How Important Is Days on Market ?

Peter Viles at LA Land the La Times Blog has an interesting post today about the SoCal MLS decision to not use Days on Market in reports to consumers.

To simplfy the article.. SoCal MLS, which operates in Orange County, has decided to eliminate the Days on Market (DOM) feature on reports given to consumers. Agents will continue to get the information and can give it to consumers and it appears that the listing date will also continue to be available on listings that are on Realtor.com.

Now I have no idea why the MLS made this decision but they do note that it may be because of litigation. I'm guessing that somewhere in the country someone sued an MLS association over the DOM data and now a number of MLS systems will, based on the advice of attorneys, stop giving the information out in consumer reports.

Our MLS just started giving out Cumulative Days on Market.. which is the total number of days a home has been on the market. I like this number as it gives a clearer picture of a home's market history.

However, that said, the truth is that DOM is a number and nothing more. It isn't indicative of anything and it doesn't really mean much. I know.. I know.. every potential buyer in the world thinks that if a house has been on the market for a long time the seller is ready to negotiate... WRONG....Sellers that want to sell will price their homes at market value. They will test their price for a short time and adjust it if the market seems to have changed until they find the price where a buyer is ready to make an offer. Sellers who are not motivated don't care how long the home has been on the market.. they aren't lowering their price. The only thing DOM really does is show market trends... if the DOM is small.. homes are selling quickly.. if it is a large number.. sales are slow.

Twenty years ago the big deal was how much did the seller pay for the house... this is another one of those things that doesn't mean much and if you think about it is really silly. If the seller bought the house ten years ago for $400,000 and it's worth $1,400,000 today.. the seller isn't going to sell it to you for less then it's current value.. And by the same token if the seller paid $2,000,000 and it's only worth $1,800,000 .. are you going to pay him $2,000,000 because that's what he paid... of course not.

A property is worth what the market says it is worth. It doesn't matter if it's been on the market for 2 hours or 2 years. If it is in good condition and priced right it will sell quickly and often with multiple offers. If it's in bad shape and over priced it will sit.. that's basic economics.