The Cost of Days on Market

You walk into a home that you are considering purchasing and you love everything about it — it meets your needs perfectly.  Usually your first question is to reconfirm the price, “how much is this house again?”  Invariably the second question is, “how long has it been on the market?”

You ask that second question instinctively, because you are checking your perception of the home’s value against the market’s reaction.  The higher the number of days on market, the lower your perception of value.  This relationship is intuitive, but we wanted to know how it looked on paper.  Our findings were surprising.

We analyzed the most recent 1,000+ transactions that closed in metro Denver.  We plotted the percentage decrease of their final list price to contract price against the number of days since their final price adjustment.  We then calculated a trend-line through the data.

DOM v. Value

From the graph you can see that the greatest amount of price adjustment occurs in just the first couple of weeks.  Within 15-days of the most recent price adjustment buyers and sellers were willing to agree on a 3% price reduction.  After another 90 days, the price only dropped an additional 2%!

Clearly, the first few days on the market or after a price reduction are very important.  Making sure that you have the home priced competitively and that your marketing campaign is ready to launch or re-launch full-force can keep more money in your pocket.

Categories: Uncategorized Tags:
Comments are closed.