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CAUTION! Days on Market STATS

Blog by Amanda Blake | January 26th, 2011

I read articles on the Internet all the time that suggests to prospective sellers that one of the questions they should ask when looking to hire an agent is "what are your average days on market." In my opinion, this question assumes that I, the agent, actually control how quickly or how slowly a property will sell. And from my experience, I would say this assumption is incorrect. According to the laws in Alberta, a real estate agent must obey their client's lawful instructions. Therefore, if I make a recommendation to my client to reduce their price in order to get their property sold and they do not accept my recommendation, how can I be held responsible if that property takes twice as long to sell because the price is too high?
There are various factors that will impact an agent's average days on market, here are a few:
  • Time of Year – Of course properties listed in December and January may end up with a longer number of days on the market because of the fewer buyers available at that time of the year. Sometimes we find that sellers will take their property off the market during the slower months and then bring them back on in the Spring. Although I am not a supporter of this strategy given the number of listings we personally sell in the slower months, this will give a lag between listings and the new listing DOM will begin at zero in the Spring.
  • Initial List Price – Of course, the more closely a list price is set at or below market value, typically the quicker a property will sell, decreasing the number of DOM. Therefore, a DOM average can become skewed if a series of listings have been priced below market value. In this scenario, the DOM should be viewed in conjunction with individual sales to determine whether or not each sale was priced at market value. It would become a rather tedious and complicated analysis which brings me back to my original point that DOM statistics should be interpreted very carefully.
  • Seller Motivation – It surprises some of our buyers when we tell them that not every seller that has a For Sale sign in their yard is motivated to actually sell their house. If a seller is holding out for a certain price or maybe not completely convinced they want to sell, the lack of motivation may cause an extended DOM.
  • Databases – In the database that I use as a member of my board, the number of DOM is tabulated based on the MLS® number associated with that property. Therefore, if an agent cancels the existing MLS® number and "re-lists" the property with a new MLS® number, it resets the DOM to zero. So in order to get an accurate DOM number, each different listing (consecutively) for the same property should have the DOM added together to get an accurate average. When DOM stats are quoted, it isn't clear whether the DOM are added together or the figure for DOM are only using the most current listing. Just another reason I am a sceptic of this stat.