Will ‘days on market’ become the industry’s next big debate?
Defining “days on market” is not as simple as it may seem, and leaders have different views on how DOM ties into transparency, consumer interests or even fraud.
Key points:
- Some industry leaders have questioned the practice of starting “days on market” only when a property is listed on the MLS, arguing that buyers don’t see the full picture.
- But there appears to be flexibility in the way MLSs, brokers and portals can decide when DOM actually starts.
- Displaying the data has the potential to impact the leverage of both sellers and buyers and the final sale price of a home.
In the months since the NAR settlement went into effect, a number of other contentious issues have risen to the surface, with industry leaders and real estate professionals debating topics including association membership requirements, the value of MLSs, and the merits of the Clear Cooperation Policy versus private listing networks.
The CCP has been especially divisive, and much of the opposition to the policy centers around the idea of seller choice — a notion that has led some in the industry to revisit one of the more basic aspects of a real estate listing: days on market (DOM).
Unlike other listing details such as price or square footage, "days on market" may be more complicated than it seems. When does it start, and is it the same as "days on the MLS?" Is there a defined standard, or is it more subjective? Are there ethical or legal consequences for conflating or misrepresenting this information? And how can DOM work for or against buyers and sellers?
Defining 'days on market'
"The second you have a listing agreement and you start holding the property out to the public for purchase, that's a day on the market," said Gary A. Pickren, a founding partner and attorney with South Carolina-based Blair Cato Pickren Casterline and a board member of the Real Estate Commission of the South Carolina Department of Labor, Licensing and Regulation.
"There's a difference between days on market and days on MLS. The problem is that real estate agents are confounding the two and saying it's the same thing. It's not."
In a recent LinkedIn post, James Dwiggins, co-founder and CEO of NextHome, backs up Pickren's premise, adding that even if a listing is not on the MLS but is being shared within a brokerage internally, "days on market is happening." He goes further, suggesting that not accurately tracking this metric — or misrepresenting it to clients — "could be deemed as fraud" and a violation of NAR's code of ethics.
However, NAR's own language suggests that there is some flexibility for MLSs and brokers to determine when DOM starts. Brian Schneider, partner at ArentFox Schiff and legal counsel for Bright MLS, told Real Estate News "there is no common, standardized definition for days on market," and there can even be variation among home search portals and public websites depending on the data available to them. "It's up to the website how to calculate that," he said.
A matter of ethics — and possibly fraud
If a real estate agent misrepresents DOM data to their client, that could raise legal or ethical concerns, Schneider conceded, including false advertising, violations of state license laws or a breach of the Realtor ethics code.
Making a case for fraud — which he described as "a false statement that was relied upon to someone's harm" — might be more challenging, but there could be scenarios where fraud occurs.
"If you are using a data point like days on market to market your services to prospective clients, are you representing that number in a truthful way? Are you using it in a misleading way? Because you've effectively made up the number yourself in a way that the client relies on," Schneider explained. "And if a client relies on a false statement in making their choice of service provider, there could be an allegation of fraud."
An important question to ask is whether an agent is "actually creating a fictitious number" or one that is "manipulated by an agent to to not be factual" Schneider said. "I think that's where you could get into trouble."
Is DOM a 'critical flaw' or a mutually beneficial data point?
Brokerages may utilize their own private listing networks to shop a property around internally before (or instead of) listing it on the MLS and public websites. Notably, Compass has taken a bullish position on its "Private Exclusives" channel and has incorporated it into the company's broader brokerage strategy. Company leaders have described DOM as a "negative insight" that could impact a seller's leverage in the marketplace.
A Compass spokesperson said the "clock starts ticking" for days on market "when the home is launched on the MLS and public portal sites," and suggests that the brokerage's approach — encouraging agents to consult with sellers about listing to Compass' Private Exclusives and Coming Soon channels before going to the MLS — "addresses this critical flaw."
"During the colder months, many sellers do not want to list because they don't want to accumulate 'days on the market,' giving buyers the impression that something is wrong" when it's just a typical seasonal pattern, the spokesperson said. A stale listing is also more likely to need a price reduction.
But there's a flip side, Pickren said.
"If I'm a buyer looking at a property that's been on the market for two days, what does that tell me? I've got to come stronger with my offer. So it works both ways," he explained. "We can sit here and act like [days on market] is a detriment to a seller, but it could also hurt a buyer. That's the system."