Quite often buyers ask me how long a listing has been on the market and sellers ask me what is the average days a listing has been for sale. I usually grimace a bit because I know they are most likely going to read too much into that number.
Every listing has a number linked to it in the RMLS. Not too long ago if an agent wanted the listing to look fresh they would cancel the current listing and do a new listing, get a new number, and the DOM would start over at zero. Previously our average DOM was anywhere from 30-90 days. RMLS finally decided that we should show a true number and now, as long as the string isn’t broken by more than 3o days, they count all of the previous listings to get an accurate number and that is around 150 days now.
So why doesn’t the number matter much to me? If I list a 1 bedroom home facing the freeway for $1,000,000 will it sell in 150 days just because? No. If I list a 5,000 sf new home for $1,000 would I expect to wait 150 days to sell it? No. Another reason for a five month average is because many sellers either can’t or won’t price their home at a reasonable price.
Also short sales have a large effect on the number. Even if we get an offer on a short sale it will stay on the market until the bank approves the numbers. I had an offer accepted in January and the bank accepted it in late June which added five months to the average to it’s DOM that weren’t real.
Buyers like to look at that number to guess how motivated the seller might be. The number can matter to me a little here. If the seller is sitting on one number for three months I am guessing he might not budge but that isn’t always the case either.
Sellers look at the number to guess how long they have to wait before they will move. It just doesn’t work like that. A house will sell when the right buyer comes by for the right price. Houses are still selling above what you would expect just because buying is still an emotional decision.
I was looking at comparables for a listing and in the history of some sold listings. I saw they had a pending offer at a higher price than the final sale price. Someone was willing to pay more earlier but than the deal fell apart for whatever reason.
I think if anything, DOM shows the prevalence of short sales and either a seller or agent overvaluing a listing.
