When you’re preparing to sell your home, you’re naturally curious about your competition. You look at the consumer websites (Zillow, Trulia, and realtor.com, to name a few) and check out the prices of other homes in your neighborhood.
Certainly, price matters – but DAYS ON MARKET is what tells us if it’s the “right” price. This information is readily available to buyers and sellers on all of the consumer and brokerage websites.
When a home is newly listed for sale, potential buyers hurry to see it hoping it’s “the one”. If correctly prepared and priced, one or more of these motivated buyers should move forward with an offer. What if they don’t?
That’s where days on market come in.
If you’re going to get one of those motivated early buyers, you can expect that to happen within the first 7-14 days on the market. If no offers are received in that time, the steady increase in “days on market” shows that the initial asking price was too high. What does that really mean to a buyer – or the seller?
That’s when showings slow way down and the seller is waiting for someone else to come along with interest in their home. A savvy buyer will know that as days on market add up, the perceived value of the house goes down since there’s less competition to get their offer accepted. These buyers are less likely to offer close to asking price when they see how much time has passed since list date.
This is the point at which a knowledgeable agent should introduce the idea of a price adjustment to the seller. Unfortunately, the penalty for in initial over-pricing is high – because the price reduction needs to be enough make a difference to the second wave of buyers who may have passed on the home initially. Smaller price adjustments are ineffective and simply coach the buyers to wait for the next reduction. Meanwhile, days on market continue to add up.
Many times, a seller will say they are waiting for that “special” buyer who sees the value in their home at that price. Meanwhile, days on market continue to add up – making the home less attractive to other potential buyers.
What does this mean to you if you are a buyer? If a home has “significant” days on market, ask your agent to reach out to the listing agent to better understand if there are condition or location issues – or simply too high a price.
If you’re a seller, it means days on market should serve as your gauge of whether or not your home is correctly priced. When you’re looking at “active” listings in your neighborhood and considering your list price, know that if these competing properties weren’t sold within 14-21 days – they’re over-priced.