What is Dom in Real Estate

There are numerous terms that every buyer, seller, and investor must understand. One such crucial term is DOM, which stands for Days on Market. This metric plays a pivotal role in understanding how long a property has been listed for sale. Whether you are a seasoned investor or someone stepping into the real estate market for the first time, understanding DOM can significantly affect your buying or selling strategy.

In this detailed article, we’ll explore what DOM means, how it impacts real estate transactions, and why it matters to everyone involved. Let’s dive deeper into this essential real estate metric.

What Does DOM Mean in Real Estate?

The Days on Market (DOM) refers to the total number of days a property has been listed on a real estate marketplace before it is sold or removed from the listing. This metric starts counting from the day the property is officially listed and ends when the seller accepts an offer or withdraws the property from the market.

There are typically two variations of DOM:

1. Active DOM: This represents the current listing duration of a property until an offer is accepted.
2. Cumulative DOM (CDOM): This counts the total days a property has been listed across multiple listings or relistings.

The DOM is a key performance indicator (KPI) in real estate and is often used by both buyers and sellers to gauge the demand, pricing, and general market conditions.

Why Is DOM Important in Real Estate?

DOM serves as an important signal for various stakeholders, including buyers, sellers, and real estate agents. Here’s why:

Insight for Buyers

For potential buyers, DOM provides valuable insights into the desirability and pricing of a property. A home that has been on the market for a long period may indicate one of the following:

• Overpriced Property: If a home has been listed for an extended period, it might suggest that the asking price is too high for the market.
• Low Demand: A high DOM may also indicate low interest in the property, either due to location, condition, or other factors.
• Negotiation Leverage: A longer DOM often allows buyers to negotiate a lower price since sellers may become more motivated to close the deal after the property has been listed for a while.

Signal for Sellers

For sellers, the Days on Market is a critical indicator of how well the property is being received in the market. A lower DOM often suggests that the property is priced appropriately and is in high demand. Conversely, a higher DOM could mean the property is overpriced, not marketed effectively, or has some other issues that deter buyers. Monitoring this metric allows sellers to adjust their strategies, such as lowering the price or making property improvements.

Importance for Real Estate Agents

Real estate agents often use DOM to advise their clients. A well-priced and well-marketed property should typically sell within the average DOM for that specific market. Agents will also review the DOM for comparative properties in the same area to determine whether a property is competitively priced.

How is DOM Calculated?

DOM is calculated by counting the number of days from the listing date until the property is either sold, withdrawn, or relisted. The calculation begins the day the property appears as “active” on a Multiple Listing Service (MLS) and stops when an offer is accepted or the listing is removed.

There are a few important nuances to consider:

• Relisting and DOM Reset: Some sellers or agents might choose to remove a listing and relist it in order to reset the DOM counter. However, most MLS platforms now track the cumulative DOM, making it harder to manipulate the metric through relisting.
• Pending Status: In most cases, the DOM count halts once a property enters the pending status (when an offer has been accepted but the sale hasn’t closed yet).

What is a “Good” DOM?

The concept of a “good” DOM is highly relative and depends on the specific real estate market. In some markets, properties may sell within days, while in others, a home could remain listed for several months without signaling a problem.

Factors That Influence DOM:

1. Market Conditions: In a seller’s market where demand outweighs supply, the DOM is typically lower, with properties selling quickly. In contrast, in a buyer’s market, DOM tends to be higher because more listings are competing for fewer buyers.
2. Property Location: Prime locations often have shorter DOM due to higher demand, while properties in less desirable areas might take longer to sell.
3. Property Condition: Well-maintained and move-in-ready homes usually sell faster than those requiring significant repairs or updates.
4. Pricing Strategy: A competitive price can shorten DOM, while overpricing can lead to extended market time.

How DOM Impacts Property Pricing and Marketing Strategy

DOM is not just a passive metric; it directly affects how buyers and sellers perceive a property. When a property lingers on the market, it can lead to the following:

Stigmatization of Stale Listings

Buyers often view properties with high DOM as undesirable, assuming there must be something wrong with them. Even if there is no real issue, the perception alone can be enough to scare off potential buyers. Sellers may then have to lower the price to regain interest.

Price Adjustments

If a property has a high DOM, sellers might feel pressured to reduce the price to attract more buyers. This is a delicate balancing act, as pricing too low can lead to lost profit, while not adjusting the price might result in even longer DOM and further loss of buyer interest.

Impact on Marketing Efforts

High DOM can also require a more aggressive marketing approach. Sellers may need to invest in additional advertising, open houses, or staging to refresh the property’s appeal in the eyes of prospective buyers.

How to Use DOM to Your Advantage

Understanding and leveraging DOM can be a powerful tool in real estate transactions. Here’s how:

• For Buyers: Use high DOM listings as opportunities to negotiate better deals. Sellers with properties that have been on the market for a long time may be more willing to entertain lower offers or offer concessions like paying for closing costs or making repairs.
• For Sellers: Aim to sell within the average DOM for your market by pricing your property competitively from the start. Monitor your listing closely and be ready to adjust your strategy if the property doesn’t generate interest within the first few weeks.
• For Investors: A high DOM property might represent a chance to acquire an undervalued asset, especially if it’s in a desirable location but requires updates or repairs. Investors can buy these properties, improve them, and then flip them for a profit.

Conclusion

DOM is one of the most telling indicators of a property’s marketability. It provides insights into pricing, demand, and overall real estate market conditions. Both buyers and sellers should pay close attention to this metric, as it can directly influence negotiations and the final sale price. By understanding what DOM means and how to interpret it, you can make more informed real estate decisions and ensure that your property transactions are both strategic and successful.