Depending on where you are, Days on Market could be a hot topic. Perhaps the most sensitive area to Days on Market is San Francisco. I had a chance to talk to Steve Mavromihalis of Pacific Union about this topic last week. Steve is one of the most productive agents in the nation.
Every year, WAV Group watches the listing count for Pacific Union go down by two thirds starting just before Thanksgiving and lasting until March or April – that’s 5 months of the year. Clearly this has P&L implications and budgeting implications for the brokerage. The truth is that these listing are still kind of “for sale”, but the agents take them off the market to prevent Days on Market from accruing. Sellers authorize this, and every listing agent tells the story to every seller for every company in the area. This is not a specific agent or a specific company following an unwritten policy.
“It’s the culture of selling real estate in the Bay Area,” according to Mavromihalis. “People want to enjoy the holidays or go skiing in Tahoe. Because of summer vacation, a lot of listings go off the market in August too!” Mavromihalis admits that if another agent were to give him a call, he could probably arrange a showing with his client.
Because the volume of off-market listings can become vary significant in areas like San Francisco, many MLSs have incorporated a status called Coming Soon. It recognizes the need to manage data when a listing is not active or before it comes active. In hot markets, listings will sometimes go from Coming Soon to Pending without every having any active days. The big advance in policy here is that the MLS can get the data for comparables, CMAs, Market Reports, Market Share and other high value needs of the MLS, its agents, brokers, and consumers.
Days on Market does not accrue during Coming Soon status. MLS Listings, the MLS to the south of San Francisco, has done a great job with the development of MLS policy around coming soon. MLS Listings CEO James Harrison and his then Board Chairman, Broker Robert Bailey championed policy development and shared their efforts with the industry.
I am not sure how the other Bay Area MLSs have dealt with it. Overlapping market disorder is very prevalent in the Bay area – San Francisco listings are placed in the surrounding MLSs and vice versa. Sellers always think that the buyer is coming from somewhere else.
Many MLSs have also built in policies that reset days on market when a listing has been withdrawn for 90 days. Days on Market also stops accruing whenever the listing is not “active.” This gives the listing some DOM reprieve while a buyer is trying close and does not penalize the property if the buyer falls out of contract. The problem in real estate is that every MLS has a different policy. The other problem is that regardless of the policy, agents attempt to game the system.
Coming Soon and “temporarily off market” statuses may be the way to manage the Days on Market issue.
This is surely a lively topic for conversation in the boardroom. If you MLS does not have a coming soon status, or temporarily off market status – or well intentioned policy – put it on the calendar for 2016.