Does the ‘average days on market’ number impose how long your house will take to sell?
Blake King with Big Earth Realty Red Deer and Central Ab
One stat people worry too much about when planning to sell their home is the DOM (days on market). The DOM only provides a minor glimpse of the general state of the local market. It might indicate buying has slowed or that there are too many homes on the market, but it actually has almost no influence on how long it will take your specific home to sell.
The one thing the ‘days on market’ does imply when it increases is that prices are not increasing. Prices may be sitting flat or maybe even decreasing but the majority of sellers list too high at first and wait too long to make an adjustment. This is one reason why the number is practically irrelevant to an individual seller.
Most people look at the DOM number and assume if they list their house it will take at least that long to sell. WRONG, you have to remember, the number is just an average based on the length of time it’s taking a portion of homes on the market to sell and many use the wrong approach. Remember, if the average DOM is 60 there are still homes selling much more quickly.
How do some homes sell in 20 days when the average is 3 times higher? The key to a shorter selling period is pricing correctly according to the market’s current condition.
Many sellers list their homes for sale higher than recommended by their Realtor® hoping for a windfall of extra cash. There can be situations where edging up your listing price is the right thing to do but it must be supported by the state of the market and planned properly.
If you price your home for sale too high and don’t react quickly to results you’ll only sell if your local market catches up. That can take a long time and it’s a bad strategy. An average real estate market might see price improvement at 3%/year, so if you price your property even only 3% over its actual market value, in a market that’s improving at only 3%/year, it could take over 365 days to sell. In a market improving at less than 3%, your home could sit indefinitely priced just a little too high.
Will a house currently priced 3% too high even sell in 365 days in the Central Ab market right now? Our market has seen price increases but how can a person predict if that will continue?
Will a home priced too high just take longer to sell if you wait? No, the homes taking a long time to sell only sell once price reductions happen. Unfortunately, because it’s a hard pill to swallow the owner usually makes price adjustments incorrectly and way too late. In the long run, this might even cause a home to sell lower than it should have.
The market doesn’t cause the DOM (days on market) to be high, sellers with the wrong approach do. The formula to sell in the 30-day range requires consideration of a few important variables and a sharp plan.
Selling at the best price in a market with high a DOM just requires the right plan based on the market condition.
To the right is a chart showing the average “days on market” for homes listed in Red Deer July 2021. Remember, each is only an average and the smart sellers are selling much quicker.
There is a specific plan that will sell your home way quicker than your local average DOM average and the plan isn’t just sitting with your fingers crossed. That’s why it’s important to use comparable sold homes when planning your listing price. If you don’t price based on comparable homes having sold you’re making a mistake. You won’t trick buyers with the information available to them today.
Most buyers have a really good grasp of home prices with so much information available online today. And, almost every buyer is working with a Realtor® who won’t let them pay too much. Another guiding factor is an appraisal. If somehow a buyer does attempt to buy an overpriced property and requires financing, the bank will do an appraisal and throw up roadblocks on a home priced too high.
Is there a specific way to find a buyer in a short time period without accidentally pricing too low and losing money? There is, and I share the simple formula that works quickly with all of my selling clients. Remember as a seller, it’s your choice which plan you use and if you see a property sitting on the market longer than 60 days, their plan was just crossing their fingers. BigEarth.ca Realty also offers low commission rates to their clients. Enter below if you’d like some help.