In Part 1 of this series, we covered the basics of segmenting your market by price and the important metric or measure that you will want to look at for each price segment. In this post we'll be looking briefly at the Days on Market measure in a bit more detail.
It is generally true that more expensive homes take longer to sell. That said the dynamics of your local market may be unique and it is important that you know them. Keep in mind that markets change over time. You need to keep on top of these changes--identifying and understanding these changes when others don't can be profitable for your and your clients!
Here is a sample chart showing Days on Market for a few segments of an imaginary market.
Two of the most obvious ways to use Days on Market are in negotiating PRICE and LISTING TERM.
In the imaginary market above homes in the $700k-$799 price segments are taking almost twice as long to sell as homes in the $600-$699 price range. If you have a home that you think should be priced in the upper $600's but the seller thinks the low $700's these average time on market numbers might be powerful in your pricing negotiations, especially when paired with the Number of Closed Transactions (aka Real Buyers) for each price range, and when the owner considers the property's carrying costs.
Also, knowing that properties in the $800k-$899k price range typically take about 178 days to sell, you can be sure that if I am listing a $875k home I am going to want to negotiate at least a six month (180 day) listing term to give myself a fair shot at getting it sold under these market conditions.
Next: Number of Closed Transactions (aka Real Buyers)