Statistics on price vs DOM

Asked by CJ Brasiel, San Jose, CA Tue Jan 29, 2008

In my area I work with many sellers who are very analytical. I am looking for any ideas on ways to find stats on actual sales price vs DOM. Ideally for California Bay Area but even national stats on how low an over priced home sales for over longer DOM vs right priced home. Thanks in advance.

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Michael Stud…, Agent, Alameda, CA
Tue Feb 12, 2008
BEST ANSWER
CJ: And more of our sellers are tending to be analytical! It's no longer the exception, but that's also a good thing if we have the right tools. Have you tried absorption rate analysis? This has been a helpful exercise for my sellers to set expectations on DOM and pricing correctly.

Since you're probably a member of REIL, you may use a different MLS platform than EBRD (which uses Paragon). But you may have access to similar reports, like Sold Price report. I train our Realtors on using this report to do easy comparisons for our sellers - such as, comparing a list of solds in two groups, under 30 days and over 30 days. I show the avg DOM and List/Sold price % for each. This really captures a sellers attention because there are big $$$ savings in pricing to sell under 30 days. (email me for my presentation, if you'd like).

Another tool you might have at your disposal is coming from the wizards at terradatum.com. They have developed AgentMetrics which, for a subscription, allows you to generate charts and graphs from your local MLS on absorption, comparisons of every kind, highly analytical stuff that is long overdue for us. Here's a screenshot to complement a CMA for instance: http://www.terradatum.com/images/Pricing-Analysis.jpg

Great question. I've given you a local answer, but I don't have a solution on the national level.
1 vote
ally, Home Buyer, San Francisco, CA
Tue Jan 29, 2008
Just an observation.... As a home buyer who has been following the listings in my area of interest for the past 8 months (started looking at listings half a year before moving), I have noticed that many homes are taken off the market when the listing agreement expires, and then are relisted later as new listings. That would confound your price vs DOM analysis that you are trying to do.
2 votes
Jed Lane, Agent, Petaluma, CA
Fri Feb 15, 2008
CJ,
I would strongly urge you and all the Realtors in the south and east bay to get your MLS to use Rapattoni's software. SFAR, and I assume BAREIS in the northbay, which also uses Rapattoni software.
I'm kinda of a geek and love to do analysis like the engineers down in the valley. I've worked with agent metrics and I can do better on my own by exporting data from the MLS. From our MLS in SF I can export data from any field in the MLS to an Excel spread sheet. Once it's in Excel you can look at it any way you want.
In answer to your specific question I ran a report that exported the DOM, the original list price as well as the list price at sale and the sold price. Easily calculating the percentage over list or under reduced list and comparing the effect on price along with the DOM.

I also ran some numbers on how often we, the experts were correct on pricing. How often do we price the home correctly (+/- 5%). How often does that ready and willing buyer pay more or less than list price. I was actually shocked at the result.

Anyway my point is this, get REIL and EBRD to upgrade the software and you won't have to pay Terranomics and you can create your own presentations with graphs and pie charts and you can trade stats with the best of 'em.
Web Reference:  http://www.jedlane.com
1 vote
Jed Lane, Agent, Petaluma, CA
Sun Feb 3, 2008
Altos is like Trulia it is just a compiler of listings from other sources and doesn't carry sold data.
In our MLS in San Francisco (Rapatoni) we can export data from the MLS to an Excel spreadsheet. I have done some analysis on sale price compared to DOM and I found one key is to include in the export the original listing price along with the listing price when it sold. Once the data is in Excel you can manipulate it by sorting on various cells. At the time I wanted to show a seller that if he priced high he will eventually get less than if he priced low at the beginning.
Web Reference:  http://www.JedLane.com
1 vote
Dave Roberts, Agent, Healdsburg, CA
Sat Feb 2, 2008
Hi CJ,
Everyone has made interesting points about resetting days on market, cumulative days on market, retreat from original asking price and other key issues. I have done some analysis on this to look at general trends in my area. What's clear is that pricing the home "correctly" will usually bring a sale in the first 30 days at or above the listing price. The selling price begins to slide gradually before 90 days and by 180 days it is very common to be at 90% or less of the original listing price. In today's market, that could be 80-85% or more off the original listing price (or the peak of the 2005 season). Different areas are experiencing variations, of course, but the price vs. DOM is clear.
I also want to second the recommendation for Altos for anyone who isn't using them yet. Their rates are reasonable and their materials are perfect for analytical buyers.
1 vote
Sylvia Barry,…, Agent, Marin, CA
Tue Jan 29, 2008
Hi C.J:

Good idea, but I am not quite sure how you can do this correctly.

For Marin MLS, you basically have to go to each listing, to through all recent history (as there might be a couple agent changes), decide if you want to include temporary' off market' days, and the last few agent changes (you have to look at those to decide if it's the seller decides to sell a year ago and then off the market to come back this year, which is a legit new listing vs taking off just long enough to reset DOM or change agents to do the same, which is a false DOM; and what is the original listing price (same scenario) against the final sale price. Almost seems to me human intervention is required.

For me, it's a pretty long process, and I do that when I am talking to my client in person (or email with a few specific properties) going thru properties.

Here are a couple of discussions on DOM -

Happening now
http://www.trulia.com/voices/Home_Buying/The_number_of_days_…

A few Trulian months ago
http://www.trulia.com/voices/Tech_Tips/How_long_does_a_listi…

Sylvia
1 vote
Sherman Smith, Agent, Tustin, CA
Tue Jan 29, 2008
CJ, there is a company called AltosResearch.com who provide all kinds of stats and graphs for zip codes, cities, counties or states dealing with just what you are asking for. They can even project prices in a area by the current trend. Hope this helps. By the way some title companies provide this to their agents FREE.
Web Reference:  http://altosresearch.com/
1 vote
Glenn Still, Agent, Arlington, TX
Tue Jan 29, 2008
Last January, I bought a home for my wife and I to live in. It had been on the market for nine months in a neighborhood that normally sells in weeks instead. It had been way over priced and was still over priced (but they had dropped the price quite a bit). I made a very low offer, and after a lot of talking, the owner finally agreed. Several neighbors (not knowing I was a Realtor) came up to me and advised me that something was wrong with the house- they were sure of it because it had remained on the market so long. Of course I had a professional inspection and handled the issues that came up.

I am happy that we got a great deal, and I believe it was because the owners priced the home so high.

But I have no statistics. I would be interested to hear what you come up with and how the statistics were gathered.
1 vote
Jim Walker, Agent, Carmichael, CA
Fri Feb 15, 2008
I really liked Glenn's anecdote about the purchase of his own home at a bargain. The neighbors (and presumably buyers) perception that there had to something wrong with the house.

As devils advocate I will challenge the stats a little bit. even though I ( intuitively ) agree with the premise that homes market priced from the outset command a higher final sale price than overpriced homes that go stale.

Challenges to the stats:

1) If (not that this EVER happens) but IF, the seller was right about the value and the Realtor was wrong then the seemingly overpriced listing would still sell within 30 days at high SP / LP percentage.
2.) It may not be staleness on the market, so much as physical deterioration that lowers the sp / lp ,
weeds grow, wet newspapers pile up, spiders webs multiply
3.) If it starts out over priced, Lets say $550K for a home that should be $500K, then sells stale 120 days later its sp / lp is 90.9% but if it was correctly priced at $500K to begin with, sold in less than 30, it is 100% sp / lp . However, except for holding costs by the seller and marketing costs of the Realtor, the actual sale dollars are the same.

The best way to provide evidence to back up the hypothesis (which I believe, intuitively to be true) that overpricing costs a seller money on the sales price as well as holding costs, would be to conduct an in depth case study of a large number of transactions. One would have to factor in variables such as showing availability, pricing search points, marketing expenditures and effectiveness, cleanliness and staging, listing agent attitude. -- Curb appeal, how do the pictures look on the internet, is the virtual tour effective or is blurry and fish eyed? Are the write-ups comparable? There are thousands of variables to a homes value, its perceived value, and its attractiveness.

To my sensibilities, one of the stalest things about stale listings are the pictures and comments that never change.. ( Listing going into 6th month with no price change: _ " Priced for quick sale !" )

Are you going to spend as much effort on the house that is 2% over priced as the one that is 2% under priced. And, Please, don't anyone post that they personally don't take on overpriced listings.. Someone does!

Which brings up the next chicken or the egg problem if sub-par or desperate agents are the ones that take overpriced listings to begin with, aren't they also likely to be sub-par agents even if the listing were perfectly priced? Since great agents have correctly priced listings and lesser agents don't. How does a statistical survey correct for that differential ?
0 votes
CJ Brasiel, Agent, San Jose, CA
Tue Jan 29, 2008
Ally - Good point. I should say CDOM (cumulative days on market).

Sherman, I am familiar with Altos. Good company. I don't remember that information being available but I'll ring up my rep and see. I will also check with the title company. Thanks for the ideas.

CJ
0 votes
Gerry Vazquez, Agent, NY,
Tue Jan 29, 2008
CJ, That's a great question and one I hope you (we) receive a serious response to. A related question is whether there's a statistical tool one for estimating the # of selling days given the distance (+/-) from the market price point? Gerry
0 votes
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