In the real estate world, savvy buyers understand that knowing a property’s days on the market is absolutely essential intel. That’s because the number of days a home spends on the market directly influences the home’s price. Besides, this information can be used to your benefit to negotiate a lower purchasing price. Keep reading to learn what days on the market mean and why it matters to homebuyers.
- What does days on the market mean?
- Why homes stay on the market for too long
- Why days on the market (DOM) matters to homebuyers
What Does Days on the Market Mean?
The National Association of Realtors (NAR) defines days on the market (DOM) as the number of days from the date on which the house is listed for sale on multiple listing services (MLS) to the date the seller signs a contract for the sale. The important aspect is that you and your agent use DOM as a fast way to figure out which home listings are fresh.
The total time a property has been for sale, is known as cumulative days on market. On several websites, you can view this cumulative listing history of the home if the seller previously used a different real estate agent or listed the property as FSBO (for sale by owner).
Why Homes Stay on the Market for too Long
A home may stay on the market for too long due to the following reasons:
- Rigid Showing Schedules: A home may be on the market for long if its showing procedure is difficult. There may be unwilling tenants or the seller may be making it extremely hard to show the property. As such, you may not be able to easily access and review the house.
- Unreasonable Sellers: Some sellers and their agents may be unreasonable. They don’t want to sell their homes for a dime less than what they’re asking. Some may set the price too high, while others refuse any form of negotiations, which will turn lots of buyers away.
Why Days on the Market Matters to Homebuyers
You and your real estate agent can use DOM as a search filter to identify properties that have been listed for a long time. DOM also matters to homebuyers in the following ways:
DOM as an Indication of How Hot the Market Is
The average number of days on the market can be used to describe how hot or cold the market is in your area. For example, in a seller’s market where there are more homebuyers than the homes listed for sale, the days on the market are . That’s because demand is high, inventory is low, and homebuyers must move quickly to make their decision.
But in a buyer’s market with fewer buyers than home listings, a home can sit on the market longer. That means when a home takes longer to sell, it can be a reflection of lower demand. In fact, buyers might be able to be a bit choosier, and sellers may need to be more accommodating, including realizing that their homes might not be worth what they think it is.
Days on the Market as a Reflection of the Home’s Condition
The more days on the market, the more likely you will wonder if there’s something wrong with the house. It may be that the house has structural issues that keep turning buyers away. But it may also be a lovely home, which isn’t desirable to most buyers.
Days on the Market as a Pricing Strategy
If, for instance, you see a home that has been on the market for 120 days and the average DOM for the area is 60 days, then there could be something: The house is priced too high. If you see that a house hasn’t had a price reduction since being on the market, you may deduce that the seller has set an unrealistic price. It could also mean you’re dealing with an unmotivated seller or one who’s unwilling to lower their price.
Higher DOM as a Potential Bargain
Higher days on the market can indicate a potential bargain, especially with sellers who haven’t received offers and might be open to a lower offer. If the neighborhood has many houses listed for sale, and the home has been on the market longer than other homes, the DOM can become an excellent negotiating tool for you.
Should You Consider a Home that has Stayed on the Market for Too Long?
If you’re interested in a home that has been on the market for a while, don’t dismiss it solely on the number of days on market. One aspect to check is the average days on market of the neighborhood. If the average is high, get your real estate agent’s opinion if that’s normal or maybe the neighborhood is an undesirable area that’ll be challenging to resell.
But if the average is lower than that particular home, just investigate the property. Get it professionally inspected or if it’s in a restricted area, like an endangered species or flood zone area.
Note: Most MLS listings will show if a home went pending. If so, you should ask the seller’s agent what happened the last time the property went under contract and why those buyers fell through the transaction.
Need Help Buying a Home?
The number of days on the market can help you make better decisions when buying a home. For more information on how to leverage the days on market metric to get the best real estate deal, call us at (813) 773-5888 now!