Understanding "Days on Market" in Real Estate: What It Means for Buyers and Sellers
When navigating the world of real estate, you’ve likely come across the term “Days on Market” (DOM) during your search for homes or while discussing a property with an agent. But what exactly does it mean, and why is it important? Whether you're a buyer or seller, DOM is a critical metric that can influence decisions and outcomes in the real estate market.
What Does "Days on Market" Mean?
"Days on Market" refers to the total number of days a property has been listed for sale, starting from the day it is first put on the market until the day an offer is accepted. In other words, it measures how long the property has been available for potential buyers to view and make an offer on. DOM is a key indicator used by both buyers and sellers to assess the competitiveness of a property and the market.
For example:
- A property listed for 30 days has been on the market for 30 days, counting every day it was listed, including weekends.
- If a property is withdrawn or taken off the market and then re-listed, the clock may reset depending on the listing status or platform.
Why Does Days on Market Matter?
For Sellers:
- Price Strategy
- Longer DOM = Potential Price Adjustment: If a property has been on the market for a longer period without offers, it might indicate that the listing price is too high for the market. A longer DOM could signal to the seller that they may need to lower the price to attract more buyers.
- Quick Sale = Strong Pricing: On the flip side, properties that sell quickly (with a low DOM) often reflect a strong demand and competitive pricing. If a property sells in a matter of days, it might suggest that it’s priced right for the market, and the seller could potentially get a competitive offer.
- Market Perception
- Homes with a long DOM can sometimes develop a stigma. Buyers may question why the home hasn’t sold yet and assume there’s something wrong with it. In highly competitive markets, homes that stay on the market too long might appear “stale,” while new listings attract more interest.
- On the other hand, properties with a low DOM (especially in a seller’s market) often indicate that the home is desirable and in-demand, which can lead to multiple offers and higher sale prices.
- Negotiation Leverage
- Seller’s Market: In a seller’s market, where demand exceeds supply, properties tend to sell faster, and DOM is typically lower. Sellers have more leverage in negotiations and might receive multiple offers, sometimes at or above asking price.
- Buyer’s Market: In a buyer’s market, where there’s more inventory than demand, sellers might have to reduce their asking price or offer incentives to make the sale. Longer DOM in this scenario could give buyers the upper hand, offering them the chance to negotiate on price or terms.
For Buyers:
- Red Flags or Opportunities?
- Short DOM: A low DOM may signal a property is highly sought-after, which can result in competitive bidding and possibly drive up the price. Buyers may need to act fast, make strong offers, and be prepared for possible bidding wars.
- Long DOM: A home that has been on the market for a while may present an opportunity to negotiate, especially if the seller is eager to sell. If the price has been reduced or the home has lingered on the market without much interest, it could indicate that the seller is motivated to close a deal.
- Buyer Strategy
- If you're a buyer looking to avoid overpaying, properties with longer DOM can often be an advantage. You might be able to negotiate a better price or request that the seller cover certain costs, such as closing fees or repairs.
- However, don’t dismiss a home just because it has been on the market for a while. Some homes simply take longer to sell due to unique characteristics, like a higher price point or the need for updates. Understanding the context behind the DOM can help you make a more informed decision.
How Does Days on Market Impact Market Conditions?
DOM can serve as an indicator of overall market conditions. Here’s how:
- Seller’s Market: In a seller’s market, where demand is high and supply is limited, DOM tends to be shorter because homes sell quickly. Sellers often have the upper hand, and properties may receive multiple offers in a short amount of time.
- Buyer’s Market: In a buyer’s market, where there are more homes for sale than buyers, DOM tends to be longer. Sellers may have to be patient, and buyers can often negotiate better deals as properties linger on the market.
How to Interpret Days on Market in Anacortes or Your Local Area
In different markets, what is considered “normal” DOM can vary widely. For example, in a small, coastal town like Anacortes, Washington, homes might have a longer DOM due to the slower-paced nature of the market or because fewer homes are available at any given time. Understanding local trends is essential for both buyers and sellers to determine if a property is priced appropriately or if it’s been on the market too long.
What Should Buyers and Sellers Do Next?
- Sellers: If your property is sitting on the market longer than expected, consider adjusting your price, improving curb appeal, or consulting your real estate agent for other ways to increase interest. Keep in mind that a change in market conditions can also affect how long a property stays on the market.
- Buyers: Use DOM as one of the many factors in your decision-making process. Pay attention to how long homes are staying on the market in the area you're interested in. You may find that properties with longer DOM offer room for negotiation, while more popular listings may require you to act fast and offer competitive terms.
How it relates to our current local market:
Anacortes has experienced a notable 50% drop in Days on Market compared to last January. This decrease can be attributed to low inventory and a growing interest in the area, resulting in homes selling faster.
