In July I posted an article How Important is Days on Market. In most normal real estate markets Days on Market(DOM) is not a big deal. Agents typically update or a some consumers view it... "bogus-re-list"... not in an effort to scam buyers but to make sure other agents take another look at a property that may have been missed for a number of reasons.
That said... I think DOM is important in markets like the present one. If a home has been on the market for a significantly longer period then normal then there may be a problem... either with the price, condition, floor plan, terms, location or possibly a combination of items. This information says a lot about the seller's motivation for selling. If you are thinking about making an offer on a property then market history can tell you a great deal about the property... and your chances for a successful offer.
DOM also says a lot about what is happening in the overall market. If the average DOM is less then 30 days for a property then that might be a "hot" property to measure other properties by. On the other hand if the DOM is 120+ then this might not be the property to use as a measure of value.. unless it is new construction that was listed during the building period.
DOM also gives a prospective buyer a measure of how the market is moving. In some parts of the country 180 days is an average market time. In our area we are concerned if we see a 120 day time frame as we have been used to most well priced homes selling in 30 days or less. Longer time frames usually indicate a market that is slowing down.
On February 4, 2008 our local MLS is going to be merging with the MRMLS system. There are a number of reasons for this merger but the main one is for greater efficiency and hopefully a better system. There will be a number of changes in the operating system. Some are technical while others are about how information is handled. Both the MLS systems realize that DOM is becoming a major item of concern. Therefore, beginning on the date of the merger, it will be more difficult for agents to change the way DOM is shown or to re-list property in an effort to make a property appear new to the system. Below is the bulletin issued to all members of the MLS about DOM:
Effective February 4th, the ability of agents to change their listing status to either withdrawn or canceled will be eliminated. Broker-level authority for cancellation and withdrawal has virtually eliminated the practice of “churning” a listing – canceling and re-listing a property to make it appear fresh. (Churning has been deemed a deceptive business practice and is against the MLS rules.) Withdrawn status, which was eliminated from our system last year, is being re-introduced with the merger and as a result of the CARETS common rules..... A property in the withdrawn status cannot be re-listed unless the listing period has expired.
The solution is not perfect and there will always be some who try to bend the rules. Many sellers are going to be upset that their property listing can't be reissued with a new DOM. However I think members of the MLS will abide by the new rules which will lend more credence to DOM information that is used by agents for their clients. This rule has been in effect on the Westside (CLAW system) for many years. The rule change will introduce a new way of looking at DOM . With these changes we will probably see longer market times for most listings, pending sales and for properties that have closed escrow. This isn't necessarily a bad thing or an indication of a falling market... just a far more realistic way to view the market.
That said... I think DOM is important in markets like the present one. If a home has been on the market for a significantly longer period then normal then there may be a problem... either with the price, condition, floor plan, terms, location or possibly a combination of items. This information says a lot about the seller's motivation for selling. If you are thinking about making an offer on a property then market history can tell you a great deal about the property... and your chances for a successful offer.
DOM also says a lot about what is happening in the overall market. If the average DOM is less then 30 days for a property then that might be a "hot" property to measure other properties by. On the other hand if the DOM is 120+ then this might not be the property to use as a measure of value.. unless it is new construction that was listed during the building period.
DOM also gives a prospective buyer a measure of how the market is moving. In some parts of the country 180 days is an average market time. In our area we are concerned if we see a 120 day time frame as we have been used to most well priced homes selling in 30 days or less. Longer time frames usually indicate a market that is slowing down.
On February 4, 2008 our local MLS is going to be merging with the MRMLS system. There are a number of reasons for this merger but the main one is for greater efficiency and hopefully a better system. There will be a number of changes in the operating system. Some are technical while others are about how information is handled. Both the MLS systems realize that DOM is becoming a major item of concern. Therefore, beginning on the date of the merger, it will be more difficult for agents to change the way DOM is shown or to re-list property in an effort to make a property appear new to the system. Below is the bulletin issued to all members of the MLS about DOM:
Effective February 4th, the ability of agents to change their listing status to either withdrawn or canceled will be eliminated. Broker-level authority for cancellation and withdrawal has virtually eliminated the practice of “churning” a listing – canceling and re-listing a property to make it appear fresh. (Churning has been deemed a deceptive business practice and is against the MLS rules.) Withdrawn status, which was eliminated from our system last year, is being re-introduced with the merger and as a result of the CARETS common rules..... A property in the withdrawn status cannot be re-listed unless the listing period has expired.
The solution is not perfect and there will always be some who try to bend the rules. Many sellers are going to be upset that their property listing can't be reissued with a new DOM. However I think members of the MLS will abide by the new rules which will lend more credence to DOM information that is used by agents for their clients. This rule has been in effect on the Westside (CLAW system) for many years. The rule change will introduce a new way of looking at DOM . With these changes we will probably see longer market times for most listings, pending sales and for properties that have closed escrow. This isn't necessarily a bad thing or an indication of a falling market... just a far more realistic way to view the market.
2 comments:
Kaye,
The SoCalMLS requires broker authority to change any listing to canceled or withdrawn. They recently began to show CDOM (combined days on market alongside the DOM, which renders a cancellation or withdrawal to hide DOM useless, a seemingly smart move. It is curious why they would very recently follow up that little stroke of genius by another change, one that removes the CDOM from the consumer copy of the MLS Listing!
Of course, none of this stopped one of our local agent genius's from discovering that by canceling or withdrawing a listing, re-listing it as a lease at $1 and showing it as leased, that once he listed it again for sale that the DOM/CDOM would be eradicated.
Who gets injured by this? The buyer does. When a buyer is deciding how much they are willing to offer on a property DOM plays a part in that decision.
MLS history on every property a buyer is considering should be examined prior to writing an offer, and every agent should know to pull that history without being asked to. Protecting the buyer is our job.
Laurie-
Thanks for the information about SoCALMLS.. There will always be those who try to scam the rules..
I absolutely agree that a buyer is entitled to know the history of a property he is thinking of purchasing and should have all the information available in order to make an informed decision..
This is also information that sellers need to know when they are making a decision about where to price their property.
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