Recently, there have been discussions about the ethics of agents who attempt to manipulate Days On Market in an attempt to remove stigma from a property. This discussion over on Active Rain really got me thinking, and I wanted to get the pulse of people’s feelings concerning this issue. Indulge me for a moment while I pontificate:
So what, exactly, does the tracking of DOM actually accomplish? Is it a tool that buyer’s agents use to determine value for their clients? If a home is on the market for 365 days, does it mean that the home is over-priced? Absolutely. However, let us say for the sake of discussion that you take a client to a home because they saw pictures of the listing on line, and thought it looked nice. So, you take them out to the listing, and they fall in love with the home. Now, as a professional agent, you have a duty to your clients to protect their interests. When they say to you that they love the property and want to write an offer, they are relying on your expertise to help them make a good decision. Would you advise them on what price to offer simply based on DOM? Of course not. In fact, to determine a good price for your clients to offer, would you take into consideration the DOM at all? You shouldn’t, as it has no relavance to the home’s value. To come up with an equitable offer, you would simply pull the comparable sold properties, and advise them of this. You would then advise them that the price you have suggested is what the property will likely appraise for, and that unless they want to pay part in cash, they should offer within this range. Paying any more would be unwise. However, an unwise person could pay whatever they want for a property if they have cash, they just need to sign a disclaimer that you advised them against it (someting I did repeatedly in the hot market of 04-05).
Now, can DOM stats help us to determine market trends? I would submit that they can, but that those numbers would be spurious anyway, because of agent’s manipulation of these numbers. There are much better methods to use to determine market trends, such as calculating absorbtion rates.
Bear with me as I put on my flame-retardant suit before giving my undoubtedly unpopular opinion. I think that, in the best interest of my clients, I need to be ethical with them. That means sharing the absolute truth about what their property could sell for. I also need to condition them to the idea that even though the price may be “right,” it may not be the price that someone is willing to pay. Now, if I take an expired listing, I am of the opinion that the 1st agent was either not exactly honest with the seller in order to get the listing (buying the listing), or that they were simply a weak agent, and caved to the seller’s demands. Either way, the agent failed on the job. Now then, should we punish the seller by publishing either their, or their former agent’s, ineptitude? I don’t think so. I am not advocating that anyone manipulate data, just that that particular piece of data is useless anyway.