Ask the Professor: Days on Market in the Athens, GA Regional Area

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This is the first Ask the Professor we've posted, and each post will feature a question posed to John Killens, the man who has forgotten more about real estate than most of us will ever know. In each installment, he and I will talk a little bit (mostly I will listen), and then I paraphrase his answer. Since John is now retired (even though he still wears dry cleaned everything, including pajamas), to ask him to contribute his knowledge is about the most for which I feel comfortable asking him, so I'll handle the writing part.

QUESTION: John, why do Athens area listings have such noticeably high average days on market? I was in Philadelphia recently, and I read a piece in the local paper where the writer was lamenting the fact that DOM in the Delaware Valley had increased from 60 to 76 days over the last year. I couldn't believe what I was reading since the average DOM in the Athens area usually hovers in the 180's and new construction in Oconee has been in the 190's. Most realtors here tell their clients it has to do with the Athens buying season starting and ending early because of UGA's yearly schedule. If you ignore the supposed UGA effect and list later than April and you don't sell before the end of July, the theory goes, then you are stuck with the property on the market all through winter and early Spring, resulting in a high DOM figure. How accurate is that?

ANSWER: The professor began with a few necessary comments about people and real estate. First, he explained that there are three things that determine whether a house will sell or sit: Price, Location, and Condition. Two of these, he said, are mutable, and one is not. Also, people seem to think they can expect a return on their investment even if they lived in a house for ten years and basically did nothing to improve or even maintain it. This idea of seller entitlement has always perplexed the professor.

Pricing also dovetails with condition: If you have a seller who feels entitled to top dollar for a house with no updates/improvements and lots of deferred maintenance, then the price will be too high. The entitled seller will also more than likely "anchor" to that inflated price or close to it. You can see where the professor is going with all this. The result is a house that will sit and jack up the DOM averages. If the location is questionable (see the neighborhood cycles post), and the seller is clueless, then DOM will go even higher. Too many DOM results in a stigma on the property and the DOM go higher still.

So where are the realtors during all this? If we are getting DOM stats from our MLS system, then surely realtors are listing these homes. Aren't they having the necessary conversations to serve their clients and move properties? The professor says the answer is no. Before further explanation, it is important to note that John is a true Southern gentleman, so he can say what he said to me. Southerners are by nature non-confrontational people. They don't like uncomfortable situations and uncomfortable conversations. You could say they are this way to a fault since the result is real estate clients not being properly served. The pain associated with telling a client they are off their rocker is too painful for some realtors, so they accept the listing exactly with the terms set by the seller, never suggesting that the price is too high, the condition is too poor, and the location is too questionable.

The result is an overpriced product on the market and it sits. The professor used my experience in Philly to further explain. In the North, he says, people tell it like it is, and realtors there probably are more hesitant (read: willing to walk away from a listing) to take on an unrealistic client just for the sake of getting a listing. The result is more realistic pricing based on condition and location realities.

The professor went on to explain that many homes sell much more quickly here than the average DOM would suggest because there are realistic sellers working with trustworthy professionals who confidently know the market and know that deep down, everyone respects the truth.

So the university has nothing to do with DOM numbers? Apparently not, according to the professor. It's a regional thing that has to do with a disproportionate number of realtors who are telling clients what they want to hear or just not telling the clients anything and simply going on a marketing call to discuss the ways he/she will market a poorly maintained, overly priced property.

Everyone likes to make money on an in vestment, and everyone enjoys being right, but if you really want to sell your house, maybe finding a market-confident and candid realtor is the way to go. It doesn't help that realtors are about as trusted as used car salesman, so find one you can trust, tell them you expect them to be straight with you about price, condition, and location, and hang on for the truth. Just don't shoot the messenger. Thanks, John! JP