Going after the high DOMs

I was talking to a friend of mine the other day. She and her husband are considering going into real estate investment. She has me scouting out properties for her, discussing the what ifs, and developing strategy. During this conversation, she expressed an interest in properties with high DOMs and if I thought that was a good idea. I thought this was a good question for all prospective home buyers.

First, what is DOM? This acronym stands for “days on the market” and refers to the length of time a home has been on the market. However, because it is generated by the current agent listing date, it does not typically account for homes that have been previously on the market as for sale by owners or with another agent.

Next, the short answer. No. I do not think that high DOM should be your starting point. There are far more important attributes of a home to consider than how long it has been for sale. For starters, it is even a home you want?

But, April, for people looking to get a good deal, owners that have been waiting forever to sell their property should be ripe for the picking, right?

No. There are numerous reasons that can contribute to the DOM. Not all are favorable to the investor or typical owner occupant home buyer. Some a moot points to everybody.

  • The property isn’t really for sale. I know this sounds odd, but some listed properties aren’t. Some property owners will set a price on their home and just “wait and see.” They aren’t interested in negotiations or working with the buyer. If somebody just happens by and must have this particular house and will meet all the seller’s demands to get it, then they will sell. But not before. You can included properties that are over priced in this category.
  • Some marketing strategies don’t work. An agent lists a home and fails to effectively market the property, or at all. Therefore, the home, a good value as it may or may not be, didn’t even have a fighting chance.
  • There is a characteristic about the property. You find this a lot in older homes. Some folks just can’t get past the age of the house, the fact it has septic and deep well, the carpet is tattered, the roof is old…whatever. These might be a perfect property of the investor or a good do it yourselfer, but these matches sometimes take a little longer to make.

Obviously this list is not all inclusive, but it is the top three that I see.

So, the moral of the story is, who cares how long the home has been on the market? This fact may come into play as you learn more about the circumstances of a property, but not before. The definition of “a deal” is going to be individual specific and not hinge on how long a property has been for sale.

Comments

  1. Excellent stuff! Sometimes I wish DOM would just go away. Seriously. Why even report it? Many buyers (and sellers, and investors, and agents) put WAY too much focus on DOM.

    Yet along with other metrics like median home price, list price:sale price ratio, etc. DOM is oft quoted and more often misunderstood…

  2. Thanks!

    I think it’s one of those things that leave you in a no win situation. When the question is raised, it doesn’t matter how you answer it, somebody always thinks there is more to it.

  3. My local MLS has two DOM numbers. Total time on MLS and the most recent listing. It does take into account when a listing changes hands.

    While I think DOM can be a tool to screen for potentially motivated sellers as you point out it is no guarantee. But of course noting is guaranteed to motivate sellers or buyers.

    There are many people who should be motivated but are not, like the many in foreclosure that bury their heads in the sand. Or banks that have REO properties in lousy condition and think they have gold.

    Good post thanks,

    Ned Carey

    • Ned – so your MLS does it by address? In ours, it only tracks DOM by MLS number. You have to search by address to see the history previous to that particular listing. Your feature sounds very helpful.

      I think you characterized the whole thing correctly when you called it a “tool” regardless of what connotation one takes with that 😉

  4. Yes it does it by address. Once you have found a listing it has 2 numbers
    DOMM – total days on market without a break of at least 180 days.
    DOMP – the length of the current listing.
    many agents try to manipulate the DOMM number by tinkering with the address; ie, 123 N Main, N Main 123, 123 North Main etc. The MLS service is cracking down on that tactic.

  5. Jason | Construction Guy says:

    Great article! I think DOM is a great tool if it used correctly. I have done some “birddogging” for an investor and when I wanted to find a motivated seller, I would start with the DOM. Of course, the investor wasn’t looking for a home, he was looking for a house which he could fix up and sell. I sure wouldn’t have wanted to live in some of the houses he was interested in!

    Jay,

    If you are so worried about DOM, maybe you should focus on selling your properties faster! 😉

  6. Ned and Jay – I am so glad you guys weighed in on this topic. The thing I found so interesting about DOMs is exactly what this discussion shows – they are like every other statistic – they can mean whatever you want them to 🙂

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