Real Estate Terminology: DOM – Days on Market
Sometimes the terminology we use in the real estate industry can be so clear to agents, but not so meaningful to buyers and sellers. Let’s explain some real estate terminology, and why it is important to understand: Days on Market, or DOM, for instance.
When a home sells, there are several statistics that are recorded, like the number of days that the home was on the market before it sold, or DOM. These numbers are all kept by the Multiple List Service (MLS) and we can see the average days that it took to sell a home in any number of categories, by neighborhood, by zip code or by city or county.
The real value comes in comparing these averages over time and over neighborhoods and areas. This average tells us how the market is doing in general. If it is taking 6 months to sell a home compared to 4 months at the same time a year ago, we can tell that the market has slowed down. If it takes 3 months to sell a home in one zip code or neighborhood, and it takes 6 months on average in the entire county, then we know that that neighborhood is in demand.
Knowing DOM Helps A Buyer
As an example, If you see a particular home that has been on the market for 180 days, and the average DOM for the neighborhood is 88 days, that tells you that something is wrong… either the house is priced too high, or there is something wrong with the condition, or both. If you look closer and see that the home has not had a price reduction since being on the market, you might deduce (with some accuracy) that the seller is not realistic in their pricing. Likewise, when you see a home that has been on the market for 60 days and has had 3 price reductions, you can accurately guess that the seller is motivated. A motivated seller is much more likely to appreciate a fair offer than an unmotivated seller. The negotiation will stand a better chance, given there are no other surprises or issues.
As far as real estate terminology, days on market is a useful statistic. If correctly used, it can give you insight into the seller’s mindset, and help you develop your negotiation strategy. Or, it can clue you into the fact that you might just want to move on.
Knowing DOM Helps A Seller
You can see how a seller will be better able to have a good pricing strategy by knowing the average Days on Market in their neighborhood and in their price range. When a home sits on the market longer than the average number of days for comparative homes, it can hurt the marketing of the home. The home can become stagnate and develop a “stigma” in the eyes of potential buyers.
Buyers start to wonder, “what’s wrong with the house?” when they see that it has been on the market significantly longer than other comparable homes. Then they start to look for the problems.
As a seller, it behooves you to keep an eye on the average days on market of your comparables. These are markers of how your home is doing in a competitive framework.
Whether buying or selling a home, choose an experienced agent who knows the statistics and trends for your neighborhood and market. A real estate agent should be a trusted adviser, willing and patient to teach about real estate terminology: DOM – Days on Market, and to give expert advice about your strategy.