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The time a property has been on the market may reveal a great deal about the property, and how well it was initially priced and marketed, etc. Aggregate market-time statistics, especially when viewed over time, reveal a great deal about changing market conditions.
Real estate brokers used to “cancel and relist” a property in order to restart the days-on-market counter. Changes in Multiple Listing Service policies over the years have made it more difficult to manipulate market-time statistics and now give a clearer picture of the market.
There’s still a major loophole that can be exploited by any real estate firm that represents new construction projects. Here’s how it works. If you have 100 units for sale in a project, you only list 10 of them in the MLS. As you sell unlisted units in the building you enter them into the MLS and mark them sold. The market time on these units looks great. If your listed units haven’t sold after, say, 90 days, take them out of the MLS for 90 days and enter 10 different ones. Do this often enough and you can significantly distort your overall days-on-market statistics.
The take-away for sellers: be deeply skeptical of the numbers you’re given by any firm that touts significantly lower “days-on-market” than its competitors. But pay close attention to the numbers: they may provide useful information about a firm’s business ethics, if not its marketing prowess.
The take-away for buyers: market-time data may be significantly distorted, depending on how widespread this practice is, in local sub-markets with a lot of new construction activity.
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{ 6 comments… read them below or add one }
Great post Joe – consumers are usually not aware of this. I’ve seen numerous marketing packets from all the major brokerages (@properties, coldwell banker, baird & warner, rubloff, koenig & strey, etc…) and feel that this number consistently misrepresented by all of them….
Thanks, trailmix.
I do not agree that all major brokers misrepresent this number.
Here are the 2009 DOM numbers from BrokerMetrics for the top 6 brokers, ranked by $ volume sales:
1 – @properties, DOM 151
2 – Coldwell Banker, DOM 194 *
3 – Prudential Rubloff, DOM 173 *
4 – Koenig & Strey, DOM 174 *
5 – Baird & Warner, DOM 178
6 – Sudler, DOM 191
* Indicates a client of our parent firm. Baird & Warner and Sudler are former clients.
Draw your own conclusions.
Wouldn’t this be more of a concern with brokerages that deal more with (with more, I suppose, would be correct) new construction or conversions than those that deal more with existing properties?
I would think this would be a little harder to get away with these days with all the screen scraping websites out there. Sites like Trulia and Dreamtown list every time a unit is listed/relisted and do so completely outside of the MLS. In modern times with ubiquitous internet, there is no excuse for not doing your homework.
Joe,
Thanks for the data. One question though – do you think this data from brokermetrics accounts for the fact that many new construction listings in the MLS will have a market time of 1 day? Isn’t that skewing the BrokerMetrics data as well? I’m assuming all the major brokerages have new construction listings / properties that impact this data from BrokerMetrics?
All the major brokerages have new construction listings. Some have many more than others, and they have different ways of accounting for them in the MLS, which accounts for some of the variability in market times.