There are so many variables that need to be met for a house to successfully sell that it can feel overwhelming. One important but misunderstood variable is the DOM number. But what does DOM mean in real estate, and what do you need to know about it?
DOM stands for Days On Market and is the number that lets potential buyers know how long a property has been available on the MLS. The first day included in DOM is when a home is listed on the MLS and runs until the house is under contract.
Understanding how DOM works can be pivotal for your real estate investment business. So let’s talk more about what it means and the way you can use it to your advantage for incredible deals.
What Does DOM Stand For?
If you’ve ever looked on a website that lists properties on the MLS like Zillow or Redfin, you may have seen the acronym “DOM.” DOM stands for Days On Market and is an industry term used for helping real estate agents and potential buyers understand how long a property has been for sale.
The day a house is under contract with a real estate agent and listed on the MLS is considered Day 1. The last day included in DOM is when a property goes under a contract with a potential buyer.
DOM vs. CDOM: What’s the Difference?
Another term you may have seen is “CDOM,” which stands for Cumulative Days On Market. This is the total sum of days the home has been available for sale without a successful closing.
CDOM is different from DOM in that the “C” accounts for all DOMs for the same listing. As an example, say a house was listed for 14 days. On day 14, a potential buyer goes under contract with the seller to purchase the home. Unfortunately, after a week or so, the deal falls through. The house is then relisted on the MLS with a DOM of 1 and a CDOM of 15 (the original 14 days plus the new day one listing).
CDOM doesn’t consider the total sum of days a home has ever been listed, though; it’s just relating to the most current attempt to sell the property.
What is Considered a High DOM?
There’s no set standard for the line between “normal” and “high” when it comes to days on the market. There are a few variables that have to be factored in when determining whether a house has been sitting on the MLS for an excessive amount of time or if it seems to be pretty typical for the area:
- Is it a buyer’s market or seller’s market?
- How solid is that market? Is it at a high point or beginning to transition?
- What is the condition of the property?
- What is the asking price?
- Is the asking price in line with other comps?
- Is the neighborhood desirable?
- What’s the local economy like? If no one has any money to spend, houses are going to sit longer.
- Have there been any “surprises” that have affected the market? Consider the onslaught of wildfires California has increasingly faced over the years, the droughts happening across various states, or the freak loss of electricity that occurred in Texas. Some things just can’t be planned for and can change the marketplace in a snap.
To give you an overall idea of what current timeframes look like, check out this table that shows the average number of days a property will sit on the MLS in cities where Do Hard Money operates:
|Metro Area||Average Time to Sell Once Listed (Dec 2020)|
|Atlanta, GA||41 days|
|Chicago, IL||52 days|
|New Orleans, LA||46 days|
|Baltimore, MD||33 days|
|Detroit, MI||36 days|
|Kansas City, MO||33 days|
|St. Louis, MO||39 days|
|Minneapolis, MN||42 days|
|Charlotte, NC||13 days|
|Cincinnati, OH||11 days|
|Columbus, OH||8 days|
|Cleveland, OH||69 days|
|Philadelphia, PA||21 days|
|Dallas, TX||46 days|
|Houston, TX||18 days|
|Richmond, VA||24 days|
A Few Tips for Creating a Real Estate Investing Strategy with DOM
Residential real estate buyers will often see a listing with a high DOM as worrisome. “Why has it been on the market so long? What’s wrong with it?” The paradox of real estate is that the longer a home sits on the MLS, the more difficult it becomes to sell. Many sellers will resort to price cuts or take it off the market altogether to wait for a better time.
Properties that have a high DOM can be especially desirable for real estate investors, though. Dealing with antsy sellers gives you an opportunity to have leverage that you might not have had with a more desirable property. Coming to the table with a cash offer, even if it’s less than the asking price (or even way less), can mean landing an incredible deal on a new investment property.
That said, you’ve got to play your hand accordingly to stop the seller from scoffing at your offer. Pitch your proposal, not as an aggressive slash and burn, but as a solution to their problem. The seller can’t seem to move this property and is either unwilling or unable to throw more money into the listing to make it more desirable. But here you are: a buyer who’s ready to offer cash and get this burden out of their hair today.
There’s a balance you need to hit when using this method because it’s easy to come off as condescending or end up sounding like a jerk. It may take a few times before you’re able to nail this sales technique, so don’t worry if the first few attempts feel insincere or awkward. Real estate investing is a numbers game, and the more attempts you make, the more refined your persuasiveness will become.
Understanding the average DOM of your area can be a valuable tool for your investing strategy. Keep an eye on the marketplace and start marketing yourself as an investor who can take problematic properties off the hands of frustrated sellers. Having that sort of reputation can help expand your fix & flip or rental portfolio much faster than you think.