Days on Market or DOM what does this metric mean
How "Days on Market" Affects Your Property Purchase Decision
When purchasing property, one of the key metrics you’ll encounter is “Days on Market” (DOM). This figure tracks the number of days a property has been listed for sale from when it hits the market until it goes under contract or is sold. While DOM can tell you a lot about a specific property, looking at the average Days on Market for the area you're considering can give you a more useful perspective on how competitive the market is and how quickly you need to act.
Understanding the average DOM for the area you are purchasing in can help you make better-informed decisions and potentially give you a competitive advantage in a fast-paced market. Let’s take a deeper look at how DOM might impact your purchasing process.
Why Should You Care About the Average Days on Market in Your Area?
Market Speed and Urgency The average DOM for the area you're buying in provides a snapshot of the market's pace. If you’re looking in a highly competitive area with a low DOM, this often signals a seller’s market—where demand exceeds supply, and homes are selling quickly. In such markets, properties can go under contract within days or even hours of being listed.
Actionable insight: If you see that properties in your desired area have a low DOM, you'll need to be prepared to move quickly. Delaying your offer could result in missing out on the property to another buyer. In these cases, staying on top of new listings and being ready to make a competitive offer is crucial.
Negotiation Leverage In contrast, an area with a higher average DOM typically indicates a slower market. Homes in such markets might have fewer offers or might take longer to sell, meaning there’s more room for negotiation. Sellers in these areas may become more flexible on pricing or offer concessions to close a deal.
Actionable insight: If you're looking at a property that’s been on the market for a while and the average DOM in the area is higher, you may have more leverage in negotiations. The seller might be more willing to lower the price or offer other incentives to move the property off the market.
Pricing Strategy The average DOM for a particular area can also help you gauge whether properties are overpriced. If homes tend to stay on the market longer than average, this could signal that the price is too high relative to demand or other homes in the area. Alternatively, if properties are selling quickly, they may be priced well within the market’s expectations.
Actionable insight: If the average DOM is high, it’s worth examining why the properties aren’t selling. Are they overpriced? Is there something about the area or the property that isn’t resonating with buyers? On the flip side, in areas with a low DOM, be prepared for competition, and ensure your offer is competitive if you want to secure the property before someone else does.
Timing Your Offer Timing is everything, especially when the average DOM for an area is low. If you notice that homes are selling quickly in the area you're interested in, you need to be prepared to act fast. In contrast, if properties have a longer DOM in your area of interest, you may have a bit more time to make decisions, conduct thorough inspections, or even wait for the price to drop.
Actionable insight: Track how long homes in your desired neighborhood typically stay on the market. If homes are regularly selling within a few days, you’ll need to be swift in making offers and might want to explore homes that are newly listed or coming soon. If the average DOM is longer, you may have more flexibility in your timeline and can avoid rushing into decisions.
Low Days on Market – What Does It Mean for Your Negotiation?
While a low DOM typically signals a fast-moving market, it also comes with a potential downside: negotiation may be difficult. In a market where homes are selling quickly and demand is high, sellers are often in a strong position, and you may have little room to negotiate on price.
In such situations, you might find yourself paying over the market rate or even overpaying for a property to secure it before someone else does. In a seller's market, where homes are selling quickly and buyers are competing against one another, the pressure to act fast can lead to impulsive decisions, including bidding higher than you initially intended.
Actionable insight: If you’re entering a market with a low average DOM, be mindful that you might need to offer at or above the asking price to stay competitive. In some cases, you might find yourself paying more than a property is actually worth in the context of the broader market. It's important to do your due diligence—research comparable sales (known as “comps”) in the area to ensure the asking price is reasonable. Additionally, consider whether the property is truly the right fit for you or if it’s a purchase driven by market pressure.
Where to Find Days on Market Metrics on Australian Property Websites
In Australia, you can easily find DOM information on major property listing websites, which can help you understand how competitive the market is in the area you're considering. Here are a few examples of where to find this data:
Realestate.com.au: On each property listing page, Realestate.com.au typically displays the DOM or a similar metric, such as how long the listing has been live. If you look at a specific property, you'll often see a “listed on” date under the price or property description. This gives you an exact number of days the listing has been available. For more insights, you can also access the "Price History" section for properties that have been on the market for a while, which shows price changes along with the dates they occurred.
Domain.com.au: Domain displays a DOM indicator in the property’s description, showing the number of days the property has been listed for sale. The platform also includes a "Price History" section for many properties, which can help you assess any price drops and evaluate if the property has been sitting on the market for too long.
REI (Real Estate Institute of Australia): Many of the REI websites and local agents' pages will provide DOM details as part of their property data. This could either be listed directly in the property’s details or in more in-depth reports about the market trends in the specific area you are interested in.
What’s a Good Days on Market Number for Your Area?
The average DOM will vary depending on the region, the type of property, and current market conditions. It’s important to have a general understanding of how long properties in the area typically stay on the market:
0-30 Days: If the average DOM is low (around 0-30 days), this indicates that homes are selling quickly. In this case, you’ll need to be ready to move quickly with your offer, as properties in popular areas may be gone before you have time to fully evaluate them.
30-60 Days: A medium DOM (30-60 days) suggests a more balanced market, where homes might sit a bit longer, but not for too long. There might still be competition, but there’s typically more room for negotiation compared to areas with a lower DOM.
60+ Days: If the average DOM in the area is 60+ days, it indicates a slower market where homes may sit unsold for longer periods. In such cases, sellers are often more willing to negotiate, and you may have a better chance of securing a deal at a lower price.
Why You Should Track Days on Market for the Area You're Buying In
Seller Motivation
If you notice that properties in the area are consistently staying on the market for longer than average, the sellers may be more motivated to negotiate and sell the property. On the flip side, in fast-moving markets with a low DOM, sellers are likely to hold firm on their asking price, knowing they have multiple potential buyers.Understanding Supply and Demand
DOM is closely linked to supply and demand in the real estate market. In regions with a low average DOM, demand is high, and competition is fierce. In areas where the DOM is high, the opposite is likely true: buyers have more options, and you might be able to take more time to find the right property.Market Trends
Keeping an eye on how DOM fluctuates over time can also give you insight into the changing trends in the market. If the DOM in an area starts to increase, this could signal a shift toward a buyer’s market, and you may be able to take advantage of more favorable pricing or terms.
Conclusion: Don’t Let DOM Be Your Only Metric
While Days on Market is a crucial factor, it should not be the only one you consider when purchasing property. By looking at the average DOM for the area you're interested in, you’ll gain a better understanding of the market dynamics and how quickly you need to act. However, always remember to consider the overall condition of the property, your personal budget, and the long-term value of the home in the neighborhood.
Whether you're facing a fast-paced seller's market or a slower buyer's market, understanding DOM for your area is an important piece of the puzzle that can guide your purchasing decisions and negotiation strategy. Just keep in mind that in fast-moving markets, you may need to pay a premium to secure a property and negotiate carefully to avoid overpaying.