Days On Market (DOM)

What does Days On Market (DOM) mean in real-estate?

Days on Market (DOM) is a real estate metric that tells you how long a property has been listed for sale before it goes under contract. It’s usually counted from the day the property is officially listed on the market until an promise to purchase is accepted.

What does a low DOM indicate?

A low DOM means that a single property was sold quickly. This could be a good indicator of a realtors ability to market the property and attract serious buyers. However, it could also be a signal of strong demand. For example, in Quebec, the DOM is normally shorter in the summer months. It is also dependent on property type and exact neighbourhood.

In reality, the DOM is normally a function of several factors that include:

1. Realtor skill: The realtor may have a low DOM if they are exceptionally skilled at selling houses.
2. Property type and price segment: Luxury homes or large properties often take longer to sell than condos or entry-level homes. This is because … Therefore, comparing DOM across very different property types can give a false impression of market speed or agent skill.
3. Listing strategties: Some sellers deliberately price below market to generate multiple offers quickly, which shortens DOM. Others price aggressively or relist after a failed listing, which lengthens DOM. Without knowing the strategy, DOM alone doesn’t reveal whether the realtor performed well.
4. Multiple listings or relisting: If a property is taken off the market and re-listed, it can reset DOM. Simply looking at the total DOM without this context may make the property appear “slow-moving” even if it sold efficiently after relisting.
5. Market fluctuations: Temporary shifts in demand, like interest rate changes or local events, can impact DOM. A slow month doesn’t necessarily mean the agent isn’t effective; it could just reflect market conditions.

The bottom line is that, the DOM figure gives a snapshot of market activity. To fairly evaluate a property or an agent’s performance, it should be view alongside season, property type, pricing strategy, and local market trends.

What does a high DOM indicate?

A high Days on Market (DOM) usually means that a property took a long time to sell. But like low DOM, it can have different interpretations depending on context. For instance, as we said earlier, a high DOM could be a result of a deliberate strategy, generally slow markets or because of the property type.

Possible red flags to watch out for could be:

1. The property has been overpriced
2. There may be issues with the condition, layout or location
3. The listing agent may not be marketing the property effectively

The way to diagnose possible issues with a high DOM are by asking people who visit your open house what they like or do not like about the property. You should be careful how you ask this question, so as not to put off possible buyers however, a good realtor should be mingling with buyers at your open house to get a sense of who is there.

How does DOM impact buyers?

Buyers must look at the DOM to know how competitive a local market is. If the DOM is low or starting to decrease, then they should be prepared to move fast. This means having the pre-approval on the mortgage, be ready to make a competitive offer, have already maximized your tax free savings accounts for the year, and be ready with home insurance.

Alternatively, if the DOM on a property far exceeds the neighbourhood average, the buyer can assume that the seller does not have many offers. In this case, the buyer can leverage this information to negotiate a better deal.

How does DOM impact sellers?

DOM also impacts the pricing strategy for real-estate sellers. For instance, if a real-estate DOM is consistently decreasing, it may be a good idea for sellers to delay listing the property, so that it can be listed in a more competitive market. This can spike a bidding war, which drives the price of the property up.

By contrast, if the neighbourhood DOM is increasing for your property type, this is a sign that demand is falling. In this case, sellers should list them homes immediately and enlist the support of a really good realtor. Because in a low competition market, sellers need to pay extra attention to all aspects of marketing their property.

How is DOM different from CDOM?

DOM stands for Days On Market whereas CDOM stands for Cumulative Days On Market. Whilst the DOM resets if a listing is removed and then re-added, the CDOM measures the total time that the property was on the market for.

Looking just at the DOM can give a false impression of the property’s true market history. For example, a property listed from July – September might have a DOM of 59 days. However, if this property was previously listed from April – June, and then delisted and re-listed from July – September, its CDOM would be approximately 150 days. This clearly tells a very different story.

Whilst the DOM is visible on most publicly facing websites, the CDOM is normally only available through the realtor’s MLS. Buyers should therefore ask their realtor to provide them with the CDOM for the property.

Although the numbers all need to be viewed in context, it is worth knowing how long a property has really been exposed to the market to better gauge pricing, demand, and negotiation strategy.