When a property is listed, its days on market can be determined by multiple factors. Obviously if it’s priced lower than its fair market value then it tends to sell quickly. In addition to listing prices, housing characteristics, as well as amenities, can have an impact on days on market. In a previous two-series blog, Turning Words into Data, Part I and Part II, my colleague Matt Cannon discussed how property values can be affected by public comments provided by listing agents when properties are listed for sale. Applying a similar technique, a new analysis from CoreLogic shows that public listing comments can have an impact on days on market as well after controlling for listing price, geographic variations and physical housing characteristics. After all, public comments that listing agents provide contain additional information about the property amenities, property architecture and neighborhood information, among other things.
The CoreLogic analysis used more than one million single-family transactions that were closed in 2016 across the country. Days on market is defined as the time between the list date and the date a contract is signed. Because the analysis is done at the national level we won’t see nuances at the local-market level but we are able to see what is trending nationwide. Distressed properties, including real-estate owned (REO) and short sales, were excluded from the analysis since they are usually priced lower and tend to sell faster than non-distressed properties1. As previously noted in Cannon’s blog, raw public listing comments were first converted to quantitative information using a document-term matrix. Then pairs of words (words next to each other) were extracted and the impact on days on market was analyzed.
Days on market can vary significantly across different geographic areas, and hence geographic variation can mask the information contained in listing comments. In this analysis, geographic area variation was controlled so that we can better understand the specific impact of words from listing comments with days on market.
Figure 1 and 2 use word clouds to illustrate the words that have the biggest impact on days on market. In each of the figures, larger font size represents a greater impact on days on market2. Figure 1 shows the top word pairs that could reduce the days on market for a listed property. From Figure 1 we see “fenced backyard,” “open concept,” “natural light” and “updated kitchen” were all favored by buyers, and properties with those features tended to sell quickly. For those selling a home that happens to have these features listed in Figure 1, they should make sure to ask their listing agent to include these words and phrases in the public comments. It is interesting to see that “fence” references appear four times in these top word pairs – “fulli.fenc,” “fenc.backyard,” “fenc.back” and “fenc.yard,” which reflect that privacy is a top priority for buyers. If a home does not have a fence, the homeowner might want to consider one to improve selling attributes. It is a small investment that can lead to a quicker sale of the house.
Figure 2 shows the top word pairs that could increase the days on market for a listed property. From Figure 2 we see that features that make the listed property stay longer on the market include “golf course,” “gourmet kitchen,” “ceramic tile” and “granite countertop,” among others. While granite countertop has been popular, there is a recent surge in quartz’s popularity. It appears two-story homes are going off market slower than one-story homes nationwide. Evidently, “two story” is one of the word pairs that could increase days on market, and “single story” is one of the word pairs that could reduce days on market for a listed property. It is not easy to figure out why properties with “gourmet kitchen” stay on the market longer, but one possibility is that this luxury feature would lead to a higher property value. Homes that have higher prices relative to their neighbors may have less demand than lower-priced, more affordable homes, and hence it takes a longer time to sell3.
Matt Cannon also contributed to this blog.
1 The settlement date on a short sale could be well after the contract date because of delays in obtaining the mortgage servicer/investor’s approval.
2 Each pair of words has a coefficient in the regression result. The bigger the coefficient, the bigger the word pair in each of the figures.
3 Acre and sq.ft in Figure 2 measure a large lot size and large home, which often means a higher-valued property.
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