Imagine you’re looking for a new home. You are online, browsing the local listings and see a property you like the look of. After inspecting the photos and the listing details, you decide this looks like a place you’d like to view ASAP. You reach for your agent’s details, but wait, what’s that? This house has been for sale for almost 60 days. There must be something wrong because days on the market matter. Right?
Does days on market matter? Yes, days on market matters. Generally speaking, the longer a home is on the market, the more likely it is to sell for under the asking price. However, the average days on market is more useful. Average days on market will tell you whether the property has been for sale longer than average in the local market.
To understand why days on the market matter, and in particular average days on the market, it’s essential to know three things:
- How real estate agents calculate the average days on market and how that figure might not be accurate.
- The reasons why properties might sit “on the shelf” for longer than most others in the area.
- The impact a longer than average DOM has on a homes final selling price.
What Is Days On Market?
The Days On Market (DOM) of a property is the number of days it has been an active listing on the local MLS. An active listing is one where the seller is still accepting offers for the home. Once a seller accepts an offer, the listing changes to pending, and the count on the days on market stops.
Homes sell more quickly in some markets than in others, so the DOM by itself is not that useful. What you really need to know is the average days on market for your location. For example, the Redfin Data Center reports that the national average DOM in August 2019 is 40 days. However, here are some of the state-level average days on market:
- Colorado – 27 days
- Kentucky – 30 days
- Delaware – 38 days
- Arizona – 42 days
- Alabama – 51 days
- New Mexico – 92 days
As you can see, it would be reasonable to wonder why the average home in Colorado was still for sale at the 40-day mark, but in New Mexico, it would not be something to worry about.
Why You Need Local Day On Market Figures
State-level average days on market is useful to give a general perspective. However, if you are looking for a home in a particular city or neighborhood, the local ADOM is more important.
You also need to check with your agent whether the local ADOM is calculated using all residential properties. Single-family homes sell at a different rate to condos, so this may change averages. Taking Delaware as an example, the average days on market were:
- Statewide – 38 days
- Neighborhood: Middletown, Village of Bayberry, all homes – 21 days
- Village of Bayberry, Single Family Homes – 16 days
Not only that, but homes sell more quickly in the spring than in the winter. Again using Delaware: in Willmington, the ADOM is for the year is 40 days, but seasonally adjust for August, and the average is 49 days.
Why Might A Home Sit On The Market Longer Than Most?
I’ll set aside the fact that some homes just don’t sell quickly. For no particular reason. Reasons why a home might have a high number of days on the market, include:
- The property is overpriced because:
- The seller has set an unrealistic price and will not budge. Alternatively, the seller may not really want to sell right now and is trying to gauge possible interest in their home.
- The real estate agent has taken on the home, knowing the price is too high and is using the listing to market themselves. Either that or they are a terrible real estate agent who doesn’t effectively market the property.
- The homeowner is difficult in some way. Either they are simply unpleasant to work with, which is putting people off, or they have unreasonable terms and conditions for the sale.
- Repairs or redecoration may be planned but not carried out before the home was placed on the market. The seller might want a price for the house, which would only be reasonable if the home was in tip-top condition.
- Some sellers have schedules that make it difficult for potential buyers to view the property. If the seller is not happy for the agent to have a key and show the home at any time, it can result in minimal viewing windows.
- Perhaps the home is a rental, and the tenant makes it challenging to show the property.
- Although a buyers agent is supposed to show their clients any home, they ask to see, and some real estate agents avoid showing houses that have low commissions.
- It is possible the home was listed with one, ineffective agent, that the agent’s contract has expired, and the property is being relisted with a new agent.
- Photos go a long way towards fueling interest in a property. If there is just one photo on the listing or a few, badly taken images, buyers may skip right past it.
Why Is Days On Market Important?
The reason why DOM is important depends on your role in the sale.
Why days on market is important for sellers
The biggest issue for sellers is usually buyer suspicion. When a potential buyer sees a house with a high DOM, their first thought is often “What’s wrong with it?” quickly followed by “The seller must be getting desperate. In that case, I can get a bargain.”
Obviously, both of these are an issue.
First of all, some buyers may not even go and look at a home that’s been in the listings for too long. They will convince themselves there is a problem with the property and avoid it.
Second, is the fact that you may begin to get lots of lowball offers because buyers will believe you will jump at the chance to sell. Studies show that the longer a home is on the market, the less likely the seller is to get their asking price.
Finally, and an issue not many people know about is the size buyer pool. Once your home has been on the market for a while, everyone who is likely to be interested will have seen it. After that, you will only have additional viewings when new buyers come onto the market
Why days on market is important for buyers
Buyers need to be aware of the DOM because it is, generally, although not always, an indicator of a problem. You should ask yourself and your real estate agent:
- Is the asking price realistic?
- Does the home need major repairs or upgrades?
- Are they any known issues with the property? e.g.
- Is it in a flood plain?
- Are there liens against the home?
- Was it a drug house?
- Do the next-door neighbors keep chickens and a cockerel that cows at dawn?
- You get the idea!
- Have any previous sales fallen through? If so, why?
This home may be one of those that for some reason, just don’t sell quickly. It is a well-known phenomenon in real estate that a house can sit on the market for weeks without an offer, and then, suddenly, three people put in offers on the same day.
Can You Manipulate Days On Market?
Although it is frowned upon, some real estate agents will remove a listing from the MLS, wait a few days, and then re-list the property. This sets the DOM back to zero and gives the impression the home is “fresh.”
Another piece of “slight of hand” is to change the sale price as an excuse to relist. Therefore when you ask when the home was listed, the seller’s agent might say “Three days ago” and forget to mention the other 50 days it was for sale at $10,000 more than the current asking price.
For this reason, be sure to ask how long the home has been on the market and whether it has been relisted for any reason. You can also Google the address to see if there have been other recent listings for the property.
Days on the market can be a useful indicator of the quality and desirability of a home. However, it should not be considered in isolation. The reasons for a high number of days on the market can vary according to location, the time of year, the seller’s motivation, the quality of the seller’s agent, etc.
Speak with your agent if the number of days on market is a concern. If you are a seller, there may be things you can do to make your property more appealing. Buyers may discover a benign reason for the home not selling and snag a dream home they didn’t know was under their nose the whole time.
Helpful Information From Real Estate Experts
What Does Days On Market Mean? – Karen Highland
Why Does This House Have So Many Days On Market? – Sharon Paxson
How To Hire The Right Agent To Sell Your Home – Glenn Shelhamer
About The Author
Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.
This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.