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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