How Does “Days On Market” Impact Home Sales
The “Days on market” concept has a crucial impact on the sale of a real estate property. Because this is an important part of the sales as it affects the price of the property. In many cases, this is used as a negotiation tool. Let’s explore how it influences property sales.
The property market is a complex idea. One of the unique terms used in real estate is “Days on market”, shortly known as DOM. It is a concept to describe how many days a property was left unsold. Technically speaking, it counts the number of days a property has been listed on a local multiple listing service or MLS till a seller accepts the offer. It can also be referred to as “time on market” or “market time”. For example, it takes a property 14 days to be sold from the listing day. It would be called “14 days on market” property. Which indicated it took the house 14 days to be accepted by a buyer.
These are simple metric systems to have an idea about the average day of a house being sold. A low average DOM indicates a strong market that favors sellers. A high average DOM signals a weak market that favors buyers. But this metric is not constant all the time. There are seasons when homes sell quite fast. That time, low DOM, and high DOM comparison doesn’t work. But in most normal circumstances, this is a great indicator to check the quality of the real estate.
In real estate transactions, DOM is important for both the buyer and seller. Mostly the stakes are higher for sellers. Homes are more likely to generate the most interest when they are new to the market. After a few weeks pass, the phone calls, open house visits, and other showings drop. The reason behind this is that, if most of the buyers have seen the house and didn’t choose it from them, chances are new buyers are also going to not prefer the property. Which results in a higher number of DOM. This decreases the chance of the sale of the house.
If a house is perfect from every direction but has a higher Dom rate, it is assumed that the market is currently a “buyers’ market”. It’s normal to have more houses and fewer buyers in this condition. So, in a lack of buyers’ many great real estates don’t get sold easily on time. On the other hand, if a below-average house has a lower rate of DOM, it indicates a seller’s market. In a market where there are fewer properties but more buyers, people are going to choose what they would get in hand. So comparatively fewer accommodating houses would be sold quickly.
DOM is a considerable point for both sellers and buyers. The higher DOM is a concerning situation for the seller. Similarly, buyers take this measure to evaluate their homes while searching for the property.
If somehow a house stays unsold for weeks, it becomes a great concern for the seller. No matter what the reason is, it sometimes becomes a burden for the agent to present the house as a perfect property in the market. In this situation, it can be said that the higher DOM affects negatively the sale of a property. Because homebuyers usually try to avoid those properties that have higher DOM.
Moreover, DOM is playing a vital role in the property market. Let’s check out some of the important impacts of DOM on property sales:
As mentioned earlier, having a higher number of days on market indicates that the house has been listed for a long time and no one was interested to purchase the property. If the sellers’ market is not prevailing on the circumstances, a property with higher DOM is considered an important red flag for home buyers. People assume that if a house has not been sold for a long time in a stable market, there must be some fault in the house. And in most cases, it is true.
People who want to sell their property try to make it quick. As DOM plays an important role in the sale of a house, property owners try to be very cautious from day one of listing. Essentially, they fix the perfect price for the house so it gets sold quickly and doesn’t stay on the market for long. It’s a good deal for the clients.
If a house has a high rate of DOM, the owner, and agent of the house are already concerned for the house. For buyers, there is a chance for negotiation to purchase the property for a profitable amount. It becomes more profitable if the property has higher DOM in a buyers’ market. The chances for negotiation get wider.
This is mostly on the seller’s part. As the owner is concerned about the sale of the house, they tend to prepare the house a little more. In addition, many homeowners take renovation projects to correct the minor mistakes so the house seems unpolished to the potential customers. This results in the chance of the buyers getting a house that is clean and polished as new.
The real estate market is never stable. But the time it takes to sell a house is still relevant to date. The average days on the market are very challenging times for a property. If a house is not being sold for a particular time and the DOM is getting higher, the only best way to solve this is to lower the price.
Thank you for reading!