Average Days on Market

[naplesrealestate]

Hi all,

Coming to this elite group of real estate professionals for some assistance.

Our board is finally furnishing days on market for listings using the following calculation: sold date minus list date.

My thinking is that the calculation should be pending sale date - list date.

Questions:
1) Which is the correct one?
2) Can someone reference an authoritative source for proper calculation?

Thanks.

[Mert]

While what you say makes sense, it is really not a good value because even pending contracts have a tendency to be broken. From a programming point of view it makes it harder for MLS to track it that is why they make closing as a standard. In Chicago tracking time is also the closing date-listing date.

[naplesrealestate]

Hi Mert,

Thank you for your response.

I agree that not all pending sales come to close.

From a programming standpoint couldn't a step or steps be included to determine the greatest pending date and use that date to calculate days on market from listing date?

When we add the number of days from pending to close, we are artificially increasing the days on market and making the current real estate market look worse than it might be in actuality.

[naplesrealestate]

Hi Mert,

This issue bothered me so much that I called NAR and had a lengthy conversation with one of the economists that uses the statistics from the boards across the US to compile the national statistics.

He stated the average days on market, should be from list date to pending or contract date. This period of time is the true marketing time.

The time between pending or contract date and close date is not related to the market conditions, it is related to financing and other contingencies within the contract.

Don't quote me on this part, but when boards report days on market that use list to close date as the number of days - they use various formulae and regression analysis to determine the number of days on market.

He did say NAR receives about information from over 600 boards and the data does lack consistency from board to board.

It was a great conversation which I enjoyed there was quite a bit of information exchanged beyond the average days on market.

Another thing that I learned was that NAR does have a wealth of information or data and compiles a great deal of it.

It seems that lack of consistency is fairly rampant without the industry and there is a need for uniformity as well as maybe a course on understanding statistical information.

[kensmith]

Glenn I also feel it should be from list date to contract date.

[austinrealestate]

In Austin we do it to pending date. So we have some properties that have a DOM of 1 day when they sell. It seems going to contract date would cause problems. Some properties take 2 weeks to go from pending to sold. Other can take up to 2 months.

[naplesrealestate]

Thank you for responding to this question about average days on market and it is nice to know that some MLS's do the calculation correctly.