There are many real estate terms and acronyms that can be confusing for both buyers and sellers. But what is DOM in real estate? DOM stands for Days on Market. As the expanded acronym suggested, DOM is the total number of days a property listing has been active since it was initially put on the market.
As a prospective buyer, you must understand DOM, its importance, and how to leverage it at specific points in the buying process.
What does DOM mean in real estate?
Days on Market (DOM) refers to the number of days a property has been listed on the market before it is sold or taken off the market for any reason.
CDOM stands for Cumulative Days on Market. It differs slightly from DOM because it also accounts for previous listing periods. CDOM helps determine average Days on Market for a particular area, unlocking further buying and selling trend insights.
Neither metric is better than the other. However, both are to gauge demand and competitiveness in a particular market. Buyers can use a longer DOM to ask for price reductions. On the other hand, sellers can use shortened listing periods to push for full list prices or the best offers.
DOM and CDOM are both shown in the Multiple Listing ServiceⓇ (MLSⓇ). Real estate agents have access to this shared system, though some online realty sites offer direct access for its users.
Factors that influence DOM
As potential home buyers or sellers, the length of time a property is on the market is important. But understanding why the property has high DOM, or CDOM, is equally critical. These factors include the following:
- Location: Properties in desirable locations tend to have a shorter DOM. Trendy areas with access to a wide variety of amenities will likely see DOMs shorter than 30 days.
- Price: Higher-priced or overpriced properties may have a longer DOM. Conversely, underpriced properties may have a shorter DOM with multiple offers.
- Condition: In general, well-maintained properties have shorter DOM.
- Market conditions: A hot market full of potential buyers can lead to high demand and shorter Days on Market.
What is ADOM in real estate?
Because the real estate industry loves acronyms, there is also ADOM. Agent Days on Market tracks how long an individual listing has been associated with a specific agent. ADOM is also shown in MLSⓇ.
Why is DOM important?
Whether buying or selling a property, you must understand DOM, how it impacts you, and how to leverage it during negotiations.
Days on Market can indicate how quickly properties sell in a particular area. A longer DOM suggests less competition in the market, meaning more negotiating power for buyers. A shorter DOM indicates a competitive environment where buyers must act quickly and might not have as much room to negotiate.
Remember, DOM can be affected by a hot market and other factors such as location, price, and property condition.
DOM can help sellers set realistic expectations for how long their property may take to sell. Longer DOM indicates that a property is potentially overpriced or needs improvements. Short DOM suggests that the property is priced well and in high demand.
Tracking DOM and average DOM is important for real estate speculators. If you invest in a property, you should understand the ebb and flow of the market and time your buying and selling accordingly.
How to interpret DOM
As you can see, DOM is not confusing. However, there are a few different ways to interpret and track DOM.
Comparing DOM to average DOM
Comparing a property’s DOM to the average DOM in the area can provide insights into competitiveness. This competitiveness may be driven by location, condition, pricing, or current economic and market conditions.
You can calculate the average DOM by adding up the DOMs for various comparable properties in your area and dividing that total by the number of properties you compared. A property with a significantly longer DOM than the average is probably overpriced or has other issues.
Tracking DOM trends
Monitoring DOM trends over time can help identify shifts in the market. Increasing DOM may suggest a cooling market, while decreasing days may indicate a hot market.
Tracking DOM is critical for real estate investors. It can act as an early indicator for buying or selling. Or, if tracked long enough, it can provide insights into the highs and lows of the market.
DOMs and economics
DOMs will likely be higher when interest rates are high because borrowing becomes more expensive. Getting into a fixed-rate mortgage in Canada when rates are high does not make any sense. However, the risk of taking on a variable mortgage may be too much for the average buyer’s risk appetite.
As interest rates decrease, you will likely find DOMs drop with them. That is why it is vital to track DOMs over time; if you “cherry pick” the data, it may be skewed, or you will end up with an outlier. Longer-term trends typically can tell you the most about a property’s value.
Why a longer CDOM is not necessarily a bad thing
CDOM on MLSⓇ is the accumulated market time on a specific property address. It would be convenient to think that a longer CDOM is bad. However, that is not the absolute truth. CDOM can be affected by many factors, including flakey buyers.
Especially if a deposit is not required (which happens in cooler markets), buyers may take an interest in a property early into the listing, drag out closing, and ultimately bow out of the deal. If this happens, the property must be relisted, sometimes with a different agent, and the CDOM will be higher.
In short, it is crucial to understand why a property has a high CDOM.
Days on Market is a critical metric in the real estate market that provides valuable insights into the competitiveness and demand of properties. Buyers and sellers can make more informed decisions by understanding DOM and its influencing factors. Whether looking to buy or sell a property, paying attention to DOM can help you navigate the market confidently.
Creditpicks has numerous articles regarding real estate, getting a mortgage, and becoming a landlord. Check back often for more posts that will help you improve your financial well-being.