OfflineA fellow DGer asked me about Days on Market and how it worked. I explained the theoretic process that each day the house is on the market until it sells is a DOM (Days on Market)The shorter the period should mean a quicker sales cycle.
However, some real estate agents are gaming the system. When a home listing gets too old on the MLS, some "smart" real estate agents are delisting the home for a couple weeks and then relisting it as a "new" listing. This resets the counter to zero. Therefore, as time progresses, the DOM marker starts to be meaningless. Now, to be fair, during normal real estate markets DOM was pretty accurate as there was no need to game the system.
Because of this, DOM can be a misleading indicator. A better gauge of the market is to use a more natural supply and demand calculation.... total inventory to sales. In this manner, whenever a house is on the market, it counts towards the number. And sales would be the number of houses that close. Using these two numbers is a better indicator of the health of a particular market.
This number will swing each way depending on the economic conditions. In fact, the number often gets worse when the economy is rising as people flood the market with new listings which pushes the number higher. So you always need to have the pulse of the market so you can interpert the numbers correctly.
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Another tool is to have your Realtor send you the comps (CMAs) with the Cumulative days on market. Sometimes noted as CDOM. They can use the MLS to find this valuable number. So, the tricky agent pulls it off the market and puts in on the MLS again, the cumulative number will tell you how many days total it has been listed for sale.
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Besides the DOM and CDOM, one also may cross check various property data via several other sites online. This is also a way to get an idea of how long a FSBO might have been on the market (since most FSBO ads don't mention anything about DOM). Plus, some MLS systems will also track the number of times that a property gets listed over a period of somewhere between 6 and 24 months. Additionally, various search engines and/or some sites sometimes will cache older listings, so that it's possible to access those listings and mine that data indirectly for the CDOM. Furthermore, certain subscription real-estate data sites also will track this info.