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Tuesday, October 17, 2017

Home Buyer and Home Seller Profile for 2005

The National Association of Realtors periodically surveys home buyers and sellers to gain knowledge and insight into who is buying and selling, what they are looking for in a home, in a real estate agent and in the real estate transaction.  The most current survey was conducted in 2005.  This was a year of record sales in real estate, and real estate was a driving force in the U.S. economy.  It was a year of high demand and low interest rates.  It was also a year of record-breaking appreciation of home prices, which contributed greatly to the net worth of many homeowners.

 

Some of the significant findings with home buyers are that sixty-one percent have no one less than 18 years of age living at home; 38 percent of the home buyers were under 35 years old; and first-time home buyers purchased 40 percent of the homes.  Baby boomers continue to be a strong factor.  Many are in their prime earning years and purchasing investment properties and second homes.  Boomers are also beginning to inherit money from their parents that they are investing in real estate.  The rapid appreciation of 2005 raised home prices so that affordability of homes to first-time home buyers and those buyers under 35 years old becomes a barrier for many young and

first-time home buyers.

 

The typical buyer purchased his home within 12 miles of his previous home; 68 percent ranked the quality of the neighborhood as the main factor in choosing a home; and56 percent of the homes purchased were in the suburban areas.  In 2005, due to the rise in housing costs, many purchased homes in outlying areas such as Maricopa, Casa Grande, Queen Creek and Buckeye for the affordability.  Buyers found they could get more home for the money in the outlying areas.

 

Buyers used a real estate agent 98 percent of the time.  First-time buyers used the Internet to search for a home 82 percent of the time while repeat buyers used the Internet 78 percent of the time.  Twenty-four percent of buyers first found their home on the Internet.  Seventy two percent of buyers rated real estate agents very useful in the search for a home.  The Internet is the fastest growing tool used in searching for a home while at the same time 98 percent of the buyers are still using real estate agents to search for and purchase a home.

 

A few years ago when the Internet was beginning to grow in popularity, real estate agents were warned of the danger that the Internet would replace their profession.  The study shows that buyers realize the value of using a real estate professional to represent them and act on their behalf.  At the same time, buyers are using technology to speed up the process and save time.  The study states that the buyer searched the Internet for a median length of two weeks before contacting a real estate agent.  The reputation of the real estate agent was the main reason for choosing to work with them.  Ninety-two percent of the buyers financed their homes and 94 percent feel that they made a good financial investment.

 

On the home seller’s side, one in five sold to purchase a larger home; the average time to sell was four weeks; and 88 percent were satisfied with the sales process.  Forty- three percent found their real estate agent by referral and half of them used their previous agent.  Sixty-three percent said they would use their agent again in the future.  In the seller’s market of 2005, it was relatively easy to please sellers.  With the prices appreciating, days on market were low and sellers were for the most part very happy to sell their homes fast and at the top of the market. Many took the great equity they earned and invested in a larger, nicer home.

 

In the business, we refer to homes for sale by owner as FSBO’s (pronounced fizbows).  The median price for sale by owners was $198,200 compared to homes sold by agents at $230,000.  The primary motivation of a FSBO is to save the commission. However, most responded that it was difficult to understand and complete all of the paperwork involved.  FSBO’s, while focusing on commission, on average would have netted more when using a real estate professional and would also have eliminated the difficult and confusing paperwork.

 

The survey contradicts the predictions of 10 years ago when it was predicted that the Internet would replace agents–and there would be far fewer agents employed.  In contrast, there are record numbers of licensed agents.  Buyers and sellers are still finding value in that professional relationship.  The baby boomers are still a huge influence on real estate and will continue to be.  The Internet and technology continue to grow and be an integral part of the real estate business; however, the human touch is not going away. 

 

  

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