I know you have all seen the For Dummies books out there. There are For Dummies books for everything from how to work your iPhone, how to use SalesForce to how to choose the right dog. Pretty much anything. You should check them out at : http://www.dummies.com/.
Now I have to admit that I’ve never read any of the For Dummies books personally. I’ve seen them at the local office supply stores. I’ll be standing there with my grossly overpriced HP ink cartridges and I’ll see them near the checkout. There will be a For Dummies book with a intriguing title and it always seem to make sense in a odd way. Stuff you would never thing they would right an entire book about, but there it is.
So I decided to entitle this BLOG entry, “Pricing your home for Dummies”. Why you ask? Well based on some data I’ve seen there appears to be a need for a short, clear and painfully blunt explanation, in For Dummies terms, how to manage a home listings Day on Market.
Days on market (DOM), alternatively Active Days on Market, is a real estate term used to describe the age of a real estate listing. Typically, properties with a large DOM will command lower prices than a property with few DOMs because buyers perceive the property as over priced or less desirable. DOM is often used when developing a pricing strategy. DOM can also be used as a “thermometer” to gauge the temperature of a housing market.
In many respects, DOM is more important that the price. The older the listing, the less visible it becomes. With our MLS rules, the listing needs to be off the market for 30+ days to be relisted and to “reset the clock”. In prior years all you had to do is relist or change brokers to start the clock again. This was not a true representation of the true days on market and they change the rules, for the better in my opinion.
In this market, which has been beaten up quite a bit, the average days on the market increased. This is because of distressed properties (i.e. Short Sales and REO’s) and due to the fact that people actually have to qualify for a loan now. No more fogging up a mirror and you are approved for a 100% loan.
For example, in Almaden where I live, the average DOM was 46 days back in 2010. In 2011 it jumped up to 68 days due to the sales on some very old listings. Despite what the media is saying, the well priced home are still selling fast, many time with multiple offers in a few days. Back in the days of the hot market, no Short Sales and easy loans, it was well under 30 days, with many new listing selling less than 3 days.
Now that the prelims are over, I present to you the “Nowicki Guide to Days on the Market Management…. For Dummies”. Fair warning. This is painfully blunt.
1-7 Days New Listing
The best time to sell a property, and to see the highest offers is in the first seven days. Agents see these pop up on our daily searches and most search engines now have a sort by days on market. Always try to price your property to get a lot of activity in the first 7 days.
8-30 Days Active Listing
Still an active property but no longer “new” from an agent’s perspective. Your goal should be to sell your property in 30 days or less to achieve the highest yield. Be proactive. I always have a proactive plan in place with my sellers when I take a new listing to review the progress of the sales well before we get to 30 DOM.
31-60 Days Stale Listing
This is a tricky one. A couple of years ago this would be considered a stale listing. Now with consumer confidence shot and money tougher to get, this is where most folks end up selling their properties, at slightly less than asking price. At this point if you don’t have an offer in hand, you need to sit down with you agent and reevaluate your pricing and marketing of the property. The clock is ticking. Everything sells at the right price.
61-90 Days Life Support Listing
You never want to get to this stage. It’s not dead yet but it’s vitals are not looking good. It’s pretty much off the radar for most buyer’s agents and buyers believe that there must be something wrong with the property. Your neighbors are concerned. If you do get offers, most of the time you are looking at low ball offers from smart buyers willing to “help you out” for a price. Basically, you have waited too long to take proactive action. You are in reactive mode now and time is running out. You are up against fresh new listings every single day. You now need to be extremely aggressive to get Internet eyes on the properties and human feet in the door. Start thinking of incentives and assistance for perspective buyer’s and higher commissions for buyer’s agents.
91-120 Days Last Rites Listing
Pretty much dead inventory at this point. Think of this as a listing in a coma. It’s alive by not by much. Pretty much just sits there, with few signs of life. Pretty much forgotten by everyone but the people who has to change the bedpan. Everyone assumes that you greedy, the property is grossly over priced or there is something majorly wrong with the property, or “why else wouldn’t it sell?” You waited too long trying to “get my price” and if you do by some miracle get an pity offer, it will be well under what you listed it at, which may have been the true value in the first place, minus some percentage for your lack of proactive pricing and marketing.
121-150 Days Dead Listings
Pushing Daisies. Taking the big dirt nap. Farting dust. The fat lady has sung. Elvis has left the building. And so has your listing. Your property is now considered a “career listing” by your agent who has spent way too much time and money marketing an overpriced listing. You blame your agent for your lack of realistic pricing. You figure your agent must not have done his or her job, because you the seller, overpriced the property based on what you wanted, not what the property is actually worth. The agent doesn’t set the price. You do!!! Work with your agent up front when you first list the property to set weekly milestones in regards to marketing and pricing. At this point, you might want to consider taking it off the market for a extended period of time, regroup, fix the place up with input from your agent who hopefully has been gathering info from open houses and agent showing follow up. People need to forget this was on the market forever. When you relist, make it a big deal. Pull out all the stops and be realistic. Any smart agent is still going to look at the property history. Give them a reason to show the property again or for the first time to his or her clients.
151 and Over Archaeological Find
Dead and buried deep as a T-Rex. It could sell. Heck, anything is possible. But statistically speaking, it’s been over for a very long time. Your listing is the joke at the local brokers tour. Your neighbors are upset with you. The paint is peeling off of your For Sale sign. Buyer’s aren’t interested in dealing with a unrealistic seller. And the term they use is not “Unrealistic.” They are not quite so kind. Buyer’s agents want to find a win-win for their clients. They don’t mind making you a lowball offer. Often times it’s something you would consider insulting. Gee, Skippy, whose fault is that? You would do the same thing if you were in their shoes. From their perspective, they are giving you a get out of jail card, for a price. At this point, any offer is a good offer. You have wasted a lot of time and money at this point. Time to regroup, rethink and relist after being off the market for a extended period of time.
Bottom line. Do your research before listing. Work with a agent who will be blunt, and honest with you. And most important.
PRICE IT RIGHT THE FIRST TIME!