Do Days On Market Determine Value?

Do Days On Market Determine Value?

There’s a lot home buyers that look at Days On Market (DOM) as an indicator of value and frankly as a suggestion that maybe the price is too high.  This was certainly the case under normal market conditions and for traditional real estate sales.

Unfortunately (or fortunately), we are not in a normal market with traditional sales, at least not in the Atlanta Metro Area. We’re in a seller’s market with little inventory and the sellers have little to no or even negative equity.  Ultimately, that creates an interesting mix but banks aren’t exactly known for efficiency.  With bank owned homes we’re seeing closing timelines of up to 45 days.  With short sales, you’re looking at 90 days if you are lucky.  If the buyer is changed on these kind of deals, this causes additional delays and … increases the days on the market.

Days on Market is a good option to look at on traditional real estate sales (where the owner has equity) but it’s a poor indicator for distressed property sales such as short sales or REO property.

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