You hear the phrase “time is money” everywhere, but it’s not entirely true: money can be lost and regained (and then lost again, as a trip to Las Vegas can teach you). But unless you have a time-traveling Delorean (e.i. “Back To The Future”) at your disposal, once time is gone you can never get it back. The more accurate phrase would be “time is expensive” and nowhere is that more true than in real estate.

Time is truly the most precious commodity in the real estate business: more so than an ocean view, school district zoning, hardwood floors and side-by-side parking combined. I’ve seen it happen all too often. A new property comes on to the market, and as with anything new, there is a lot of initial interest, both from agents and the public alike. Every property that becomes active has a ripple effect on the market for the entire area in terms of price and inventory, so naturally the phone starts ringing, showings are scheduled and open houses are abuzz with activity. Sellers are wondering how this newly listed home stacks up against their property. Buyers are hoping that this could finally be the home they have been searching for.

But after a few weeks, the phone basically stops ringing, the showings are few and far between and open houses become an excuse for the neighbors to catch some shade while out for a walk. Sellers are watching their carrying costs stack up and agents are watching their advertising bills come in and the only thing they both hear is the ticking of the clock. The honeymoon is now over.

So what happened? In my years of experience in real estate, you can trace the answer to that question all the way back to the initial listing presentation. There are two types of listing presentations: one that is designed to secure the listing and one that is designed to sell the listing. Oftentimes a seller has ascribed a certain value to a home based not on empirical evidence, but rather on an emotional connection or what they need to get. This is their home where a child took his first steps, where the family hosted Thanksgiving every year and where the seller put in that new patio by hand.

You can’t put a price on those memories … but other people can. Any reputable agent will carefully look at the market to see what similar properties have recently sold for and make a presentation that includes a realistic price recommendation considering current market conditions. This is how the sale will provide maximum return for the client. Sometimes an agent will overshoot their expectations and sometimes they will purposefully mislead a seller towards a higher price. This may get the agent the listing, but eventually the price will need to be reduced.

The problem with the latter approach comes down to three little letters, D O M, which stand for “Days On Market.” While a property is just sitting there, racking up carrying costs for the seller and advertising expenses for the agent, it is inherently becoming less attractive along the way. The longer a property is on the market, the more doubt there is in a potential buyer’s mind as to the quality of the property and the less leverage a seller has to negotiate. The fresh-faced new kid in school has suddenly become the last kid to be picked for dodgeball.

In Santa Monica, current average DOM for single-family homes is 140 days. Back in May of 2011, single-family homes were at 157 DOM and have been steadily declining ever since. Condominiums are selling even faster at 130 days, down from 155 days back in March of this year. Simply put, properties in Santa Monica are selling significantly faster now than earlier in the year. While many factors can be attributed to this, it’s also important to note than inventory in Santa Monica for condos is down 27 percent from a year ago and there are 23 percent less single-family homes for sale as well. So while less inventory in an area as desirable as Santa Monica certainly is a contributing factor, in the end the market decides what the value of a property is, not the seller and not the agent.

Of course, there are some factors that are outside of everyone’s control, such as a new property popping up on the market which is similar to yours and priced 10 to 20 percent less (which is far from a coincidence). In that case, even the most well intentioned of agents and most realistic of sellers need to be flexible on price. That deafening sound of silence you hear after your property has been on the market longer than four or five months is the sound of the market speaking to you. The question is, will you listen?

 

 

 Simon Salloom is a realtor partner at Partners Trust Real Estate Brokerage in Brentwood. He lives in Santa Monica with his wife and two sons.