Internet, Agents, First Stops for Home Buyers

Internet, Agents, First Stops for Home Buyers

An overwhelming majority (87%) of recent home buyers in the US say they used the internet as an information resource during their home-buying process, and nearly one-third say they first learned about their newly purchased home from an online channel, according to a study from the National Association of Realtors (NAR).

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Though the internet was the most popular source, buyers also cited information from real-estate agents (85%), yard signs (62%), open houses (48%) and print or newspaper ads (47%). Fewer buyers relied on home books or magazines, home builders, television, billboards and relocation companies, the study said.

When asked where they first learned about the home they purchased, 34% of buyers said a real-estate agent; 32% cited the internet; 15% said from yard signs; 7% said from a friend, neighbor or relative; 7% said home builders; 3% said from a print or newspaper ad; 2% learned directly from the seller; and 1% from a home book or magazine.

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The NAR also found that 87% of home buyers used the internet to search for a home purchased through a real estate agent, in contrast with 72% of non-internet users who were more likely to purchase in a private transaction directly from a builder or from an owner they already knew.

Local metropolitan multiple-listing-service websites are the most popular internet information resources, consulted by 60% of buyers, followed by Realtor.com (48%), real-estate company sites (46%); real-estate agent websites (%); for-sale-by-owner sites (19%); and local newspaper sites (11%).

Other survey findings are detailed below.

First Time Home-Buyers Up Slightly

  • First-time home buyers have risen in market share – to 41% of transations from 39% last year – and plan to own their homes  for 10 years, up from seven years in 2007.
  • The median age of first-time buyers is 30, down from 31 in 2007, and the median income was $60,600. The typical first-time buyer purchased a home costing $165,000.
  • The typical repeat buyer is 47 years old, earned $88,200, purchased a home costing $236,000 and has plans to stay in that home for 10 years.

Downpayments on the Rise

  • The median downpayment by first-time buyers was four percent, up from two percent in 2007.
  • The number of buyers purchasing with no money down fell from 45% in 2007 to 34% in the current survey.
  • Among first-time buyers who made a downpayment, 69% used savings and 26% received a gift from a friend or relative, typically from their parents. Another seven percent received a loan from a relative or friend, while 16% tapped into a 401(k) fund, stocks or bonds.
  • 92% of buyers chose a fixed-rate mortgage.
  • Repeat buyers made a median downpayment of 15% , but 10% paid cash for their property.

Buyers and Sellers Use Agents

  • 81% of home buyers and 84% of sellers used a real-estate professional, comparable to 2007.
  • Nearly nine out of 10 home buyers and sellers would definitely or probably use the same agent again or recommend him or her to others, consistent with 2007 .
  • 38% of sellers found their agent as a result of a referral, while 26% used the agent in a previous home purchase. Similarly, 43% of buyers relied on referrals to find an agent, while 18% of repeat buyers used an agent from a previous transaction.
  • Only one percent of sellers chose an agent based on his or her commission.
  • 46% report that the real estate agent initiated a discussion of compensation, while 24% of sellers brought up the topic and the agent was willing to negotiate the commission or fee.
  • 13% percent of sellers did not know commissions and fees are negotiable.
  • The level of ‘for-sale-by-owner’ transactions was 13%, up slightly from a record-low market share of 12% in both 2007 and 2006. The level of homes sold without professional representation has trended lower since reaching a cyclical peak of 18% in 1997.
  • Factoring out properties that were never placed on the open market, the actual number of homes sold without professional assistance is seven percent. This matches the results in the 2007 study and marks a downtrend from 10% sold on the open market in 2004.
  • The median home price for sellers who used an agent was $211,000 vs. $153,000 for a home sold directly by an owner, though unassisted sellers were more likely live in rural areas or small towns where sellers are more likely to know potential buyers.
  • The most difficult tasks reported by unrepresented sellers are selling within the planned length of time, getting the right price, preparing the home for sale, and understanding and performing paperwork.

Foreclosure Purchases Higher

  • The percentage of buyers who purchased a home in foreclosure jumped to six percent of transactions in the 2008 survey, from one percent in 2007.
  • Another 38% of buyers considered purchasing of a home in foreclosure but did not, primarily because they could not find the right home.

Features and Incentives Up

  • Environmentally friendly features were cited as desirable by 90% of buyers. Heating and cooling costs were of primary importance, followed by energy efficient appliances and energy efficient lighting
  • 42% of sellers offered incentives to attract buyers, such as assistance with closing costs or home warranty policies.

Additional Demographic Information

  • The median age of home sellers was 47 and median income was $91,000.
  • 61% of buyers are married couples, 20% are single women, 10% single men, 7% unmarried couples and two percent fall into other categories.
  • 26% of buyers are non-white, nine percent were born outside of the US, and four percent primarily speak a language other than English.
  • 78% of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing.
  • 55% of all homes purchased were in a suburb or subdivision, 17% were in an urban area, 16% in a small town, 10% in a rural area and two percent in a resort or recreation area. The median distance from the previous residence was 12 miles.
  • The typical home sold for 96% of the listing price, and 86% of sellers were satisfied with the selling process.
  • 52% of sellers were trading up to a larger home, while 22% were downsizing.
  • Overall, buyers searched a median of 10 weeks and viewed 10 homes.
  • Nearly nine out of 10 people consider their home a good investment, and almost half see it as a better investment than stocks.
  • 15% of buyers own two or more homes.

About the study: The 2008 National Association of Realtors Profile of Home Buyers and Sellers is the latest in a series of large national NAR surveys evaluating demographics, marketing, preferences and experiences of home buyers and sellers. NAR mailed an eight-page questionnaire in August 2008 to a national sample of 133,000 home buyers and sellers who purchased their homes between July 2007 and June 2008, according to county records. There were 10,053 usable responses and the adjusted response rate was 7.9%. All information is characteristic of the 12-month period ending in June 2008 with the exception of income data, which are for 2007. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.