2011 Buyers and Sellers Survey
The 2011 National Association of Realtors® Profile of Home Buyers and Sellers surveyed 5,708 home buyers and sellers and discovered interesting trends in how buyers come up with their downpayment, what sacrifices they felt they had to make in order to buy their home and how difficult they perceived the home buying process to be.
Funding a downpayment
While two in every three home buyer used savings this year to fund their downpayment, one in four used proceeds from the sale of a primary residence. Additionally, 14 percent of buyers noted gifts from a friend or relative funded their downpayment.
First time buyers are more likely to rely on savings (79 percent) for a downpayment and are also more likely to rely on gifts and loans from friends or relatives while repeat buyers used savings 59 percent of the time and used proceeds from the sale of their primary residence 41 percent of the time.
While over half of all buyers said they didn’t have to make any sacrifices in order to purchase their home, first time buyers were more likely to indicate a sacrifice was made, most commonly in the form of sacrificing luxury spending. Like first time buyers, unmarried couples and single females were most likely to sacrifice for a home purchase.
Difficulty in the process
Not surprising, two in every five home buyers said the mortgage application and approval process was more difficult than expected which is similar to the study results from 2010 but significantly higher than the two years prior. Interestingly, 16 percent of buyers found the process to be easier than they had expected.
Most consumers use savings or home sale proceeds to fund their downpayment and first time buyers are more likely to rely on gifts and loans. First time buyers, single females and unmarried couples were most likely to respond that they had to make sacrifices like cutting back on luxury spending in order to obtain their home. Many buyers found the mortgage process to be more difficult than they expected it would be.
Realtors should know current trends regarding who typically has to make sacrifices, where downpayment monies are coming from and how difficult the process is in an effort to know not only what consumers are telling their friends (“oh it was so time consuming and difficult, plus I had to give up going to the movies every week!”) because perception is reality, so knowing that consumers expect frustration but also expect to make sacrifices and have money saved up gives any agent an advantage when preparing a buyer for their purchase.