Days on Market (DOM) is important!
It seems pretty obvious that if a home for sale must take a price reduction in order to find a willing and able buyer the property will spend many more days on market before selling compared to a house priced correctly from the start. What I find eye opening is how much of a difference in time it actually makes. Properties priced correctly from the start sold in about 40 days on average while homes priced too high for the market that subsequently reduced their sale price took over 100 days to sell! That is a huge difference.
The San Francisco real estate market is an efficient housing market. The players, whether buyer or seller, are typically very well informed. Buyers will have seen every property fitting their criteria as it becomes available for sale, so when they visit a home they have an immediate sense of whether it is priced correctly or not. The purchase of a home in San Francisco is a large undertaking, so it shouldn’t be surprising that buyers have informed themselves well.
The bottom line is in San Francisco be careful if the plan is to test the market. Set reasonable expectations backed up by actual data and have a solid plan of action. The number of days a property sits on the market will hurt it’s marketability. The first question buyers often ask me when they visit one of my listings is “how long has this house been on the market?” I’ve gotten this question even at the first open house! Days on market is an important metric, a method of measurement every listing agent tries to minimize as best they can.
When working with a buyer who has set their sights on a property I always give them a list of similar homes that have sold in close proximity. I also see when and how often the property of interest has sold and I check the days on market for each time it was on the market to get a sense of how desirable the home is.