Days on Market (DOM)
Days on Market (DOM) is a critical metric in residential real estate that measures the total number of days a property has been actively listed for sale on the Multiple Listing Service (MLS) before entering into a binding contract with a buyer. It serves as a key indicator of a property’s marketability and provides valuable insight into the overall health and velocity of the local housing market.
This metric functions as a timer that begins the moment a listing goes live and stops once the status changes to “pending” or “under contract.”
Purpose and Function
The primary purpose of tracking DOM is to gauge the relationship between supply and demand. For individual properties, it signals how the market is receiving the listing. For the broader market, the average DOM across a neighborhood or city reveals whether conditions favor buyers or sellers.
- Market Velocity: A low average DOM indicates a fast-moving, competitive market where homes sell quickly, often characteristic of a seller’s market. Conversely, a high average DOM suggests a slower pace, potentially signaling a buyer’s market where inventory lingers.
- Pricing Accuracy: DOM acts as a feedback loop for pricing strategy. If a home accumulates days on the market without offers, it often suggests that the asking price may not align with buyer expectations or current market conditions.
Implications for Sellers
For sellers, DOM is a statistic that requires careful management, as it directly influences buyer perception.
- The “Freshness” Factor: New listings typically generate the most interest within the first few weeks. As DOM increases, that initial excitement fades.
- Perception of Stale Listings: When a property sits on the market for significantly longer than the local average, potential buyers may begin to wonder if there is an underlying issue with the home, such as hidden defects or unreasonable pricing. This “stigma” can lead to lower offer prices.
- Negotiation Leverage: A low DOM puts the seller in a strong negotiating position, often leading to offers at or above the list price. As DOM creeps higher, sellers may lose leverage and need to consider price reductions or concessions to reignite interest.
Implications for Buyers
For buyers, analyzing DOM provides strategic intelligence that can shape their offer strategy.
- Identifying Opportunities: A high DOM can signal an opportunity. A seller whose home has been listed for an extended period may be more motivated to sell and more open to negotiating price, repairs, or closing costs.
- Gauging Competition: A low DOM alerts the buyer that they need to act decisively. In a fast-moving market, hesitation can lead to losing the property to another bidder.
Context is Key: Buyers must look beyond the raw number. A high DOM doesn’t always mean a property is flawed. It could be the result of a previous contract falling through due to financing issues, which would reset the listing status, but might not reset the cumulative days on market in buyers’ minds.
