#EWR FAQ Corner: Days on Market
Hello, I’m broker Will Puente with Expert Way Realty, and I have a real easy question I want to share from one of my clients. He asked me: what is the big deal about Days on Market?
Days on Market is one of the economic principles that is very prevalent in Real Estate. The reason being is that it dictates a lot of what the price of the home should be and appraisers, brokers, agents, look at that daily to give you an estimate of what the home’s price should sell for.
To give you an example, if someone had an iPhone 7, and sold it at very good conditions for 50 dollars, anyone looking and not looking for an iPhone 7 would actually take up on the offer. It’s 50 dollars. In fact, you could actually take that same phone and sell it on the market for maybe 200 dollars easily. It goes around the same principles. Homes, at a certain price, will sell to anyone.
As you keep going, you may notice that that iPhone 7 at 100 dollars is not for everybody. You keep going and maybe that iPhone 7 at 500 dollars would actually go towards the people who are seriously considering an iphone 7. And then you go to maybe 800 and maybe you notice it doesn't sell. If it sold at 5000 dollars it would probably stay on the market for a very long time.
That goes along the same economic principal of time vs price. Homes use Days on Market. We try to gauge to see how well it should sell. If you’re looking at your property and it’s been about a month into the sale of the property and it hasn’t been shown much then it gives you an idea that maybe it’s a little overpriced. The rule that brokers try to follow is that after a month it's probably a good idea for you to price reduce, so that way you gauge correctly and kind of get to the right price. If you don't reduce it, then the appraiser will probably do it when valuating a home.
That is why you need to keep an eye on DOM. CMAs try to give you an estimate, while showings give you a much easier metric on your DOM and how you are doing. In one week’s time, are you showing a lease once or twice? In a month’s time, have you shown about six times? That should be around the timeframe in which you should think about price reducing to get more showings.
Time to price ratio, that’s what DOM is about. Just a suggestion, when you look through Zillow, Trulia, or Realtor.com, pay attention to that just as much as you look at the actual sale price. If you have any questions, let me know.
SAVE & CLOSE