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.