“Days on Market,” or DOM is self descriptive – it is basically the number of days a home is “active” on the market. DOM is used by real estate professionals and economists to gauge the market and home inventory. Since real estate is a major component of the United States economy, these statistics are used by economists in examining the condition of the real estate market and the economy as whole.
Home buyers and sellers have also given meaning and significance to DOM. To some home buyers, the belief that an inverse correlation exists between the length of time a home is on the market and the seller’s motivation gives them the justification to make a lowball offer. But is the correlation accurate? If a home has been on the market 120 days when the average is 60 days, the seller maybe more motivated- but not necessarily ready to take a lower offer. Realistically, the high DOM may be an indication of a home that is over-priced to begin with; some sellers may reluctantly reduce the price as time goes along, while some are apt to hold on to the higher price.
In addition to supply and demand, home prices can be correlated to various factors through equilibrium models, such as price and condition, and price and size. As far as I know, no one has discussed an equilibrium model to indicate a correlation between price and DOM; DOM is not only dependant on market conditions but also dependant on variables such as seller’s personality and financial situation.
Just like home buyers, home seller’s assign meaning to DOM based on conjecture rather than sound reasoning. If a home is on the market longer than the average DOM, many sellers tend to focus solely on their real estate agent’s effort (or lack of effort); conversely, some sellers are led to believe they may have sold for too little if the home sells in less than the average DOM.
Real estate agents give credence to the emphasis of DOM placed by home buyers and sellers; and some agents add their own emphasis such that they are compelled to manipulate a material fact about a home. Yes, my local MLS (MRIS) considers DOM a material fact about a home. Manipulating DOM is not only manipulating a material fact, it also appears to be a violation of National Association of Realtor’s Code of Ethics Article 1 (“…REALTORS® remain obligated to treat all parties honestly.”) and Article 2 (“REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property…”).
If the reasoning behind the emphasis for DOM by home buyers and sellers is speculative, and the DOM may be manipulated by the listing agent any way- what’s the big deal anyway? I honestly have never had anyone list DOM as criteria for their home search. Need more information about DOM? Talk to your Realtor about DOM and its significance to your purchase or sale.
This article is not intended to provide nor should it be relied upon for legal and financial advice.