Every week I seem to find myself reviewing the business (not legal) implications of MLS Rules and Regulations. I believe that NAR does an admirable job in fostering good debate and considerations on rules revision and reform – but Days on Market is a nightmare. Organized Real Estate would benefit from adopting a rules standard, and publicly displaying Days on Market on every listing on Agent and Broker Websites.
Days on Market is an important statistic in measuring two key performance issues in our industry – market performance and REALTOR performance. This morning, I read a set of rules that indicate that “Days on Market should be suppressed for the IDX feed, public websites, or to participant websites.” WHY? What could possibly be dangerous about the public display of Days on Market? Clearly it is not confidential data.
Consider the consumerIf I am a seller, Days on Market for properties similar to my home in my area provides me with an expectation of the shelf life of my listing. During my pre-listing research, I need to prepare myself and my family that we are likely to experience 110 days on market for the sale of our home. Granted, the boundaries may prove to be outside the norm, but at least I would have a benchmark.
Understanding Days on Market will also help a seller to determine their pricing strategy with their REALTOR more effectively. If the seller understands that the average DOM is 110, and they need to show up for work in a new town in 60, they can aggressively price their home. If 110 is a comfortable DOM for the seller, they may price the home higher and test the market. Critics may suggest that this information is readily available from a REALTOR, but I disagree as a consumer. I want to know this information before I negotiate with my listing agent.
Agents will often overvalue a home during a CMA to win a listing contract, then quickly ask for a price reduction after the first open house. I love the feature in Broker Metrics and Clarus by California Association of REALTORS that allows broker’s to analyze list price to sale price comparisons between agents. There are many chronic offenders of this overpricing scheme of ‘bait and switch’ in every market.
I would like to see an agent rating program available to consumers that would display their Average Days on Market per listing. Perhaps this will be fodder for QSC, one of the leading Agent rating programs. It would be a great tool for consumers to separate agents who bluff from agents who perform.
If I am a buyer, inventory aging helps me negotiate. If I have been shopping awhile and a new listings comes on the market that I love – I will know to jump on it fast. Alternatively, I may look for homes that have been on the market for a long time to go bargain shopping.
Aside from blocking Days on Market from public display, there is a hodge podge of rules regarding how long a listing needs to be off the market to reset Days on Market. Some MLSs reset this whenever a listing is cancelled and relisted. Some MLSs require the listing to be off market for 30, 60, or 90 or 120 days.
I understand the arguments on both sides of this issue. There are many examples, but lets examine the issue of Termite damage. In California, every home has termites or is about to get termites. Some homeowners do a better job than others at combating these pesky insects, but unless you just tented your home – you have termites. Some home sellers may elect to list the property before termite abatement, and roll the costs into the listing. Other sellers manage the termite issue after an offer has been accepted. Depending on the home, this expense adds anywhere from a few thousand to tens of thousands in costs to the sale.
Organized Real Estate would benefit from adopting a rules standard, and publicly displaying Days on Market on every listing on Agent and Broker Websites.