The Internet is an increasingly popular tool for home searches, according to the latest annual survey of home buyers and sellers conducted by the National Association of Realtors trade group.
About 77 percent of home buyers reported that they used the Internet to search for a home – a 3 percent increase since 2004, according to the 2005 Profile of Home Buyers and Sellers. In 1995, about 2 percent of home buyers said they used the Internet to search for a home.
About 24 percent of buyers said they first learned about the home they purchased on the Internet, a sharp jump from 15 percent in 2004 and 2 percent in 1997.
In finding a real estate professional, 44 percent of buyers were referred by a friend, neighbor or relative, 11 percent used an agent from a previous transaction, 7 percent found an agent on the Internet, 7 percent met at an open house and 6 percent saw contact information on a “for sale” sign.
The report is based on 7,813 responses to a survey mailed to about 145,000 home buyers and sellers who purchased homes from August 2004 to July 2005.
While there are many ways to search for homes on the Internet, and most prospective home buyers are looking for homes on the Web, there remains controversy over Realtor policies governing the sharing and display of property listings information on the Web.
The federal government last year filed a lawsuit that challenges online property listings policies that were earlier approved by the National Association of Realtors trade group. The U.S. Department of Justice alleges in the lawsuit that the association’s new listing policies, which were withdrawn pending the litigation, are overly restrictive.
And core issues of data ownership and control related to property listings information continue to ignite debate among agents, brokers, multiple listing service executives and real estate technology company officials.
The 2005 Profile of Home Buyers and Sellers report found that 90 percent of home buyers use a real estate agent in the home-search process, and 71 percent of buyers said yard signs were also an important source of information in home searches.
Although most buyers use an agent to complete the transaction, 36 percent first learn about the home they buy from a real estate agent and 15 percent from yard signs, while five other categories were 7 percent or less.
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.
The typical buyer walked through nine properties, searched eight weeks to buy a home and moved 12 miles from his/her previous residence. The typical seller placed his/her home on the market for four weeks, had lived in it for six years, moved 15 miles to a new residence and previously owned three homes, including the one just sold.
NAR president Thomas M. Stevens, who is senior vice president of NRT Inc., said in a statement, “The real estate industry today bears little resemblance to the way we did business 10 years ago.”
The association announced that FSBO sales accounted for 18 percent of transactions in 1997, and about 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005. Of those, about 39 percent of the transactions were “closely held” between parties who knew each other in advance, up from 32 percent in 2004, the association reported.
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.
The median home price for sellers who use an agent is 16 percent higher than a home sold directly by an owner – $230,000 vs. $198,200, according to the report.
Stevens stated, “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.”
Realtor.com, used by 54 percent of buyers, was the most popular Internet resource, according to the survey, followed by MLS Web sites (50 percent), real estate company sites (38 percent), real estate agent Web sites (31 percent), and local newspaper sites (15 percent).
Married couples make up the largest share of the housing market, accounting for 61 percent of transactions. Single women purchase 21 percent of homes while single men account for 9 percent. Unmarried couples were 7 percent of the market, and 2 percent were listed as other, the Realtor group reported. In 2004, single women were 18 percent of buyers and single men were 8 percent.
The most important factor in choosing an agent was reputation, according to 41 percent of home buyers, followed by an agent’s knowledge of the neighborhood (24 percent). In terms of desired qualities in an agent, about 90 percent of buyers rated three categories as very important: knowledge of the purchase process, responsiveness and knowledge of the market. Of buyers who use an agent, 63 percent choose a buyer representative, the Realtor group reported. Satisfaction with real estate agents is very high, with 85 percent of buyers saying they were likely to use the agent again.
Among sellers, 43 percent chose agents based on a referral by a friend, neighbor or relative, and 28 percent used their agent previously. Fifty-seven percent of sellers said reputation was the most important factor in selecting an agent, followed by their knowledge of the neighborhood (17 percent), and 82 percent said they were likely to use the same agent again or recommend to others.
About 40 percent of respondents are first-time buyers, a finding that is consistent for more than a decade, the association noted. The median age of entry-level buyers is 32 and the household income was $57,200. Buyers made a down payment of 2 percent on a home costing $150,000, but 43 percent purchased with no money down, the report states.
Of first-time buyers who made a down payment, about 23 percent received a gift from a friend or relative.
The typical repeat buyer is 46 years old and had a household income of $83,200. They placed a down payment of 21 percent on a home costing $235,000, but 11 percent of repeat buyers paid cash for their home. In all, 94 percent of buyers and sellers believe their home purchase is a good financial investment, the survey found.
The most important factors in choosing a location to purchase a home are neighborhood quality, cited by 68 percent, close to a job or school (43 percent), close to family or friends (36 percent), and the quality of the school district (23 percent).
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