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.
{ 13 comments… read them below or add one }
Kathy Drewien
03.01.08 at 8:12 am
Love the analogy, Kris!
Our mls handles days on market in the same way you describe. Tracking DOM for a particular house is not as important to me as trying to determine market trends. My only comfort is knowing that our mls has always reported dom in the same way, so I can see trends even without solid numbers.
Jim Klinge
03.01.08 at 9:49 am
The association of realtors in this town are adamant about protecting the weaker agents - no personal promotion is allowed in the MLS remarks, out of fear that the listing agent might be trying to “steal buyers”.
If the association cares so much about protecting the lousy agents, they should insist on a continuous DOM. Agents who don’t/can’t follow the previous listings will tell their buyers to jump on a what-appears-to-be a hot new listing, which isn’t.
That lawsuit in Carlsbad where the buyer is suing her agent is a great example. The seller/agent of that house did the “re-fresh”, after being on the market for 86 days. She didn’t change the price, just re-listed it as a new listing, and boom - opened escrow 15 days later.
BTW, on that case - the buyer could have bought the same model across the street for $175,000 less - it was on the market at the same time, but was on the “value-range” of $999,000 to $1,100,000 with no view, which may have thrown a curve to the plantiff. It closed for $1,025,000 on THE SAME DAY that the plantiff’s home closed.
Kris Berg
03.01.08 at 10:12 am
Kathy and Jim, Both excellent points. Jim - I love the idea of continuous days on the market, regardless of listing broker, listing agent, expirations and the like.
I have seen agents many times cancel a listing and then try to relist with a team member’s name as lead agent to get around the issue. Swap “Agent 1″ with “Agent 2″ and voila! Something new for diinner.
The whole idea of not being able to provide information which could lead a grazing consumer to the listing agent is one I have taken for granted for so long, but that is another issue entirely, and I am glad you raised it. In this day and age, it makes very little sense. It certainly isn’t a rule that benefits the seller client, since promoting my website would serve to drive buyers to a place where I can promote the home in a much more thorough and better light. In the old days, where listings could only be found through an agent and through the MLS, the approach may have had some merit. But, today, where listings including the verbatim MLS remarks show up all over the Internet through feeds or IDX arrangements, it’s goofy, to put it mildly.
Steve Berg
03.01.08 at 10:55 am
Beyond the DOM issue, I looked at the same group of homes in the MLS this morning (now up to 97 active detached listings), except I looked at each individual listing for two other purposes; Price Reductions and Overpricing. Recognizing that the pricing issue is my own subjective opinion, I was very lenient. I only counted homes where i believe the list price was at least 5% above what I thought the home should sell for. Of course since it’s only my opinion, take it for whatever you think it’s worth. The results were fairly interesting:
Of the 97 listings, 48 showed up as having had at least one price reduction. Also, 49 homes (IMHO) were overpriced well beyond comparable sales for their size and neighborhood. And again, I was being liberal in my evaluation of pricing, so there are probably more. These homes will need to reduce price or fail to sell.
When roughly 50% of our current (detached) inventory has had to reduce price (many multiple times) or remains currently overpriced, the mindset remains pretty clear. In a market that’s adjusting as ours is today, time/DOM does not work to a sellers advantage. Why this isn’t crystal clear by now is beyond me.
Jim Klinge
03.01.08 at 11:23 am
It’s because we’re the only ones pointing it out.
If NAR, CAR, and the local associations would be keeping their fiduciary duty to their sellers, they’d be doing a full blitz of advertising, telling sellers to lower their price until they start getting offers.
But instead, we get the insanity like we received this week - did you get the email video podcast from our fearless leader, Dickhead Gaylord?
“Now that the loan limits have been raised, everuthing is fine - go tell buyers to buy!” was the gist of it. I wanted to puke.
Steve Berg
03.01.08 at 11:43 am
Jim - I am not one to defend NAR, but they have backed themselves into a corner. Over the past two years, they have consistently underestimated the magnitude of the cycle, to the point where their credibility is suffering. Even CNBC is qualifying their monthly press releases due to the lack of objectivity. The problem is that this hurts all of us (agents) and our credibility. When the San Diego Union seems more credible than NAR we are all in trouble.
Dee Marie Fisher
03.01.08 at 2:58 pm
We are in luck with the new Sandicor MLS Tempo 5 system that will give us the history of the property with a click of the button and accurate marketing time! This convenient componet of the new MLS Tempo 5 will allow agents to disburse more accurate information to their buyers. Sellers may not like this feature but accuracy is paramount for our business.
Trevor Smith
03.01.08 at 6:34 pm
NWMLS up here in Seattle has a rule that I have a love-hate relationship with. The house has to be off the MLS for 90 days before the DOM resets. Cancellations, expirations, even Lennox Scott himself can’t reset the DOM’s.
The one thing I have noticed that some tricky (shrewd, lame, cheater) agents are doing to get around this is changing the address after they cancel and relist. Since the NWMLS database tracks DOM by address, just a slight change will reset the DOM.
Here is a really common tactic I see:
2500 N 187th St Seattle, WA
will be changed to
2500 187th St N Seattle, WA
They may be able to trick NWMLS, but they can’t trick Google Maps. I wonder how many showings this has cost these turkeys by Buyer’s Agents getting lost.
Jamie Geiger
03.01.08 at 7:19 pm
In Phoenix, our MLS system, ARMLS, tracks agent DOM and continuous DOM, CDOM. The only way to return to “0″ days is for the property to be off the market for 90 days. This was implemented for the very reason you described. We can also see the history of the listing.
Loved the article analogy-very clever
Tara Jacobsen
03.02.08 at 4:34 am
In this day and age “hiding” anything is ridiculous. When I started to see this conflict around on the blogs, I went to our Listingbook (public MLS interface) thinking that we would for sure have it in there. Instead of DOM it had N/A. If it didn’t have that it would have had the current listing DOM, as ours are not hooked together either. We can pull an archive search to find out total cumulative days but it is not available to consumers. I have NO problem with providing that information on my listings. Maybe all the members of NAR can vote whether they care or not and we can put this latest CONTROVERSY! about our profession to rest.
Kris Berg
03.03.08 at 8:00 am
I like the 90 day rule but, as Trevor points out, someone will always go to the trouble to try to cheat. At least our MLS now has a nifty little button that says “report a violation,” so fingering the cheaters is a little easier for us.
Kris Berg
03.03.08 at 2:52 pm
Dee - I scooted back in because I think I skipped over your comment. So, now you know that while my shiny new Tempo 5 key fob is in my possession, I have yet to actually activate it or mess around with the new site. They say “starting in April,” and I hear “you have one more month before you have to worry about it.”
A property history search is awesome but only if agents chose to use it. We will still have the same old market time problem on the actual listing page, will we not?
Dee Marie Fisher
03.05.08 at 1:45 pm
Hi Kris,
First, start using that key fob and Tempo 5… don’t wait! The first time you need to obtain information in a hurry in April, you’ll be crying the blues for not practicing while you can still use the old MLS. They are only running parallel for the next month.
As for the property histotry, it will be different with T5, because it will look to the previous listings on the property and calculate the days of market.