Find properties with a high CDOM can help you find motivated sellers willing to sell at a discount. But what does CDOM mean and how can you leverage it for fix & flips profits?
We’ve covered a few essential terms on this blog that you’ll encounter on the MLS, including DOM. There’s another acronym that’s just as important for your investing strategy: CDOM. What does CDOM mean in real estate, and how can you use it to your advantage?
CDOM stands for Cumulative Days on Market and is the total number of days a property has been available for sale. Unlike DOM, CDOM covers all times the property was listed and put under contract but had to be relisted.
Understanding DOM and CDOM can give you the upper hand in real estate negotiations. Keep reading because I’m going to dive into how CDOM works compared to DOM and the sales tactics you can use to get your next property for much lower than the original asking price.
What Does CDOM Stand For?
When looking at listings on the MLS, you’ll run into a few terms that seem like weird industry jargon. CDOM is most likely one of those. CDOM stands for Cumulative Days On (the) Market and is the total number of days a home has been listed for sale.
CDOM is not representative of the entire lifespan of a house and all of the sellers who have moved onto another property, so it’s not “cumulative” in that way. Rather, it’s meant to be used from the day a house is listed until it’s finally sold.
If you see a CDOM, don’t automatically assume it’s due to something wrong with the house. Things happen that are out of our control, and sometimes house contracts just can’t be completed as expected.
DOM vs. CDOM: What’s the Difference?
You might run into listings that show DOM, CDOM, or both. DOM is different in that it represents a single period of time that a home was put on the market, where CDOM covers the entire timeframe it takes for a house to sell.
Here’s an example of how these are different. Let’s say there’s a house that goes live on the MLS on October 1st. On October 14th, Jane Doe makes an offer that Joe Schmoe, the owner, accepts. The house had a DOM of 14 days.
But for some reason, Jane’s not able to follow through on the contract. It could be the inspection showed something that was a dealbreaker, the title company found multiple positions on the title, her funding fell through, or dozens of other possibilities. Jane and Joe decide to terminate the contract on October 25th, and Joe relists the home on October 26th.
Now the home has a DOM of 1 day (October 26th) and a CDOM of 15 days (October 1 – 14 + October 26). Both numbers continue to increase until the house is eventually put back under contract with a new buyer.
What is Considered a High CDOM?
There’s no set standard between a “normal” and “high” CDOM because it’s based on what the current marketplace looks like. That said, there are some benchmarks we can look at to determine if the DOM and CDOM can be used as leverage for real estate investing.
The Investor's Edge works with investors all around the country, so we have the luxury of seeing data that helps our clients make successful real estate investments. Here’s an example of such data that shows what the average number of days looks like in major cities around the US where we operate:
|Metro Area||Average Time to Sell Once Listed (Dec 2020)|
|Atlanta, GA||41 days|
|Chicago, IL||52 days|
|New Orleans, LA||46 days|
|Baltimore, MD||33 days|
|Detroit, MI||36 days|
|Kansas City, MO||33 days|
|St. Louis, MO||39 days|
|Minneapolis, MN||42 days|
|Charlotte, NC||13 days|
|Cincinnati, OH||11 days|
|Columbus, OH||8 days|
|Cleveland, OH||69 days|
|Philadelphia, PA||21 days|
|Dallas, TX||46 days|
|Houston, TX||18 days|
|Richmond, VA||24 days|
How to Create a Real Estate Investing Strategy Using CDOM
As I said before, seeing a gap between DOM and CDOM doesn’t necessarily mean anything negative, but it can give you some insight that can be used as leverage.
There’s a rule of thumb sellers must face when it comes to real estate: the longer a house sits on the market, the more difficult it will be to sell. Buyers who are looking for a home of their own will wonder, “What’s wrong with it, why has it been on the market for so long?” and instead opt for a “fresher” house even if the “older” home is more to their specs.
The same thing happens when there’s a difference between DOM and CDOM. Residential buyers often assume that the difference in numbers is because something is wrong with the house and the potential buyer got cold feet.
This might be unfair to the seller, especially if it’s the buyer’s fault the deal fell through, but such is life. That lack of fairness is your sweet spot as a real estate investor so start looking for more properties with different numbers for DOM and CDOM.
Sales Tactics for High CDOM
Since it becomes more difficult to sell a property the longer it sits on the MLS, sellers become more flexible for the offers they’re willing to accept. If you’re able to come to the table with a cash-in-hand offer, you’ll be surprised at the offers you can make.
There’s some finessing that comes along with making low-cash offers to desperate sellers, so I’d recommend working on your sales skills before giving this a try. You’ll be dealing with a person whose ego has been hurt and feels the sting of rejection, even if it’s not rational. They might also act a little bit like a caged animal who does not take kindly to your lower offer.
Once you understand that position, you’ll be able to modify your sales tactics to make this a successful deal. Instead of coming to the table acting like a condescending jerk who’ll throw them a couple of bucks, you’ll want to position yourself as a problem solver.
They’re in a bind because they can’t get this house moved, so you’re here to help them out. Life is tough, and you get it, but there’s only so much you’re able to do. While you’re happy to cut them a check, it’s not going to be as much as they’d hope for. However, they can get that check now and have the property be your problem. Or they can keep waiting for a better offer, that’s fine, too. When is that next mortgage payment due? “Alright, good luck!”
This sales tactic takes a few tries to get down, so don’t worry if you have a few doors slammed in your face. Real estate investing is a numbers game, and the more you try, the better you’ll get.
CDOM is a number that means nothing or is a world of info, depending on how you look at it. Give some thought to the tips above and start looking at the MLS through a new lens; you might just find a hidden gem that’s fallen through the cracks.
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