A home that’s been sitting on the market for a while is kind of like a single, attractive 35-year-old.
Huh? OK, Let’s back up a little.
“Days on market” is a term the real estate industry uses to label the time a house stays on the market. When a house doesn’t sell quickly, it can seem stale and people start to ask questions.
Just like going on a date with a single, attractive, 35-year-old makes you ask a few questions. Why is this very eligible bachelor single? Is this gorgeous woman secretly a crazy cat lady? Does he have a strange hobby? Or worse, keep all his fingernail clippings in a box under his bed?
For the record, there’s nothing wrong with being 35 and single, and there might not be anything wrong with your house that’s been sitting. As a trend though, houses that don’t move quickly tend to sell for less than asking price, so it’s up to you and your real estate agent to prevent your home from being on the market too long.
Goldilocks & the Price of Your Home
Days on market, often abbreviated DOM, is the time between when a home is listed on the MLS and when it’s marked sold or taken off the market. DOM is basically a measure of how long a house takes to sell and is used as a key metric by buyers and real estate agents.
In April 2017, the National Association of Realtors reported a U.S. record: a median of 29 days on the market. This means homes are selling. Inventory is moving quickly in most states and this is to the seller’s advantage.
The demand for homes is based on the individual area but initial attraction to a home depends on the price at which it starts. The initial listing price you set is your most detrimental decision.
List your home too high and you go right over the head (and search filters) of most buyers, creating a situation where it sits on the market. List your home too low and buyers get suspicious (Why is it so low?) or you end up getting less than the house is worth. The key is narrowing in on a “not-too-hot, not-too-cold, just-right” price. Goldilocks found “just right” through trial and error. You can’t afford to do that. It’s a science so work with a good real estate agent who will help you price it correctly from the start.
Toni Spott, a top-selling Realtor® in Milwaukee, Wisconsin with almost four times as many homes sold as the average agent there, says when a seller wants to list their home for more than she thinks they should, she comes armed with numbers — active listings, pending sales and trending homes in the area. If a house is priced correctly, it’ll have a full spectrum of buyers and often end up getting more offers, some of which are over asking price, she says.
Why Does ‘Days on Market’ Matter to the End Price?
There are no good studies that explicitly state a house that sits longer on the market sells for less. The lack of this data is mostly because the market differs so much from place to place and it changes so rapidly. While the average DOM in California is less than 31 days (as of April 2017) in New Mexico it’s more than 75. Comparing the homes and health of those two markets wouldn’t be fair. This is kind of like how milk and bread have very different “best used by” durations. A seller’s goal is simply to be within the average of the area.
There are however, various case studies from individual areas that show the correlation between DOM and selling price.
For example, in Wallingford, Pennsylvania, data shows that in 2014, homes sold in 10 days or fewer realized at least 98.29 percent of the original price (some went for full- or even over-asking price). Homes that were on the market between 46 and 90 days dropped to 89.82 percent, and homes on the market for six months made only 83.68 percent of their asking price.
Another example is in Skagit County, Washington. Because of the health of the market, homes are selling at close to asking price even when they sit on the market for a while, but notice the subtle differences. In December 2016, a home that sat on the market for an average of 65 days would make 98 percent of the listing price. Today, the average is only 26 days and sellers are getting their full asking price or more.
Even though hard numbers aren’t easy to come by, anecdotal evidence is in every good Realtor’s back pocket. Spott says in no uncertain terms, the longer a house sits, the more ammunition the buyer has to lowball.
What’s Going on Inside a Buyer’s Brain?
A potential buyer is treating your house much the same way you would treat a first date you’re about to go out on.
You’d probably Google her name, stalk his Facebook page for a bit, figure out where he works via LinkedIn and might even come across a rogue newspaper article published in 1999 about her science fair win… or something equally far down the internet rabbithole. The point is, buyers are channeling their inner-detective to figure out what the scoop is on your house. They’re looking at everything available to them — from public records to crime stats to chatting with the neighbors about the sewer system.
If your home has been on the market for a while, buyers are asking all kinds of questions:
- What’s wrong with it?
- Is it overpriced?
- Does it need a bunch of crazy repairs?
- Is the foundation cracked?
- Does it share a retaining wall with marching band practice every day at 7 a.m.!?
Buyers are asking themselves: “What am I missing?”
If you want to get ahead of this and speed up your home sale, Spott recommends you get a pre-inspection. Doing this first saves a lot of time and means everything’s is disclosed. This way buyers can’t use certain repairs as a way to negotiate down the price. This is like your date telling you 10 minutes after you’ve met that he still lives with his mother. Maybe it’s not a dealbreaker for you but at least it’s all out in the open from the beginning.
What’s a Seller to Do If Their Days on Market Gets High?
Once your house has been listed for several weeks or months, it’s too late. Sorry, that’s not the answer you wanted to hear, but your house will most likely sell for less than your asking price. It critical to price your home correctly from the beginning.
If you’ve had your home on the market and it’s just not moving, here are a few things you can do:
Be realistic, not stubborn. It may be tempting to wait it out for multiple offers or one that’s closer to your asking price. If it’s overpriced or has been on the market for a while, you may need to lower the price or accept an offer below what you wanted.
Mind the real estate market. If the average DOM in your area is 75 days like in New Mexico, chill out. If homes are selling super fast in your area and you’re not getting any bites, re-evaluate your asking price with your real estate agent.
Make sure it shows well. Clean, declutter, depersonalize and be sure the curb appeal is swoon-worthy. Ask your Realtor for staging and decorating tips if you’re unsure of how to proceed.
Be accommodating to viewers. It’s inconvenient to be out of your house for a showing at 6 p.m. on a school night, but if you’re going to sell your home, you have to accommodate buyers’ schedules. Taco Bell, anyone?
Complete major repairs. Nobody wants to buy a house that’s going to need a new roof as soon as they move in, so make plans to get it done.
Hire a better real estate agent. Some agents or owners will remove their listings and repost them. This makes it look like the home is new to the market and puts it up front again. It’s not tricking anybody though. Most local MLS associations keep track of Cumulative Days on Market (or CDOM) as well as DOM, and real estate agents who reset and relist properties over and over again can be ineffective and leave a bad mark.
A good real estate agent will have a few tricks up their sleeve in situations like this. Spott says she will often find real estate agents who are selling in that neighborhood and talk to them. She might even go to nearby businesses to chat with them about the property.
If you need recommendations for top local real estate agents who can sell your home faster, we’ve got you covered.
The longer a home sits on the market, the less likely it is to sell for the price you want. Account for your area, clean the baseboards and stage it right. These things are all important but ultimately, pricing your home correctly from the beginning is your first — and most important — line of defense.