Home Buyers and Sellers Increasingly Use Internet and Agents

According to a recent study by the National Association of Realtors®, technology has transformed the way people buyer and sell homes.  Use of the Internet has increased exponentially over the past decade, but despite dire predictions that the Intenet would eliminate the need for agents, consumer reliance on agents is at an all time high.  Here are some of the key findings from that survey:

9 in 10 buyers use a real estate agent in the search process.  36% first learned of the home they bought from an agent.

Internet use in home buying has increased dramatically -- from 2% in 1995 to 77% in 2005.  1 in 4 buyers first learned of the home they bought through the Internet -- up from 15% in 2004 and just 2% in 1995

Yard signs are the next most common source of information, mentioned by 71% of buyers.

Buyers who use the Internet in their home search are more likely to use agents for the purchase (81%) than those who do not use the Internet (63%.)  This is likely due to Realtors®' increasing use of email to send listings to prospective buyers.

The level of For Sale By Owners ("FSBOs") has declined steadily from 18% in 1997 to an all time low of 13% in 2005.  Even this proportion overstates the number of open market sales conducted by sellers who did not use a real estate professionals because 4 in 10 FSBO sales were "closely held" -- conducted between relatives or people who knew each other before the sale.  The proportion of closely held transactions increased from 1 in 3 in 2004.

The median price of homes sold through an agent is 16% higher than the median price for homes sold directly by the owner -- $230,000 versus $198,200.  This more than compensates for the real estate commission that the FSBO seller was trying to "save."  Although the study does not directly assess the reason for this difference, the NAR attributes it to the agent's expertise in preparing homes to maximize the value as well as the ability to provide larger exposure to the market.  They also speculate that private sales between those who knew one another previously may be concluded at a lower price than "open market" sales.  Another important reason is found in the study itself -- since 9 in 10 buyers use agents, those buyers are far more likely to be shown listed properties.

Buyers and sellers agree that the two most important characteristics of an agent are reputation, and knowledge of the neighborhood.  Furthermore, the level of satisfaction with agents is extremely high with more than 8 in 10 buyers and sellers saying they would use the same agent again or refer him/her to a friend.

So what does this mean to you?  A good agent can be worth far more than the commission paid on the sale.  Aside from the difference in sales prices for represented sellers versus unrepresented ones, a good agent can sometimes salvage a sale that might have fallen through.  A few of the many possible problems that could derail a transaction are:  the home appraises for less than the agreed upon sales price, a title search identifies a "cloud" on the title that keeps the title from being marketable, a lender gives a prequalification letter on a particular type of loan but stops writing that type before the final commitment is given, a buyer has difficulty finding a lender who will give them a mortgage, there is a question about water rights, the home inspection reveals hiddend defects in the home, and the list goes on.  How do you choose an agent?  Agents can vary widely, so it pays to compare.  Make sure your agent has expertise in your area.  This is especially true here in the Ogden Valley.  Our market is vastly different from the rest of Weber County, due in large part to the rapid appreciation and the low inventory.  In many areas of the county, you can find several nearly identical homes that have sold nearby in the past few weeks.  Here, there may not be anything comparable -- certainly not nearby or recently.  Also, it is important to make sure that your agent is serious about real estate as a career.  Do you really want a part-timer handing what is probably your most important single investment? Finally, make sure that your agent capitalizes on technology.  These results show how important the Internet is becoming in real estate buying and selling.  Your home should be exposed on multiple Internet sites.  For example, I typically market each of my listings on 7 different Internet sites, including the home's own private website.  Interview several agents and choose the one that you think will do the best job of marketing your home, not the just the one who offers the highest price.  For more information on choosing an agent, check out the Buyers Seller Tips from the Home page.