What Days on Market (DOM) Means to You

Days on market is a real estate term that describes how long a home for sale has been on the market. The number of days a home sits on the market has a direct effect on the price the home will eventually sell for. Whether it’s a positive or negative economy, a home may sit on the market for a longer amount of time than normal. If there is an excessive supply of homes on the market for an extended period, it could signal that the economy has taken a downturn and there is less money flowing throughout a community.

Coming to Terms with Reality

Most sellers want to price their homes at prices to net profits from the proceeds and are hesitant to accept offers for less than they think their homes are worth. A seller may feel his home is the best property on the block and make the mistake of pricing the home high, thinking he is leaving room for negotiation. However, his home is not the only one for sale, and when a buyer has an abundance of homes to choose from, she won’t be so quick to buy the first home she comes across. This causes homes that are overpriced to have longer-than-average days on the market. Unfortunately, once a seller comes to the determination to lower the price he has set on his home, it has been on the market so long that any potential buyers may see less value in the home since no one else has bought it.  

Negotiation Strategy

A buyer’s agent will look at the days on market of a property when helping a buyer write an offer to purchase a home. The Multiple Listing Service (MLS), a subscription service that shows all the active homes for sale, will tell the real estate agent how long the home has been on the market. If the days on market is extensive, it is more likely the seller will accept an offer lower than the price that is listed for the home. The buyer’s agent will submit an offer that is lower than the asking price. Although a seller does not have to accept the offer, the likelihood he will get a higher offer is slim since the perceived value of the home has significantly downgraded since it first entered the market. Some homeowners will attempt to erase their days on market by changing real estate agents; however, some MLS systems keep a running tab on the days on market for a property. The cumulative days on market (CDOM) will show the total no matter how many times an owner has switched agents.

The Clock Is Ticking

In a down market, avoid losing tens of thousand of dollars in property value by setting the price right when it’s first put on the market. This means taking a look at homes similar to yours that have recently sold and pricing your home at least 3 percent below what the others sold for. This way, you’ll be ahead of the market and competitively priced amongst all the other homes that are not in line with what the market is telling them. A home is worth only what a buyer is willing to pay for it.

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