WASHINGTON, D.C. – Technology is
transforming how Americans buy and sell
homes in unexpected ways, including how
they work with real estate agents and
brokers, according to one of the largest
surveys of real estate consumers ever
conducted. The study was released by the
National Association of Realtors®.
Nine out of 10 home buyers use a real
estate agent in the search process, but
use of the Internet to search for a home
has risen dramatically over time,
increasing from only 2 percent of buyers
in 1995 to 77 percent in 2005; it was 74
percent in 2004. The next largest source
of information for buyers is a yard sign,
mentioned by 71 percent of buyers.
When asked where they first learned about
the home purchased, 24 percent of buyers
identified the Internet, up strongly from
15 percent in 2004 and only 2 percent in
1997. Although most buyers use an agent to
complete the transaction, 36 first learn
about the home they buy from a real estate
agent and 15 percent from yard signs; five
other categories were 7 percent or less.
The 2005 National Association of
Realtors® Profile of Home
Buyers and Sellers, based on more than
7,800 responses to a questionnaire mailed
to a large national sample of consumers
located through county deed records, is
the latest in a series of surveys
evaluating demographics, marketing and
other characteristics of home buyers and
sellers.
NAR President Thomas M. Stevens from
Vienna, Va., said the findings underscore
the complexity of the home-buying process.
“Buyers who use the Internet in searching
for a home are more likely to use a real
estate agent than non-Internet users, and
consumers rely on professionals to provide
context, negotiate the transaction and
help with the paperwork,” said Stevens,
senior vice president of NRT Inc.
“The real estate industry today bears
little resemblance to the way we did
business 10 years ago. It is hard to find
another industry that has adopted
technology so readily to its customers,”
Stevens said. “Realtors® have
invested a lot of time and money in
building information technology, and
because of these efforts, more consumers
than ever are using the Internet in their
home search.”
The survey shows 81 percent of buyers who
use the Internet to search for a home
purchase through a real estate agent,
while 63 percent of non-Internet users buy
through an agent; non-Internet users are
more likely to purchase directly from a
builder or an owner they knew in advance
of the transaction.
“We find that the level of
for-sale-by-owners is on a sustained
decline and is now at a record low. In
addition, a growing share of FSBO
properties are not placed on the open
market – they’re private transactions,”
Stevens said.
A clear downtrend in FSBOs has been seen
since that market share experienced a
cyclical peak of 18 percent in 1997. Only
13 percent of sellers conducted
transactions without the assistance of a
real estate professional in 2005, and 39
percent of those FSBO transactions were
“closely held” between parties who knew
each other in advance, up from 32 percent
in 2004. The FSBO market share was at 14
percent in both 2003 and 2004. NAR began
tracking the FSBO market in 1981; the
record was 20 percent in 1987.
“In reality, the term ‘FSBO’ is a misnomer
when used to broadly describe homes sold
directly by owners. Since two out of five
of these transactions are between related
parties, and those properties are not
placed on the open market, we believe that
‘unrepresented sellers’ would be a much
more accurate term to describe this
segment,” Stevens said.
The median home price for sellers who
use an agent is 16.0 percent higher than a
home sold directly by an owner;
$230,000 vs. $198,200; there were no
significant differences between the types
of homes sold. “While many unrepresented
sellers are motivated to save on paying a
commission, we think the price difference
speaks for itself,” Stevens said. “Owners
without professional assistance also have
problems in understanding and completing
paperwork, prepping the home for sale,
getting the right price and selling within
the time planned.”
Survey data don’t explain the price
difference, but Stevens offered some
context. “Agents know best how to prepare
a home and maximize value, agents provide
broader exposure to the market and are
more likely to generate multiple bids, and
the portion of sales that are between
private parties are likely to be at a
lower price than those on the open
market.”
“The housing market today contrasts
sharply with predictions a decade ago that
the Internet would ‘disintermediate’ real
estate agents, including speculation that
NAR membership would fall in half. In
reality, it’s grown dramatically – selling
real estate is not like selling a book or
buying an airline ticket,” he said.
Realtor.com was the most popular Internet
resource, used by 54 percent of buyers,
followed by multiple listing service (MLS)
Web sites, 50 percent, real estate company
sites, 38 percent, real estate agent Web
sites, 31 percent, and local newspaper
sites, 15 percent; other categories were
smaller.
Sources: National Realty News &
Realtor.com |
