are times when relisting a property like this can be beneficial in marketing, such as when a large price reduction is obtained or new photos are taken due to repair and or updates to the home. The fact is that it is the new asking price and improved condition of the home which will make the difference in getting the home sold, not the new MLS # and new list date.
More importantly, buyers searching for homes are being misled with the new listing promotion and, when the home is sold, the days on market calculation is tainted. In other words, MLS days on market statistics that are given to buyers, sellers and reported by agents and brokers are not absolute and are inherently flawed by the MLS reporting standards!
When looking at days on the market, home buyers need to ask their agent to also provide the MLS history of the property address. Not only will the history show the length of time on the market, it will show previous listings and the date of any price adjustments. This is important information for a buyer to have when considering a contract offer and purchase!
The days on market statistic can also help owners when planning their sale and in determining how much lead time they need to find a buyer and then close on the sale. These statistics are a good guide to the state of the real estate market. When days on market increase beyond the norm, such as the current market, it is an indication that it is a buyer’s market.
When homes are on the market longer, there is more is more inventory for a buyer to choose from and it might be more appropriate for an owner to aggressively price their home when needing a faster sale. The initial listing price becomes more important in a buyer’s market. When homes are selling faster and not on the market too long or when there is a shortage of comparably priced homes, owners may have more flexibilty in their original pricing.
Likewise, it is very important that a owner obtains additional information when reviewing a market analysis with their agent. In addition to viewing active listings, under contract listings, closed sales and expired listings, owners need to also review the full history of the most comparable properties to get a better understanding of what is taking place in their local real estate market. Did the home really sell in 30 days, or did it finally sell when the the asking price matched the market, 7 months after the home was originally palced on the market for sale.
Real estate agents need to keep an eye on days on market statistics, and not only in reviewing statistical reports prepared by the MLS for a town or county. Again, real estate is local, and what is true of the whole may not be true of the parts. In other words, some towns or neighborhoods may have higher demand than others and sell faster, lower priced homes may be selling much faster than higher priced ones and market values may be dropping more in some towns and price ranges than others. Statistical reports may not be telling the entire story.
A home seller needs to obtain a complete picture of the current real estate market and that includes a true picture of the days on market statistics!
A home buyer needs to obtain the complete listing history of a home they are considering and not just simply relying on the list date of the current listing in determining days on the market!
A real estate agent needs to understand the complete market statistics in the areas they specialize in and not just rely on statistical reports provided by the MLS!