How Many Years on the Market? – Part 1

So called Days on the Market or “DOM” is a ticking time bomb for real estate agents  so much so that they would prefer to not be public information.  As soon as a property is listed on the Multiple Listing Service? (MLS?), an invisible clock starts counting each day that passes until the property is sold or removed from listing.  As the DOM increase potential buyers are skeptical about the property and the listing agent is closer to the seller cancelling his listing agreement or it expiring.

Higher DOM indicate that the property has problems or issues or simply is priced way too high for the market place.  The property could be the nicest house in the neighborhood and the seller wants too much or the listing agent has promised the seller too high a sales price to simply get the listing.  Either way, the property sits on the market, sometimes abandoned as the homeowner moved away and then they slowly get more motivated to sell.

 There is no accounting for seller motivation as the property may be free and clear from a probate or upside down and facing foreclosure.  The probate is a free asset to the seller so whatever he gets is a profit.  Sitting on it without renting it is a “slow burn” as he has to pay utilities, maintenance, insurance, taxes and it is subject to vandalism.  If he rents the property he then has the issue of tenants and toilets to cope with so eventually the property will likely sell but it could be years. 

 The absentee owners of pre-foreclosed properties have lost any hope of getting money out of the property and have moved on to another place to live.  These people are candidates for either buying their deed and renting the property or doing a short sale to get the property’s mortgage payoff in line with the marketplace.   Without being on title a landlord cannot evict the tents unless he gives written authority to someone else.  Then he will know you are renting the property and may want a piece of the rent or try doing it himself!

 The investor should not have the homeowner deed him the property if he intends to do a short sale as the lender can see in the public record who owns it and will likely not be as cooperative in reducing the mortgage amount due.  These absentee owners are sometimes very susceptible to cooperating with an investor to do a short sale if they know they can get some money out of the transaction. 

 More and more I am seeing Students and investors looking at deals that are short sales or REOs (bank-owned properties) that have been on the market for many days, even years.  The conventional wisdom you’ll hear from listing agents is that every listing of theirs is selling like crazy at or above the listing price.  In some municipalities and in some subdivisions this is the case but not everywhere and especially not every property.

Stay tuned for Part 2 of this article for a specific example of how this works, which will be posted next week.  It is entitled “How Many Years on the Market? – Part 2” and you’ll understand the reason for the title of this article.

To your limitless success,

Dave Dinkel