Yesterday a home seller asked me "how long does it take to sell a home?" Now for the long-time readers of the Tallahassee Real Estate Blog, you know this is a touchy subject for me. The short answer of course (with appropriate liquidity in the market) is "4 to 14 days", but I'll get to that in a bit.
Occasionally, I have to get up on my soap box and harangue real estate professionals who provide statistics about "days on market," or how long it takes to sell a home. This is the most visible evidence of somebody in our industry having no clue about what it takes to sell a home, so I will attempt to explain why it not only is misunderstood, it is also mis-measured.
First of all, selling a home is not rocket science. All you really have to do is tell the people who are ready to buy a home that you have one that they will like. If it is a bargain compared to the competition, it will get shown. If it is the best buy on the day that a buyer is going to make a purchase decision, then an offer will ensue. So the key to selling a home is to know where the buyers are, price the home to be attractive, and then promote the home to those ready buyers.
We know that 94% of homebuyers are using the internet to buy a home, and we know the processes that they are undergoing in their efforts to buy a home (see our Progressive Marketing Plan video about targeted exposure). So the market time (which is the answer to how long does it take to sell a home) is the time that it takes to fully expose a home to this buying audience (not shoppers, not lookers, not nosy neighbors, but BUYERS). Thanks to the internet, this is usually between 4 and 14 days.
Liquidity Matters When Selling A Home
There are times and price ranges where liquidity in the market might extend this market time. For example, if you have a $1M home to sell, and your market area only sees one sale in this price range every year, it might take a while for that buyer to come along. But when you see multiple buyers in a price range each month, enough liquidity exists for a quick sale.
You can determine liquidity by examining the active listings and the number of recent sales in your market area. Every month, we post liquidity statistics on our Tallahassee Real Estate Market Reports Page, and we also make it available for download. Supply and demand is a critical component of any market, and one should not try to sell a home without a solid understanding of where they fit in to the market.
So, just to clarify, with proper liquidity and a targeted marketing plan, market time (or days on the market) for most homes is 4 to 14 days. Anything longer than that is due to a lack of information or lack of motivation on the part of the home seller (and anybody involved advising them on the sale of their home).
Measuring Days On Market (DOM)
I always chuckle when a real estate agent reports "it takes 152.1 days for a home in this price range to sell.." They actually look at "average market time" and think it is a valid measurement of how long does it take to sell a home. It is not.
When the Tallahassee MLS reports 'days on market,' it is only reporting the current listing days on market. So when somebody gathers up a group of properties and determines an average of this, what they are really reporting is the average marketing time it took to sell a group of houses based upon the last time the property was put in the MLS. Maybe an example would make this clear:
Mary and Bob Smith listed their home "For Sale By Owner" for 30 days to try to sell it on their own. They had no luck so they hired Broker A to sell their home. The home was listed for 6 months with Broker A and the property failed to sell. Finally, the Smiths hired Joe Manausa Real Estate and the property was placed in the MLS. The property sold in 10 days. So, the MLS report would show a market time of 10 days!
Total time on the market for the Smiths was:
- 30 days "For Sale By Owner"
- 180 days with Broker A
- 10 days with Joe Manausa Real Estate
This is a total of 220 days, yet the MLS would report it as "10 days." So what does that tell you when you see a report that says the average days on market for a home is 75 days? Next time you see this, I hope you think to yourself .... "Self, that is only the average of the final listing periods for those homes."
Worst of all, what about the days on the market for all the homes that failed to sell. What if in our scenario the Smith's home never sold? How would those days be factored into the mix? The facts on market timing are just a bunch of mis-measured time frames thrown into a pot and boiled. If liquidity is abundant, the home will sell when enough of the buying market sees it, and a well run marketing campaign will achieve that in 4 to 14 days.
Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.