Victor,

I wholeheartedly agree that reform/standardization of rules regarding DOM is long overdue. The more transparency and clarity here, the better for consumers.

I wanted to add this: there seems to be a prevailing rule of thumb that, when selling a property, the lower the DOM, the better. I would argue that just as a very high DOM for a property might indicate that a property is priced too high, a very low DOM might indicate that a property was priced too low and money was left on the table. After all, the market is not perfectly efficient -- it may take time for enough potential buyers to see a property for a fair "market price" to be set. I wonder if the broker/agents congratulating themselves on selling a property quickly really got the best deal possible for their client. There's a balance to be struck here.

Your point in the 4th paragraph is the salient one -- if consumers can have a good understanding of the DOM trends in their area, then THEY can make the right pricing decisions based on the urgency/timeline of their own situation.

Great post!

Great Comment Matt - CARETS contemplates this in their rules and perhaps is setting a model standard for others to follow.

From About.com

One of the first things a buyer asks about a listing is its days on market.  Days on market matter. To determine the average days on market, agents
take the last 30 days to six months of sold listings, add together the
days on market (before each listing went pending) and divide that total
by the number of listings.

For example, if six listings entered pending status in December --
meaning the seller accepted a buyer's offer but it has not yet closed
-- and three of those listings were on the market for five days, one
listing was on the market for 21 days and two were listed for 30 days
before an offer was accepted, first add together all the days on
market. The average days on market for December, in this example, is
derived by adding 5 + 5 + 5 + 21 + 30 + 30, which equals 96 days. Then
dividing 96 by six listings will equal 16 average days on market.

 

Do Average Days on Market Matter?

Which is more important? The 16 average days on market or the number of
days on market of each listing? If you're a buyer, of course, it's the
home you want to buy that matters. If you're a seller whose home has
been on the market for 17 days, you will have fallen into the lower 50%
of homes that sold over the previous month.

 

How Buyers Look at Days on Market

There are no ifs, ands or buts about it. When buyers see extensive days
on market, they figure the seller is desperate to sell because the home
is still on the market. Buyers also believe there might be something
wrong with the home that caused other buyers to pass it up. Both of
those assumptions, however, can be wrong.

Homes can linger on the market for the following reasons:

 

• The common reason is overpricing.
  The agent may
  have "bought" the listing by misleading the seller into believing the
  home was worth more than the market will bear. It's not unusual for an
  agent to deliberately take an overpriced listing
  
  

   

  
  


• Little seller motivation.
  Sometimes sellers
  want to "test the market" by pricing too high, just to see if they can
  find a fool to pay that price. It's known as a sellers worst mistake.
  
  

   

  
  


• Stubbornness.
  Sellers could be stuck on the price and willing to wait out the market until the market catches up to the asking price.
  

   

  
  


• Down real estate market.
  In buyer's market, it can take longer to sell a home than in Seller's Market A home that would sell in five days in a seller's market might sell in 190 days in a down real estate market (like today)
  
  

   

  
  


• Unsuitable to show.
  Sometimes sellers put homes on the market before they are ready to let buyers see it. They might be finishing resale repairs or painting during the first 30 to 60 days of a listing.
  

   

  
  

 

Agent Practice of Relisting to Reset Days on Market

A common practice among many real estate agents is to withdraw a
listing from MLS after a certain number of days and relist it as a new
listing. Agents relist to show zero days on market because they know
that buyers gravitate toward new listings.

Many buyers dislike this practice because they feel it is misleading
and not an accurate picture of the number of days on market. After a
home is on the market for 60 to 90 days, it is not unusual for it to
sell within five days after coming back on the market as a new listing.

Sometimes listings expire. Many agents take a listing for 90 days and when the listing expires
a new agent snaps up the listing and reaps the rewards of the first
agent's hard work. If you're happy with your present agent, you might
consider relisting with your existing agent.

 

Cumulative Days on Market

Some MLS systems refuse to let agents withdraw a listing and enter it
as a new listing without first canceling or expiring the listing. In
either case, it is relatively easy for an agent to determine the number
of days on market; it's not so easy for a buyer.

 

• 
  

   

  
  

 

Victor, you are more than right! DOM is a very important information most sellers and buyers ask for. In this era of transparency and easily accessed information it's a must to have it displayed in every listing.

There has to be a system to track DOM and the same across the country.

It has been a challenge to obtain additional fields from the Boards in our area to be able to provide as much information as possible to our consumer. In our searches we display the % of price change. Unpleasant for some but useful to many.

I've always thought that Days on the Market is a really misleading indicator. It assumes that a property has been fortunate enough to have been sold...in these economic times, that's a very misleading assumption.

Via Twitter @miamibeach: ok been thinking. I think that the system is so easy to get around--there will be NO way to really reform DOM reporting.

Sans "re-listing" tricks I don't see how DOM is misleading. In any market, if the home is priced right, it should sell.

Great post Victor. There is a saying where I'm from; "Figures lie and liars figure". Those that wish to manipulate statistics in their favor will always find a way to do so. For that reason, all MLS statistics should be taken with a healthy grain of salt. I believe DOM should not be readily displayed so that an experience real estate professional may interpret or qualify the statistic. I realize there is a national movement to standardize MLS data. I believe the real estate business is still a local, broker to client one. I also believe in local determination of real estate definitions. Your post is most timely for us as we are currently reviewing our definition of DOM and its associated policies. The question now becomes - should local brokers lose the right to define their real estate market for sake of a national standard? To what benefit? Or, more to the point, who benefits? The consumer? How many clients and potential clients search for properties out of their local market? Don't most people reside very near where they were born? They may use a national search engine but our statistics show the vast majority of syndicated property searches are from our State. Call it what you may but I for one stand against brokers losing control of their MLS. Great thought provoking post Victor. Thank you.

Victor,
As always, a great post! I'm an advocate for more information for the consumer so they come to the table knowledgeable and ready for a conversation. A common fear is that the information will be misused or misinterpreted by the consumer. If that happens, what better opportunity for the agent to display their expertise! With that said, in order for DOM display to provide any benefit, there must be a standard, at a minimum, within each MLS.


However, as I mentioned in my tweet, I don't agree with posting DOM stats for an agent automatically. These averages will be misunderstood and the real estate agent may not have the chance to educate the consumer. With a listing or market statistic, this is a conversation opener for a potential buyer and an agent. I believe it should be up to the agent to choose to provide their average DOM when and where they choose.