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Real Estate - Home Buyers Market

National Association of Realtors® Study 2006

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% of buyers in 1995 to 77% in 2005; it was 74% in 2004. The next largest source of information for buyers is a yard sign, mentioned by 71% of buyers.

When asked where they first learned about the home purchased, 24% of buyers identified the Internet, up strongly from 15% in 2004 and only 2% 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% from yard signs; five other categories were 7% or less.

“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,”

The survey shows 81% of buyers who use the Internet to search for a home purchase through a real estate agent, while 63% 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.

For Sale By Owner - A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18% in 1997. Only 13% of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39% of those FSBO transactions were “closely held” between parties who knew each other in advance, up from 32% in 2004. The FSBO market share was at 14% in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20% in 1987.

Married couples make up the largest share of the housing market, accounting for 61% of transactions. Single women purchase 21% of homes while single men account for 9%. Unmarried couples were 7% of the market, and 2% were listed as other. In 2004, single women were 18% of buyers and single men were 8%.

The typical buyer walked through nine properties, searched eight weeks to buy a home and moved 12 miles from their previous residence. The typical seller placed their home on the market for four weeks, had lived in it for six years, moved 15 miles to their new residence and previously owned three homes, including the one just sold.

NAR’s senior economist Paul Bishop said both buyers and sellers use traditional methods to choose a real estate agent. “Word-of-mouth recommendation is the most common way to learn about real estate professionals,” Bishop said. “The most important criteria, whether you’re buying or selling, are the individual agent’s reputation and their knowledge of the local market.”

In finding a real estate professional, 44% of buyers were referred by a friend, neighbor or relative, 11% used an agent from a previous transaction, 7% found an agent on the Internet, 7% met at an open house and 6% saw contact information on a “for sale” sign. Six other categories accounted for smaller shares each.

The most important factor in choosing an agent was reputation, according to 41% of home buyers, followed by an agent’s knowledge of the neighborhood, 24%. In terms of desired qualities in an agent, three categories were rated as very important by more than nine out of 10 buyers: knowledge of the purchase process, responsiveness and knowledge of the market. Of buyers who use an agent, 63% choose a buyer representative. Satisfaction with real estate agents is very high, with 85% of buyers saying they were likely to use the agent again.

The typical repeat buyer is 46 years old and had a household income of $83,200. They placed a downpayment of 21% on a home costing $235,000, but 11% of repeat buyers paid cash for their home. In all, 94% of buyers and sellers believe their home purchase is a good financial investment.

The most important factors in choosing a location to purchase a home are neighborhood quality, cited by 68%, close to a job or school, 43%, close to family or friends, 36%, and the school district itself, 23%; seven other categories were under 20%.

NAR mailed an eight-page questionnaire to a national sample of 145,000 home buyers and sellers, based on county records, who purchased their homes between August 2004 and July 2005. It generated 7,813 usable responses; the response rate was 5.4%.

The 2005 National Association of Realtors® Profile of Home Buyers and Sellers can be ordered by calling 800/874-6500. The cost is $50 for NAR members and $125 for non-members.