What is Average Days on Market (DOM)?

Days on Market, often abbreviated as DOM, is a crucial metric in the real estate industry. It measures the length of time a property listing is active before it goes under contract. This includes the period from the day the property is listed for sale until the day the seller accepts a buyer's offer. DOM gives us a sense of the pace of the real estate market - a low DOM suggests a seller's market with high demand, while a high DOM can indicate a buyer's market with abundant supply.

How is DOM Calculated?

The calculation of DOM is quite simple. When a property is listed, the count begins. Once the property is under contract, the count stops. For example, if a house is listed on July 1 and goes under contract on July 30, the DOM for that house would be 30 days.

However, it's essential to understand that the DOM can differ depending on the source. Some sources calculate DOM from the day a property is listed until the day it closes, while others consider the period until the day a contract is signed.

What Influences DOM?

Several factors can influence DOM. Here are a few key ones:

• Price: Overpriced properties tend to stay on the market longer. Potential buyers compare listings and are likely to pass on homes they perceive as too expensive.

• Condition: A property in excellent condition will generally attract buyers faster than one needing significant repairs or improvements.

• Location: Properties in high-demand areas typically have lower DOM.

• Market Conditions: In a seller's market, where there are more buyers than available properties, DOM tends to decrease. On the other hand, in a buyer's market with more properties than buyers, DOM can increase.

Why DOM Matters to Sellers?

DOM plays an essential role for sellers in various ways:

• Pricing Strategy: A low DOM can indicate that the property is priced appropriately or even competitively. Conversely, a high DOM might suggest that the property is overpriced, prompting a potential price adjustment. To learn more, read How to Set a Competetive Price for Your Property.

• Negotiation Power: A property with a low DOM can create a sense of urgency among buyers, potentially leading to multiple offers and better terms for the seller.

• Marketing Strategy: If a property has a high DOM, sellers might need to rethink their marketing strategies, perhaps staging the home, investing in professional photography, or boosting the listing's online exposure.

Why DOM Matters to Buyers?

DOM is also important to buyers:

• Negotiating Leverage: A property with a high DOM might indicate a motivated seller, giving the buyer more leverage in negotiations.

• Market Analysis: Understanding the average DOM in a specific area can help buyers gauge the competitiveness of the market, informing their approach to offers. Check out How to Conduct a CMA for more information.

• Price Expectation: If a property has been on the market for a while, buyers may anticipate a price reduction, or they may question why the property hasn't sold yet, prompting further investigation.

How Real Estate Agents Use DOM

Real estate agents use DOM to advise their clients on both sides of the transaction. Agents can analyze DOM trends to determine the optimal time to list a property, suggest a competitive listing price, or advise on offer strategies. They use their knowledge of local market conditions, along with DOM data, to provide informed guidance to sellers and buyers alike.

DOM is a valuable tool in the real estate market. It helps to paint a picture of the market conditions, property value, and potential negotiation strategies. However, while DOM is helpful, it's only one factor in the larger real estate landscape. Working with an experienced real estate agent can provide comprehensive insight and a balanced perspective when buying or selling a property.

Whether you're a seller wanting to maximize your return, or a buyer looking for the best value, understanding the concept of Average Days on Market can greatly assist in navigating the real estate process.

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