What is Days on Market in Real Estate and What Does It Mean for Buyers in San Diego?

If you’re in the process of buying a new home in San Diego, you most likely have heard your real estate agent mention the amount of time a house has been listed for sale. This term is known as days on the market, DOM. The length of time a home has gone from being for sale to pending is key when you’re looking to buy a new property. The longer a home has been for sale, the less demand there is for that particular property and in return, you may start thinking there is something wrong with this home or the sellers are just not very motivated to sell their current home. Discover how the length of time a house has been on the market can affect your decisions as buyers.

Why is DOM important?     

Days on the market is crucial because it lets interested buyers know how long a house has been listed for sale. Homes which have a low DOM are in the seller’s best interest since they can generally ask for more money for the property and often have a lot of interest in the home. However, homes with a high DOM generally favor buyers because the sellers will usually lower the price of the home after a certain period of time to try and receive more offers and are more willing to negotiate on a price.

What does it mean for the buyer?      

If a home has a low DOM often you’ll need to act fast if you’re very interested in the property because there are other people placing offers on the home as well. In addition, the sellers will usually not be willing to negotiate on the price that much since there is a strong demand for the home. It’s wise to talk to your real estate agent and come up with a price that you believe is reasonable and will increase your chances of buying the home.

When a home has a high DOM that means that there hasn’t been a lot of interest in the property for several days. The reasons for a high DOM can be that the property might have an issue, the listing might be too high, the seller isn’t motivated to sell their home, the housing market is stale or the real estate agent isn’t very experienced. If you’re interested in a home with a high DOM, it’s best to use this to your advantage and try to negotiate on the selling price.

Reasons for a high DOM:

Overpriced listing

If the seller is asking too much money for a particular home, then there will be very little interest in it. Generally, people will not be willing to spend more money on a home than they feel is necessary. If you feel the seller has listed the home for too much money you can try and negotiate on a price that you feel is more reasonable. If the seller isn’t receiving a lot of offers they might be willing to consider a lower price.

Repairs

When a property has certain issues, such as plumbing or electrical problems, that can influence the home’s DOM and cause people to quickly lose interest in the property. If you’re very interested in a home that is need of substantial repairs, it’s wise to know this information before becoming attached to the property. You don’t want to fall in love with a home later to find out that it has mold or is leaking in particular areas. As a buyer, you need to decide whether or not you’re willing to spend the time and money that’s required to fix the home and make it functional or visually appealing.

Unmotivated

If the seller has multiple homes or is already living in their new home, they may not feel as inclined to sell the home very quickly. A seller who isn’t in a rush to sell their home can be difficult to deal with since they won’t be motivated to accept every offer they hear and they can greatly delay the process of buying a new home. This type of seller is not going to feel a sense of urgency to get their home off the market until they receive a wonderful offer.

Cold market

If the real estate market is stable, then it can be very difficult to sell a home. A slow market means that there isn’t a lot of demand for the location of the home. Sometimes, it’s best for sellers to take their home off the market and start the home selling process again with a new real estate agent. By taking the home off the market for a period of time the property will have a very low DOM when it’s listed again since it’s new to the market. In return, people may end up showing more interest in the home since they don’t know that it was previously listed.

Also, sellers could make changes to their home, such as updating their kitchen or bathroom, to make the home look more attractive and try to gain more appeal. During a slow market, it’s best to consult with a real estate agent and find out his/her advice.

Unqualified real estate agent

A real estate agent who isn’t very experienced in selling homes can greatly affect a home’s days on the market and make it more difficult for a house to sell. Agents who have poor communication skills and don’t understand the importance of showcasing good photos of a home can put a strain on the process of selling a home. As a buyer this can be used to your advantage since the real estate agent might be naïve and unaware of how to effectively sell a home. You might be able to negotiate on the price more if the agent is not fully knowledgeable about the details of a home.

Bottom line

Before committing to a home with a high DOM you should find out the reason it’s not received a lot of attention from other people. If you’re still interested in the property after finding out why it has a high DOM, then you should consult with your real estate agent to make an offer on the property. One of the main reasons a home will be on the market for an extended period of time is because people feel as though the sellers have overpriced the property and aren’t willing to settle for the asking price. Days on the market for a home is crucial but it shouldn’t be the only factor that you consider when purchasing a new home.