Days on Market - Why Is It Important?

 
Knowing what to expect from the real estate market is key to knowing when to list your home and for how much, in addition to setting a realistic goal for relocation or the purchase of a new home.

Part of being a real estate agent is paying close and continual attention to the market forces that will impact the sale of a property. The strength of the local economic base, unemployment figures, and purchasing power all play a macroeconomic role in the ability of a real estate market to function in an efficient manner, ensuring a reasonable number of Days on Market for listed properties.

My last two blog posts have been about economic criteria, or “metrics,” that we can employ to determine a pricing strategy which results in the fewest possible Days On Market for a given property. Pricing strategy is derived from three categories of housing information collected directly from the real estate market:

• “On-Market” (also known as “Testing The Market”) properties;
• “Sold” (or “Market Proven”) properties;
• “Expired” ("Market Failed") properties.

“Testing The Market” housing prices typically set the upper limit of pricing or value. “Market Proven” housing information reflects what real buyers and sellers actually accomplished as a closed transaction, preferably within the last 3 to 9 months. “Market Failed” properties are those whose asking prices were higher than the market would bear or whose condition was less favorable or cost to cure more expensive than the market would tolerate and as a result, sold for a significantly reduced price from the original listed price, or were simply withdrawn from the market.

Typically the reason for an extended marketing time can be attributed to an excessively high Initial List Price. Here is some information you might find interesting:

The average Days On Market of “Market Proven” residences in the Morgantown area from March 1, 2010 to March 1, 2011 was 99.

The average List Price of “Testing The Market” residences is $283,058, with an average of 166 Days On Market – approximately five months from the initial listing.

The average List Price of “Market Failed” during this period of time were on average priced 16.9% higher than “Market Proven” residences and comprised a 21.78% expiration rate.

That last point is worth repeating: Nearly a quarter of the homes in this region that were overpriced by just 16.9% failed to sell.

If you have a strong need to sell your house within a given time frame, I can’t overestimate the importance of working closely with your real estate agent to set realistic goals and develop a pricing strategy that is derived directly from actual market data.