Multiple Days On Market
High Days on Market (DOM) matters for several reasons, both for sellers and buyers, as it often reflects the desirability, pricing, and condition of a property. Here's why it is significant:
1. Perception of Property Value
- Buyer's View: Properties with a high DOM can give the impression that something is wrong with the home, such as being overpriced, in poor condition, or located in a less desirable area. Buyers may wonder why it hasn't sold, assuming hidden issues exist.
- Seller's View: If a property lingers on the market, potential buyers might start to question its value. This can result in lowball offers, further slowing down the sale.
2. Negotiation Power
- Buyer's Advantage: A high DOM often signals a motivated seller. Buyers may have more room to negotiate a lower price, request repairs, or ask for seller concessions because the seller may be more eager to close the deal.
- Seller's Disadvantage: Sellers lose negotiation leverage as the property stays on the market longer. The longer a property sits, the more likely the seller will need to lower the price or offer incentives.
3. Price Reduction
- A property with high DOM may require price reductions to attract more interest. Repeated price cuts can create a perception among buyers that the home may not be worth even the new, lower price, leading to a downward spiral in interest.
4. Market Stigma
- High DOM can create a stigma around the property. Buyers might assume the home has issues or that other buyers passed on it for a reason. This "market stale" effect can make the property less appealing over time.
5. Market Timing and Seasonality
- If a property stays on the market for too long, it may become stuck in an off-peak season, making it even harder to sell. For example, a house listed in spring but not sold by fall might face fewer buyers, especially if it's a seasonal market (like vacation homes).
6. Costs for the Seller
- The longer a property stays on the market, the more costs the seller incurs, such as mortgage payments, taxes, insurance, and maintenance. For investment properties, a delayed sale could result in missed opportunities to invest elsewhere.
7. Competing Listings
- In competitive markets, high DOM homes can be overshadowed by new listings. Buyers are often more interested in fresh listings, creating more competition for homes that have been on the market longer.
8. Impact on Financing
- Sometimes, lenders or appraisers may scrutinize properties with high DOM. It could impact a buyer's ability to secure a loan if the appraiser believes the property's value is in question due to a long time on the market.
In summary, a high DOM can lead to lowered interest in the property, force price reductions, weaken the seller's negotiating position, and create a perception problem that impacts both buyers and sellers.
