DOM = Days on Menu.
There really should be a statutory disclosure required at our dinner table. The pot roast, which wasn’t all that tasty at its debut, reappears if by magic. It mysteriously morphs into chili another night, tacos another, and ultimately a special treat for the dog. But, it doesn’t really matter how its sliced or garnished or packaged; it’s still the same hunk of beef.
Some nights, if I am lucky, I can pull it off as a new offering. The Beef Casserole Surprise doesn’t really taste any different when the main ingredient is on its maiden voyage, but the perception of the family consumer is that fresh is better, more exciting, and more satisfying. Left-overs get a bad rap. So I pretend.
The exception is the dog. He likes the old stuff best. He’s just looking for the scraps. To him, it all tastes the same.
DOM = Days on Market.
This morning in Scripps Ranch, there are 93 active listings in our MLS. These show an average market time of 70 days, and many are kind of like that pot roast.
I don’t have time to run a history on each of the 93 homes – I am after all a busy, busy professional. Things to do, people to see, busy, busy I am. But, I recognize more than a bunch of these from my travels. One shows a market time of 14 days, when it was previously listed and expired after 130 days. Another expired after 27 days and has been with us again for 160. Yet another was listed for 147 days only to make a new appearance for what has now been an additional 132 days. Many more are new homes offered through the MLS by the builders. These are generally only listed in the MLS once the builders start to get really anxious about moving their inventory, and the homes have in actuality been available for months to anyone who stumbled into the new home sales office.
I recognize a lot of these homes as homes that have been on the plate before – left-overs. It really doesn’t matter to me that I have seen them before; I know that value is value, and days on the
menu market don’t change the true nature of the offering. But, it should matter to the people being fed the stuff, and for a couple of reasons.
- For sellers: Days on Market is a valuable statistic. It indicates market activity and sets expectations for their own performance. Whatever your agent tells you the average market time for your area is, assume it is longer.
- For buyers, Days on Market can be an indicator of seller motivation (or lack thereof). There will be many reasons for longer market times, and just because the entree has been around a while doesn’t mean it’s going to be unappetizing. But, whatever the reason, the information could be useful in crafting and negotiating an offer. Make sure your agent runs a full property history on any home you are considering.
Yet market times are misrepresented for a number of reasons. Sometimes, a listing expires or cancels and is relisted with a different broker. The Days on Market subsequently return to zero. Then, there is what we call “churning.” Our MLS is aware of the practice, and has tried to address it by making it a violation for the same agent to cancel and relist within a thirty-day period. The loophole is that a listing can expire and relist with the same agent on the same day, resetting the Days on Market to zero. Alas, it is still a common practice for agents to “pretend” that a listing contract has expired so they can reenter the home in the system. “Yesterday it was pot roast, but today it is beef stew! I promise!” The hope, of course, is that agents unfamiliar with the area or buyers new to the market will not remember. Fresh is better.
One could argue value has nothing at all to do with how long a home has been on the market. The home sale transaction enjoys a form of checks and balances. In theory, at least, a seller will make an informed decision on pricing based on an analysis of recent comparable sales with a dash of market trends mixed in. If a seller fails to price properly, the reasoned buyer will know this, having done their own evaluation of the data. Once at the negotiating table, they will all sit down and talk turkey.
That’s the theory. While a house is not a perishable commodity with a real shelf life, the reality is that homes do have a “best by” date. When a property is served up for the first time, it will attract everyone who is hungry for meat and potatoes. After that first sitting, if a seller doesn’t find any takers, it will start to feel like left-overs, regardless of how many price reductions come later and how much the offering is staged, improved or generally spiced up to seem different. The agents will remember it as the home that is overpriced or has green carpeting or needs a new fence. The buyers will come to see it simply as the home that has been around awhile. Few people will want to revisit it, and fewer showings means a longer market time yet, and ultimately a lower sale price.
Except the dog. He’s only looking for the scraps. To him, they all taste the same.
And, that’s the meat of it.