Knowing how many days a home has been on the market can tell you a lot as a potential buyer. Additionally, for those selling a home, it’s important to be aware of how time on the market affects the sale. This statistic depends on a variety of factors like location, market trends, and pricing. However, it is a key number to pay attention to. So, what exactly are Days on Market and do they matter when selling or buying a home?
What is Days on Market
Days on Market (DOM) is a common statistic found on many Multiple List Services (or MLS’s). It tracks the amount of time a home is on the market before it sells. This means that as soon as a real estate agent lists a new home on the MLS, the DOM clock starts ticking. The number of days continue to accumulate until the status of the listing changes to “pending.” It is important to note that there are a couple of distinct stages on the path from “for sale” to “sold.” Once the seller has accepted an offer, the status of the MLS listing will change to one of the following:
- Under contract – The seller has accepted an offer but is still willing to look at others should this one fall through due to financing or inspection contingencies. The DOM clock continues to run in this case.
- Contingent – The seller has accepted an offer, contingent upon something else happening. This usually means that the buyer has an existing home they need to put on the market or sell to buy this new home. The DOM clock continues to run in this case as well.
- Pending – The transaction is moving towards closing. This is when the DOM clock stops.
Why Days on Market Matters
This number gives sellers, buyers, and real estate agents an idea of how well a home is being received. When selling a home, you can think of Days on Market as a desirability score: the lower, the better. When a home is on the market for a short period of time, the gap between list price and sales price tends to be close. In fact, in many cases these homes sell for more than list price.
The higher the days on market, the more questions the buyers might raise. They might ask questions like: “Does it need a lot of work?” “Are they asking too much or too little?” “Is the seller not very motivated to sell?” Or, perhaps the worst question for a home seller, “How low do you think the sellers will go?” Some buyers may not even consider a home with a longer than normal time on market.
When selling a home, the ideal timeframe to get an offer is within the first 30-60 days of being on the market. If the home is on the market for longer than 60 days, the seller and the real estate agent should be revisiting a number of things in order to determine why it is not selling.
However, this is why proper pricing from the beginning is so important. It is the best way to generate buyers and multiple offers. The more competitively priced your home is, the more likely it is that you’ll sell above list price. In our books, that is a great return on investment!