While we are dismantling all previous assumptions, let’s throw out the one that says having six months’ worth of inventory is normal.
There is no more normal.
The market is much more efficient now.
It’s an errorneous signpost making people think that 6 months is the goal.
The internet has greatly increased market efficiency, creating instant exposure and urgency for new listings. Markets with more than six months’ worth of inventory are bloated with over-priced turkeys, where sales feel more like surrenders.
How efficient are today’s markets?
|NSDCC Sales Last 6mo.|
We have an efficient marketplace, but we lack tools to help interpret it better.
Let’s create new guideposts, based on how buyers think. They use the days-on-market metric as THE gauge for list-price accuracy, and think if your house doesn’t sell in the first week or two on the market – the price is wrong.
Sellers have choices – they can wait it out, hoping that the market comes to them, which has worked wonderfully the last 12-18 months.
But when the market flattens out, buyers want to see the price get lowered to compensate for stale-ness.
New Metric #1 – For Individual Properties
0-20 days on market – Hot property, sellers have max negotiating power.
21-45 days on market – Buyers get suspicious, want to pay under list.
45+ days on market – The gig is up, and buyers expect deep discounts.
New Metric #2 – For General Markets
0-30 Avg. DOM – Red hot market, buyers paying full retail, little resistance.
31-60 Avg. DOM – Buyers more demanding, and have more control.
60-90 Avg. DOM – Price reductions are working.
90+ Avg. DOM – Sellers are dug in, creating a major standoff.
Let’s use accurate rules-of-thumb that create better awareness for everyone. Most importantly, work with a realtor who knows how to interpret the market signals correctly, and advises you accordingly!