A metric that is important to sellers and buyers alike is Days on Market (DOM). Because buyers use the length of time a house is on the market to determine (1) how desperate (if at all) sellers may be and (2) what offer to make on a house, sellers need to pay attention to DOM . If a house that has been on the market longer than the average DOM for the area, it may be perceived as having something wrong with it. Buyers will wonder why it hasn't sold. Is there something unknown about the house?
What your DOM tells the Market
If the seller doesn't do the proper things to sell the home, the DOM for that home may become greater than the average DOM for the market. It is likely that the seller overpriced the home or cut corners preparing the house for the market. It is at this point that buyers will begin to wonder about how desperate a seller may be, and whether they are serious about selling. The homes that are on the market for a long period of time are overpriced as a result. The longer the DOM, the less the contract price will be as compared to the original asking price. And buyers are savvy enough to request the DOM report from their agent to make this determination.
How the DOM Average is Calculated
The DOM average that buyers are looking for is determined by gathering the number of listings that went under agreement in a given time period. The time used is usually 90 days. The buyer's agent will calculate the number of days between the date that the property was initially listed for sale and the date that the buyer and seller fully executed an agreement of sale, for those homes that went under agreement in the period. They then total the number of days that the homes in the market for the given period were on the market and divide by the number of homes. For example if there were 100 homes that went under agreement in a given 90 day period and the total number of days that the properties was on the market was 12,345 days, then the average DOM for that market is approximately 123 days. (The number is an approximate number because the actual average is 123.45 days.)
How a Lower DOM Number Motivates a Buyer
If the buyer truly loves a house that is a fairly new listing, they will act somewhat faster. They won't want to take the chance that someone makes an offer that is more appealing to the seller. Also, a buyer is not going to submit a low bid on a home with lower DOM because of the chance that someone will make a more reasonable offer. But the lower DOM is not the only factor in a buyer's motivation to buy a house. In other words, a buyer is not going to make a more reasonable offer simply because the DOM is low. They are going to make a reasonable offer because the house is fairly priced and the condition of the home is at least equal to the surrounding neighborhood.
How do you beat the DOM Average? Present the factors that sell your home in a better light than the other homes in the market, and make sure enough buyers see your house. DOM is a reflection of how the market has received a seller's house. A seller that places their home on the market with ideal selling conditions (i.e. priced right and in excellent condition and repair) will beat the average DOM because their home will exceed buyers' expectations.
Unfortunately for sellers, DOM matters and generally to their detriment. We have to remember that the housing market ultimately is just that: a market. The whole market is the collection of sellers and buyers in a given area who agree to sale terms. Sometimes a seller who holds out for a price that is not supported by the market, finds that magical buyer who sees the value of the house that only the seller sees. But in today's real estate market, that is really a needle in a haystack. The much more common result is that the higher the DOM of a given house, the larger the difference will be between the original asking price and the contract price. Even worse, that price will probably be lower than what it would have been if the seller had done what is necessary to have a shorter DOM. The house that is priced right for the market it is in, is shown in excellent condition and repair and is represented by an excellent real estate agent will beat the average DOM for its given area.
Tips for avoiding a high DOM
* In the past, the only thing that mattered in real estate were three things: Location, Location, Location. Location is still important but just as important is the Listing Price, the price at which the seller offers their house to the market. If the price meets with buyer's expectations, and the rest of the similar homes on the market, the seller will sell the house faster than average DOM.
* Make sure that your real estate agent delivers equal parts sizzle and steak. Your agent needs to make your house sizzle in the market place. This means placing your house in the best light, and offering it to the most people. AND your agent needs to show you the steak as well. They have to be able to deliver the deal when the right buyer makes a reasonable offer. Knowing all of the service providers and vendors that will keep your home sale on track will ensure that you beat the average DOM.
*Appearances are important. Your house needs to sparkle, especially compared to other homes that are available. This means fixing the small annoyances that some sellers choose to live with. For example, spruce up the landscaping for maximum curb appeal. The minor roof and/or gutter repairs need to be addressed. The rooms need to convey the environment that allows potential buyers to see themselves living in your house.
What your DOM tells the Market
If the seller doesn't do the proper things to sell the home, the DOM for that home may become greater than the average DOM for the market. It is likely that the seller overpriced the home or cut corners preparing the house for the market. It is at this point that buyers will begin to wonder about how desperate a seller may be, and whether they are serious about selling. The homes that are on the market for a long period of time are overpriced as a result. The longer the DOM, the less the contract price will be as compared to the original asking price. And buyers are savvy enough to request the DOM report from their agent to make this determination.
How the DOM Average is Calculated
The DOM average that buyers are looking for is determined by gathering the number of listings that went under agreement in a given time period. The time used is usually 90 days. The buyer's agent will calculate the number of days between the date that the property was initially listed for sale and the date that the buyer and seller fully executed an agreement of sale, for those homes that went under agreement in the period. They then total the number of days that the homes in the market for the given period were on the market and divide by the number of homes. For example if there were 100 homes that went under agreement in a given 90 day period and the total number of days that the properties was on the market was 12,345 days, then the average DOM for that market is approximately 123 days. (The number is an approximate number because the actual average is 123.45 days.)
How a Lower DOM Number Motivates a Buyer
If the buyer truly loves a house that is a fairly new listing, they will act somewhat faster. They won't want to take the chance that someone makes an offer that is more appealing to the seller. Also, a buyer is not going to submit a low bid on a home with lower DOM because of the chance that someone will make a more reasonable offer. But the lower DOM is not the only factor in a buyer's motivation to buy a house. In other words, a buyer is not going to make a more reasonable offer simply because the DOM is low. They are going to make a reasonable offer because the house is fairly priced and the condition of the home is at least equal to the surrounding neighborhood.
How do you beat the DOM Average? Present the factors that sell your home in a better light than the other homes in the market, and make sure enough buyers see your house. DOM is a reflection of how the market has received a seller's house. A seller that places their home on the market with ideal selling conditions (i.e. priced right and in excellent condition and repair) will beat the average DOM because their home will exceed buyers' expectations.
Unfortunately for sellers, DOM matters and generally to their detriment. We have to remember that the housing market ultimately is just that: a market. The whole market is the collection of sellers and buyers in a given area who agree to sale terms. Sometimes a seller who holds out for a price that is not supported by the market, finds that magical buyer who sees the value of the house that only the seller sees. But in today's real estate market, that is really a needle in a haystack. The much more common result is that the higher the DOM of a given house, the larger the difference will be between the original asking price and the contract price. Even worse, that price will probably be lower than what it would have been if the seller had done what is necessary to have a shorter DOM. The house that is priced right for the market it is in, is shown in excellent condition and repair and is represented by an excellent real estate agent will beat the average DOM for its given area.
Tips for avoiding a high DOM
* In the past, the only thing that mattered in real estate were three things: Location, Location, Location. Location is still important but just as important is the Listing Price, the price at which the seller offers their house to the market. If the price meets with buyer's expectations, and the rest of the similar homes on the market, the seller will sell the house faster than average DOM.
* Make sure that your real estate agent delivers equal parts sizzle and steak. Your agent needs to make your house sizzle in the market place. This means placing your house in the best light, and offering it to the most people. AND your agent needs to show you the steak as well. They have to be able to deliver the deal when the right buyer makes a reasonable offer. Knowing all of the service providers and vendors that will keep your home sale on track will ensure that you beat the average DOM.
*Appearances are important. Your house needs to sparkle, especially compared to other homes that are available. This means fixing the small annoyances that some sellers choose to live with. For example, spruce up the landscaping for maximum curb appeal. The minor roof and/or gutter repairs need to be addressed. The rooms need to convey the environment that allows potential buyers to see themselves living in your house.
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Homarc offers specialized senior relocation services to help simplify our client's move to a Retirement Community.
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