Days on Market is the age of a real estate listing. It’s how many days the specific home listing you’re looking at has been up and active on market.
If you’ve ever looked at an online home listing, or more in general at the real estate market, you’ve likely seen the initials “DOM” somewhere on the page. An acronym for Days on Market, DOM might seem like just another one of the million data points listed for a home, but the truth is it’s actually quite important. Days on Market, along with median home price is one of the key metrics to evaluate a real estate purchase.
What Does Days on Market Mean?
Put simply, average Days on Market is the age of a real estate listing. It’s how many days the specific home listing you’re looking at has been up and active.
Typically, showings start the day a home is listed, so if you’re looking at a property that was listed 14 days ago, other buyers have been considering the property for about two weeks.
Every day a home is listed as active, which means it’s sellers are currently accepting offers, the DOM stat will go up. When the home’s status is changed to pending (after the seller has accepted a bid), days on market will stop accruing.
Hot or Not?
The DOM stat is a great gauge of how a specific housing market is performing. In a hot market, where demand from buyers is high, DOMs tend to be on the low end. In markets where demand isn’t so great (or inventory of housing is particularly high), DOMs are usually higher.
If you’re considering multiple cities or markets to buy in, you can typically get a feel for how competitive each market will be by looking at the average DOM for each area. The lower the number, the more competition you’ll likely face in your home search.
How is average DOM calculated for an area?
To determine the average days on market, agents take the last 30 days to six months of sold listings, add together the days on market (before each listing went pending) and divide that total by the number of listings.
For example, say an agent had six listings in December. Three of those listings were on the market for five days, one listing was on the market for 21 days, and two were listed for 30. The average days on market for December, in this example, is derived by adding 5 + 5 + 5 + 21 + 30 + 30, which equals 96 days. Then dividing 96 by six listings will equal 16 average days on market. In most markets, this is a on the low end of DOMs, indicating a “hotter” area and rising buyer demand.
What DOM Means for Home Buyers?
DOM can be a powerful tool to use as a home buyer. Both long and short DOMs can give you insight into the marketplace, the sellers and their potential for negotiation. All of this can help guide your approach to buying.
A long DOM, for example, means a home has been on the market for quite a while. Knowing this, it’s safe to assume the seller is becoming desperate to get the property off their hands. This can mean they’re more willing to negotiate on price.
Long DOMs can also indicate something is wrong with the property, and that buyers are visiting the home but not putting in any offers. You can do two things with this information: avoid the property knowing it may have some flaws, or use those flaws as leverage to negotiate a lower price.
There are a few other assumptions that can be made from a long DOM:
- The property is overpriced. This is very common. Maybe the seller is overzealous about what they can get for their home, or the agent has looked at comparables and believes the property may be worth more than other properties in the area. Either way, approach the home with caution and have your agent evaluate the home’s price before you put in a bid.
- The seller is not interested in selling quickly. This could be because it’s an extra property they own, it was inherited from a family member, or the sellers have already moved into their new home. Either way, they’re not motivated to get it off the market quickly and are willing to wait around for a higher bid.
- The market is “cold.” If there’s lots of housing inventory in the area or buying demand is low, homes will simply take a bit longer to sell.
- Showings haven’t been possible. If the property has tenants, is being refurbished or has other factors at work that preclude buyers from seeing the home, this could result in a longer-than-average DOM.
- The seller’s agent is unqualified. The problem could be the agent or their lack of skills and experience. Poor listing images, bad marketing, unattractive descriptions or just poor selling skills can all affect a property’s DOM. If the agent is working for a reduced commission, and therefore has less motivation to sell the home, this can also have an impact.
Short DOMs, on the other hand, are typically the sign of a seller’s market, meaning homes are selling fast and properties are in high demand. These hot markets often have a low level of housing inventory as well.
When a home has a short DOM, it indicates the property was just listed. In most cases, sellers are unwilling to negotiate this early in the process unless they are very motivated to leave the property. A short DOM may also mean you’ll need to act fast. Homes sell quickly in hot markets, so if you see a property you like, you’ll want to put in a bid ASAP if you want a chance. Work with your agent to put in a right-sized offer that will get serious consideration from the seller. You may even need to go above listing price to get noticed.
Zenlist Insights: How Agents Relist a Property and Reset Days On Market (link)