Web is Vital to RE Sales

By Dave Fratello | November 16th, 2007
Buyers use the internet to search for homes at the same rate as they use real estate agents, according to the National Association of Realtors.

Results of a mail survey by NAR show that 84% of buyers used the web and 84% used an agent to search for a home. (There is overlap because people used multiple methods.) Also, 50% looked at newspaper ads and 48% went to open houses.

Business time is agent time: Once it was time to buy, 8 in 10 of the internet users did use a real estate agent, the survey says. So it would appear that the web relieves pressure on agents to show a bunch of homes without diminishing business all that much.

Internet exposure connects buyers with homes: Of those who actually bought a home in the 1-year period between July 2006 and June 2007, nearly the same number first discovered their future home online as saw it with an agent (29% online, 34% with an agent). This is a more vital measure of the internet's role in facilitating real estate sales. By contrast, just 3% first saw their new home in a newspaper ad, while 0% first learned of it via an open house. Now, why, again, do some sellers choose not to list on the web, or withhold addresses?

They love you, no they don't: In a bit of self-contradiction, 9 of 10 recent buyers said they would use their agent again – but among repeat buyers, just 2 in 10 actually did use an agent from a previous transaction. That's a pretty dramatic dropoff, which NAR reports but does not comment on. Where does the love go?

The NAR survey covers a lot of other ground, mainly looking at buyers' and sellers' feelings about realtors (and non-realtor RE professionals). It was a mail survey compiling 10,000 results from 150,000 copies mailed out to recent buyers and sellers.

There are also these tidbits:

Financing the whole thing. Amazingly, 45% of first-time buyers purchasing from July '06-June '07 put no money down. The rate among all buyers was 29% with no skin in the game. Remember, this was the last full year before the mortgage meltdown tightened credit – it'll be years before those rates are equaled again, if ever.

Long-term thinking. When the NAR runs ads urging people to view home buying as a long-term investment, they're really just echoing back what people already believe. This NAR survey showed that 3 in 4 recent buyers "believe their home will perform at least as well as stocks."

Now read those last two items together. Bullish (or cash-poor) buyers put nothing down and expect investment-level price performance.

What happens if they are disappointed by the performance and/or get underwater? (Some would argue that most 0-down buyers are already underwater.) There are a few words that start with "f."

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