What if you could actually know the odds of selling a client’s home in 30 days… or 60 days… or 90 days? Wouldn’t that make advising that client a lot easier? Well now you can! And it’s easy.
As a listing agent, one of the questions I was often asked by sellers when I was a listing their home was, “How long do you think it will take to sell my house?” As a new agent I struggled with this, and I did a lot of research to see if I could find the formula to calculate sale probability. Sure enough, I eventually found what I was looking for. I needed two pieces of information to make the calculation.
First, I needed the actual DOM for the area. Then I need the standard deviation of that DOM. In the last installment, we discussed how you find the actual DOM for any market. But the standard deviation of the DOM? How do you calculate that?
The easiest way to calculate a standard deviation of the DOM is by using a spreadsheet like Excel. Pull up all the closed residential properties for your community from the last year from your MLS. Then copy and paste that data onto a spreadsheet. Then use the formula in Excel to compute the standard deviation for the DOM column.
If you are like most agents, by now your eyes are starting to glaze over, and your mind is going blank. You’re probably thinking, “If I have to do all that stuff, I really don’t care about the odds!” And because I know that’s what most agent are thinking, we designed a calculator to do the math for you. All you need to do is type in the average DOM, then the days you want to calculate… like 30, 60, 90 etc.
I’ll give you an example. Let’s assume the actual DOM is 240 (like it is right now in my market). In a matter of a few clicks, here are the odds of a home selling:
- 30 days — 10.1%
- 60 days — 13.7%
- 90 days — 18.3%
- 120 days — 23.4%
- 150 days — 29.3%
- 180 days — 35.8%
- 210 days — 43.1%
- 240 days — 50.0% (Remember, this is the average DOM.)
- 270 days — 56.9%
- 300 days — 64.2%
- 330 days — 70.7%
- 360 days — 76.6%
- 390 days — 81.7%
- 420 days — 86.3%
- 450 days — 89.9%
- 480 days — 92.7%
Now let’s say that a competing agent tries to convince your client that his home can sell in a matter of days. You can tell your client with complete certainty that the chances of selling his home in a few days are nil, and that in reality he should be prepared for at least an 80% probability. In the example above, that means just over a year.
When you can show your client, with authority, how long it will take to sell his home, he’ll inevitably respect your honesty and the fact that you know exactly what it takes to sell a home in your market, even if he doesn’t like the hard facts. He knows that you’re not guessing, like most agents, and in fact you’re speaking with the voice of authority. Knowing your market better than any other agent will impress your clients while also giving your own confidence level a boost.
I saved the very best for last. Of all the calculators we’ve developed, this one was the most difficult, but it’s also my favorite because it will give you information nobody else has, and that will win you the listing, time after time. You’ll love it! Simply put in the accurate Days on Market and the number of days to estimate, and you will instantly know the statistical probability of selling and home within that time frame. So check out our awesome calculator and then let us know what you think of it.
Note: To use this calculator, enter the average days on market in your market or market subset, then enter the number of days you would like to calculate. You may find it helpful to project 30 day, 60 day, 90 day, etc. time periods prior to taking a listing, or perhaps to calculate the probability of selling an existing listing in the current time to calm a frustrated seller.