Days on Market

[Rick Hamilton]

I recently completed an appraisal for a property that had been on the market for 734 days in a market that typical marketing time is 93 days. When digging into a days on market analysis, I found, naturally, that homes that sold under the 93 days (an average of 34) sold for 98% sale to list, opposed to 94% for the average. On the other side of the ball, I found that homes listed for over the 93 days (184 on average) sold for 91% of their list price.
Based on this information, it appears that the market penalizes for underpricing (in the form of not getting as much as you could have over the typical marketing time) and also penalizes for exceeding the marketing time in the same regards. Is this a safe assumption? I applied this to the sales comparison in the form of adjustments for marketing time and my adjusted sales prices came out very close to each other. So it seemed to have worked. Economically speaking, it makes sense to me that the product (the house) is priced to low then the seller missed out on a segment of the market that would have paid a little more for it, if it was priced a little higher. Anyone feedback would be appreciated.

 

[CANative]

If someone listed a property in a $100,000, 90 day neighborhood for a million dollars it might stay on the market for a million days. If on day one million and one the property owner dropped the list price to $100,000 and got an offer on day 90 then he would have sold at market pricing but with one million ninety one days on market, and the sale price to list price percentage would be about 10%.

But really, the first million days don't count because the property was not being correctly exposed to the market. The days of correct exposure would be ninety one days and the sale to list price perentage would be 100%.

We need to be careful how we use statistics.

FTR, I agree with you in theory and believe you're on the right track.

 

[Thomas Fiehler]

Rick-Don't forget that if a property is listed, expired, listed, expired, then listed again, the DOM will only show the final period of time that it was listed.

 

[LI-Appr]

DOM analysis is very tricky. What is the property was listed but not made available to view? What happens then? Was it really exposed to the market? DOM is from the last list price day to the contract day. I include this information in the Marketing Conditions Section. I do not make adjustments for it in the SC grid. You can not by any means justify those adjustments. I would not go there.
IMHO
KP

 

[Rick Hamilton]

Rick-Don't forget that if a property is listed, expired, listed, expired, then listed again, the DOM will only show the final period of time that it was listed.

Yeah Tom, the Cincy MLS makes it tough to get accurate DOM, you have to do it manually. I wish they would keep a running total like NKY does.

 

[Cruiznblue]

I've seen clients list properties just to get them exposed to the public and build interest...even though the client clearly knew that the property would not be transferable anytime soon(i.e. re-foreclosure, title defects, encroachment issues, city violations, etc...). Technically it could be on the market for 180+ days without being 'marketable'. Most buyers wont wait around in these situations....

 

[residentialguy]

I called an agent on a TownHome listing that was WAY over priced to every TH in the development. I asked why it was so high and he said the buyer was upside down and it's going into short but they needed to show it had market exposure.

 

[LI-Appr]

Did one for a short sale. Listed about 80K over final listing the day before. It went to contract for list on the same day it dropped 80K. Lender actually sent me a BPO from listing agent arguing that I overpriced the subject. Now with Realtors like this, am I going to adjust for DOM. Never happen. When I inspected it I asked the (Tenants/ owners ) how many people have bothered them to view the property? They said none. It was on the market for over 6 months. Realtor does not list the basement kitchen. But in her BPO( rebuttal) she claims the Apartment in the basement is illegal. Non of which was in her MLS report.

Adjust for what? Days on Market?

 

[LI-Appr]

PS all of this went into my report.