The DOM (days on market) factor
According to the National Association of Realtors, DOM — days on market — indicates the number of days from when the property was first listed for sale on the Multiple Listing Service (MLS) to the date a seller signs a contract of sale.
DOM can signal market liquidity. In a seller’s market where inventory is lower than demand, the days on market are expected to be few in number. In a buyer’s market where inventory exceeds demand, days on market are expected to increase.
But other factors can impact DOM. If the property is overpriced, in a less desirable location, or needs a lot of work, it may sit on the market longer.
In the post-pandemic era, with inventory down 12%, homes have spent an average of 17 days on market, even though prices are higher than they were a year ago, when DOM averaged 22.
Because buyers may use DOM to negotiate a lower price, it’s important to work with an experienced real estate agent to offer advice and strategies to get the most out of your home sale.
How long do most houses stay on the market?
Market fluctuations alter the average DOM. Way back in 2017, the U.S. market set a record of a median 29 days on the market, per the National Association of Realtors. By 2019, that rose to 38 DOM, but by 2021 the average DOM reached 21 and since then, a new record has been established at 17 DOM.
Several reasons affect the number of days on market:
Low interest rates. Another new record DOM was set in 2021, thanks in part to an all-time low interest rate for 15-year, fixed-rate mortgage of just 2.29%.
Low inventory. When low inventory combines with high demand, houses don’t usually spend many days on market. In 2021, the market experienced a decrease in listings by 43% compared with 2020. By late summer, all four major regions in the U.S. saw a 2% drop in home sales from July to August. Correspondingly, in the country’s top 10 cities, the median DOM was nine days or under, with Peabody, Massachusetts, averaging just three days. Marshall says that since early 2020, houses in the Asheville area have stayed on the market a quick 24 to 48 hours — and usually generate multiple offers over asking price.
Rise in remote work. Remote work provides flexibility to live anywhere. Marshall says Asheville has experienced “an influx of out-of-town buyers” who prefer the lower tax rate in North Carolina to other states and can now take advantage of that by working from home.
Reasons homes stay on the market longer than usual
Some factors result in houses staying on the market longer than the average, such as:
Overpricing. The number one reason a house lingers on the market is because it’s overpriced. If the price is too high, it may not even appear in a buyer’s search.
“Price is everything,” Marshall emphasizes. “If it’s priced correctly, it will sell — with multiple offers.”
A stubborn seller who is emotionally attached to the home may refuse to lower the listing price or negotiate in good faith when a buyer offers a low bid, resulting in the house stagnating on the market.
On the flip side, if a home is priced too low, it can scare off buyers, who suspect there’s something wrong with it. To determine the right listing price, it’s important to work with a real estate agent who knows the market.
House condition. It may not be the price that’s scaring away buyers; it could be the condition of the house. Not everyone wants a fixer-upper. In fact, 90% of buyers want a turn-key house they can move right into.
Even if the seller offers credit for needed repairs, not every buyer is going to want to take on that extra work. Fixer-uppers tend to stay on the market longer and sell significantly below market value.
If a house isn’t selling, Marshall says the seller has to adjust either the price or the condition.
Presentation. If a home doesn’t make a good impression, it’s relegated to a long stay on the market. First up is curb appeal. If buyers don’t like the looks of a house’s exterior in the listing photos or when driving by, they’re not going to come inside.
A fresh coat of paint, sparkling-clean windows, mulched flower beds, and an inviting front entry make a buyer feel welcome and eager to see what’s behind the front door.
Once inside, the home should be clean, uncluttered, and updated. Buyers notice upgraded appliances, countertops, and flooring.
Buyers also notice clutter. If a house is jam packed with furniture, it’s hard for a buyer to see the potential. Too many personal items make it difficult for buyers to envision themselves living there.
If your house doesn’t pass the sniff test, it may sit on the market for a very long while. Get rid of smoke, pet odors, and musty smells if you want to sell more quickly.
Lack of marketing. If buyers don’t know about your listing, they can’t view it. While newspaper ads are still the most effective tool, 70% of today’s buyers begin their search online.
That means a real estate agent should take a diverse approach to marketing: newspaper ads, website postings, mailers, and open houses. For high-end luxury homes, it’s a good idea to add real estate magazine ads, virtual tours, and color brochures.
Marketing starts with enticing photos; sub-par photos can sink a listing. Marshall says professional photos are a must. She also likes to include overhead drone shots and a video walk-through.
Limited showings availability. If the seller or the seller’s agent isn’t cooperative and flexible, showings may be limited. That leads to missed opportunities, as buyers are discouraged and will seek other properties, leaving your home to waste away on the market.
It’s not easy to keep a home in pristine condition or to drop everything at a moment’s notice if a buyer suddenly wants to see it, but the more flexibility a seller can provide, the more opportunities become available to sell.
After staging the home to show, it’s best if the sellers absent themselves while buyers are viewing the property. It gets complicated if the home is rented; tenants might not be so agreeable to a showing schedule.
Depressed market conditions. No matter how well your house shows, how accommodating you’ve been, how great your marketing is, or how valuable your property, sometimes a house can stay on the market because of the market.
If the economy is bad, if interest rates are high, or if the market is flooded with inventory that outweighs the number of buyers, it’s not easy to sell no matter what you do. Sometimes you just have to ride it out, which means your home can languish on the market longer than you’d like.
What are the effects of a house staying on the market too long?
After about 90 days on the market, a property is considered “stale.” When it does finally sell, it’s likely to bring a lower price than listed because when buyers notice that a home has been sitting on the market a long time, they assume something is wrong with it.
As we’ve noted, the real reasons a house doesn’t sell quickly could reflect the economy or the market. Perhaps the listing price was too high or the seller made showings difficult. But in the eyes of the buyer, if a house doesn’t sell, it raises questions of why.
Every time you drop the price, you find a new subset of buyers.
At what point should you lower your price?
If you count days: Most real estate agents urge a price reduction if there’s no serious interest after just a few weeks. Anywhere from 10 days to four months is common, depending on the local housing market and how long it takes for other houses in the area to sell, although many agents don’t like to wait much longer than 30 days if there’s no action.
If you count showings: Marshall doesn’t go by the calendar. Instead, she urges sellers to reduce the price after five to eight showings without an offer or if the home gets fewer than two showings.
If you compare averages: In August, the national average DOM was just 22 days. New listings get the most attention within the first 21 days. If it’s been longer for your home a quick price adjustment might entice initial buyers back, although Marshall says if they really liked it the first time they saw the house, they would probably have made an offer at a lower price than listing. The longer you wait to reduce the price, the lower you may have to go to eventually sell your house.
If you need new buyers: When considering a price reduction, some agents feel it’s best not to lower the price more than once or buyers may have trepidation about your home. Marshall disagrees. “Every time you drop the price, you find a new subset of buyers.”
To determine how much of a price reduction is necessary, look at comps and pending sales that had price reductions. Compare how many days they were on the market before the price was lowered and how much it was reduced.
In general, you’ll probably want to reduce the price by more than 3%, but take into consideration how much of a reduction is needed to reach another price level. For example, if the original list price was $423,000, a 3% reduction would bring the cost down to $410,310. But if you lower the price to something under $400,000, you’ll reach a new level of search criteria that can attract new buyers.
“People shop in increments of $5,000 or $10,000,” Marshall observes. Thus, depending on the original listing price, she tries to align price reductions accordingly in the same increments.
Should you ever re-list the property?
To avoid the stigma of a price reduction, you can take your home off the market and re-list it at a lower price. This will restart the DOM clock and get new eyes on your property.
However, a savvy real estate agent will review the home’s history and discover that it was recently re-listed, so your advantage could be moot. Many MLS associations keep track of Cumulative Days on Market, so it’s difficult to fool an attentive agent.
In fact, if a seller’s agent uses this trick routinely, it can be counterproductive and leave a negative impression.
The only time Marshall would advise a client to pull a property from the market and re-list is if it needed repairs or improvements. That said, she admits that some clients who took their homes off the market in 2020 and re-listed in 2021 made a “good decision” because market fluctuations favor sellers now. It’s a gamble, however.
Conclusion: It’s a seller’s market
The market in 2021 has favored sellers, due to:
In fact, 98% of top real estate agents considered 2021’s second quarter a seller’s market — up from 79% in 2020, according to data from HomeLight’s Top Agent insights survey for Summer 2021. In other words, houses were moving quickly.
But the market fluctuates, and as the country recovers from a global pandemic, it’s important to reassess strategies and consider how long a house should sit on the market.
Marketing, presentation, house condition, and, above all, pricing have a significant impact on how many days your home will stay on the market before a sale. Whatever the challenges, working with a top real estate agent can help minimize DOM and sell your house quickly.
Header Image Source: (Andy Dean Photography / Shutterstock)