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Real Estate Big Data

NAR Report: Relationship between real estate pros and home buyers

(REAL ESTATE BIG DATA) The latest release from NAR’s 2020 report looks at what buyers want from real estate pros and how they choose an agent to help them.

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Real estate pro helping out a client

Maintaining a good relationship requires occasional check ins on how things are going – and that includes relationships between home buyers and real estate pros.

For its updated relationship “report card,” the National Association of Realtors surveyed new home buyers who closed from July, 2019, through June, 2020, on how their purchasing process went. NAR’s analysis breaks out the numbers by all buyers, first-time or repeat buyers, and adult household composition.

Here are some of the main takeaways from their “2020 Profile of Home Buyers and Sellers.”

Buyers continue to see the benefit of working with agents or brokers.

A healthy 88% of recent home buyers say they worked with a real estate professional. Compare it with the 82% in 1981, and you’ll see that rise holding steady. Buyers in the West were most likely to buy through an agent (90%), followed by unmarried couples (90%) and single males (88%).

Answering that climb are declines in other purchasing methods. Of note, 6% of buyers purchased directly from the builder or builder’s agent, versus 8% in 1981. Furthermore, 5% bought directly through the previous owner, versus 10% in 1981.

When you break it down by whether buyers had previously owned a home, the purchase from a builder rate went up much higher to 38%, which is up from 36% in 2019.

Method of Home Purchase, 2001-2020

Sellers still are more likely to pay agents’ commissions.

When it comes to who’s paying, “seller only” is at 55%; “buyer only” is at 2%; and “split between buyer and seller” is at 12%. The majority of agents are compensated as a percentage of sale price.

Disclosures and formal arrangements between buyers and agents aren’t standard.

Only slightly more than half of buyers reported signing an agent representation disclosure, including 40% with a written arrangement; 28% had no arrangement at all, which is unchanged from 2019.

Buyers want agents to find the right home and help them navigate the deal.

Half of buyers most wanted help finding the right home (51%), but negotiating terms and prices came in at a combined 24%. Single females prioritized help finding the right property more than other types of households.

When it comes to negotiating, unmarried couples, repeat buyers and buyers of previously owned homes were most likely to want help finalizing the transaction. Fewer buyers worked with an agent when buying a new home from a builder.

Buyers said the top benefits of working with an agent were: 1) helping them understand the process (62% of all buyers, but 83% of first-time buyers); and 2) pointing out unnoticed features or faults with the property (61% of all buyers and 59% of repeat buyers).

The next most-valued benefits were negotiating better terms of the sale, providing a list of service providers such as home inspectors, and increasing buyers’ knowledge about where to search.

Finding agents is all about referrals.

Of all buyers, 40% of them (and 50% of first-time buyers) were referred to their agent by a friend, neighbor, or relative. Repeat business factored into buyers’ choices at 13% overall, but 18% of previous home buyers returned to their last agent. Married couples were the most likely to return to work with an agent.

A combined 13% met their agent either through inquiring about a property they saw online or visiting a website.

Buyers tended not to shop around for help.

Three-quarters of all buyers, including repeat buyers, interviewed only 1 agent. First-time buyers were most likely to interview 2 agents.

Most of all, buyers need to trust and feel comfortable with their agent.

In choosing an agent, buyers are looking for professionals who are honest and trustworthy (21%), have a good reputation (15%), or are someone they know personally, such as a friend or family member (13%). Moreover, 18% valued the agent’s experience the most.

When ranking the skills or personal qualities they felt were important, honesty and integrity was the clear winner, at 98%. Also in the 90s were responsiveness as well as knowledge of the buying process and the real estate market. The next most highly ranked: communication, negotiation, and people skills. Technology skills were ranked last, but single females were most likely to value them.

Interestingly, the onset of the COVID-19 appears to be starting to have an impact on what buyers value. To identify pandemic-related trends, NAR compared responses to some questions from buyers who had closed from April through June, 2020, with those who had closed earlier. They found the beginnings of upswings in the percentage of buyers who most valued honesty and personal relationships. The category of “Agent is friend or family member” climbed by 5 points, suggesting buyers might now feel safer with people they know. “Agent is honest and trustworthy” climbed by 3 points. Experience and reputation were rated as slightly less important.

When it comes to communication, repeat buyers most valued personal calls, while first-time buyers most appreciated texts. Nearly three-quarters of all buyers want immediate notifications of listings, price changes or contract status.

Buyers are giving their agents As on their report cards.

Notably, 91% of buyers said they were very satisfied with their agent’s honesty and knowledge of the purchase process. And even further, 90% were very satisfied with responsiveness. Negotiation skills ranked lowest, at 78%.

When asked if they would use their agent again, 76% gave an emphatic “definitely,” and 15% said “probably.” About a third of buyers had not recommended their agent to anyone, but the typical number of recommendations was two.

Data suggests there is room for improvement, though.

One thing that stands out: For household composition, the category of “other” is fairly high throughout, suggesting it’s time for analysis and reporting to delve a little deeper into buyers who don’t fit the standard categories. One example: While 88% of all buyers purchased through an agent or broker, 93% of people in the “other” category did so. Also, 40% of all buyers found their agent through referral; the “other” category was 37%.

What type of buyers are under “other”? NAR’s numbers after the onset of the pandemic revealed a trend toward purchases of homes suitable for multiple generations as well as unrelated adults who are likely pooling income.

That “other” represents a lot of buyers, making it a great place for agents to look for niches as well as to refine their targeted marketing strategies.

Lisa Wyatt Roe is an Austin writer and editor whose work has been featured on CNN.com/Travel, in Texas Parks & Wildlife Magazine and in the book “Seduced by Sound: Austin; 100 Musicians on Why They Make Music.” Travel and live music feed her soul. Volunteering with refugees feeds her sense of purpose. And making friends laugh feeds her deep (yet possibly sad) need to get all the laughing emojis on Facebook.

Real Estate Big Data

The NAR’s top 10 places for millennials to move to (a 2020 reflection)

(REAL ESTATE BIG DATA) If you’re a millennial, and wondering where you should move that can get you ahead even during this pandemic, here’s the top 10 cities for millennials.

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An analysis of the largest 100 metropolitan statistical areas in the US by the National Association of Realtors (NAR) has resulted in the release of their list of top housing markets for millennials from the past year of the pandemic. NAR used housing affordability, local job market conditions during the COVID-19 pandemic, share of millennials in the area, and inventory availability as part of their metrics in the development of the list.

“With relatively better employment conditions and a strong presence of millennials in these markets, more new home construction will be required to fully satisfy the housing demand as the economy reopens” said NAR’s Chief Economist Lawrence Yun. Nationally there has been a 6% increase in the percent of listed homes the typical household can afford to buy since 2019, but with median home prices in the $300k and $400k range in some of the top markets, many millennials will still be priced out.

The NAR Top 10 Housing Markets for Millennials during the Pandemic, listed alphabetically:

Austin-Round Rock, Texas:

  • Affordability, April 2020 (y-y change): 11%
  • Share of Millennials: 35%
  • New Listings, April 2020 (y-y change): -28%
  • Share of most affected employment: 20%
  • Median Home Price (Q1 2020): $341,500
  • Share of listings that the typical household can afford to buy (April 2020): 33%
  • Employment y-y change (April 2020): -9%

Dallas-Fort Worth-Arlington, Texas

  • Affordability, April 2020 (y-y change): 22%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -36%
  • Share of most affected employment: 21%
  • Median Home Price (Q1 2020): $269,700
  • Share of listings that the typical household can afford to buy (April 2020): 30%
  • Employment y-y change (April 2020): -8%

Des Moines-West Des Moines, Iowa

  • Affordability, April 2020 (y-y change): 11%
  • Share of Millennials: 31%
  • New Listings, April 2020 (y-y change): -16%
  • Share of most affected employment: 17%
  • Median Home Price (Q1 2020): $209,200
  • Share of listings that the typical household can afford to buy (April 2020): 57%
  • Employment y-y change (April 2020): -10%

Durham-Chapel Hill-Raleigh, North Carolina

  • Affordability, April 2020 (y-y change): 23%
  • Share of Millennials: 31%
  • New Listings, April 2020 (y-y change): -36%
  • Share of most affected employment: 15%
  • Median Home Price (Q1 2020): $293,800
  • Share of listings that the typical household can afford to buy (April 2020): 26%
  • Employment y-y change (April 2020): -11%

Houston-The Woodlands, Texas

  • Affordability, April 2020 (y-y change): 14%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -31%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $245,300
  • Share of listings that the typical household can afford to buy (April 2020): 31%
  • Employment y-y change (April 2020): -8%

Indianapolis-Carmel-Anderson, Indiana

  • Affordability, April 2020 (y-y change): 12%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -35%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $204,000
  • Share of listings that the typical household can afford to buy (April 2020): 47%
  • Employment y-y change (April 2020): -11%

Omaha, Nebraska/Council Bluffs, Iowa

  • Affordability, April 2020 (y-y change): 15%
  • Share of Millennials: 30%
  • New Listings, April 2020 (y-y change): -30%
  • Share of most affected employment: 18%
  • Median Home Price (Q1 2020): $197,000
  • Share of listings that the typical household can afford to buy (April 2020): 38%
  • Employment y-y change (April 2020): -9%

Phoenix-Mesa-Scottsdale, Arizona

  • Affordability, April 2020 (y-y change): 12%
  • Share of Millennials: 27%
  • New Listings, April 2020 (y-y change): -24%
  • Share of most affected employment: 21%
  • Median Home Price (Q1 2020): $308,900
  • Share of listings that the typical household can afford to buy (April 2020): 29%
  • Employment y-y change (April 2020): -8%

Portland, Oregon/Vancouver, Washington

  • Affordability, April 2020 (y-y change): 17%
  • Share of Millennials: 27%
  • New Listings, April 2020 (y-y change): -41%
  • Share of most affected employment: 19%
  • Median Home Price (Q1 2020): $416,100
  • Share of listings that the typical household can afford to buy (April 2020): 20%
  • Employment y-y change (April 2020): -12%

Salt Lake City, Utah

  • Affordability, April 2020 (y-y change): 13%
  • Share of Millennials: 32%
  • New Listings, April 2020 (y-y change): -14%
  • Share of most affected employment: 18%
  • Median Home Price (Q1 2020): $372,100
  • Share of listings that the typical household can afford to buy (April 2020): 30%
  • Employment y-y change (April 2020): -8%

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Real Estate Big Data

Ultra simple shortcut to attract new (or more) real estate investors

(REAL ESTATE BIG DATA) Without having to spend any money, this shortcut can attract more business to boost your bottom line with real estate investors – a win-win for the nation.

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Whether you’re a real estate veteran, or looking to expand your services to the real estate investment world, a wild shortcut has just been launched, and you already have access to it for free if you’re a Realtor.

Realtors Property Resource (owned by the National Association of Realtors (NAR)), rolled out a map layer to unveil the Qualified Opportunity Zones (QOZ) across the nation this year, and it’s a tool we should all be using regularly…

The QOZ program was created in 2017 as part of the Tax Cuts and Jobs Act and is designed to improve local economies (specifically the economically disadvantaged areas) through long-term investments with real estate investors.

There are 8,700 QOZs in America, and real estate investment and development in those areas are rewarded with tax incentives (potentially reducing their tax liability by 10-15%, and appreciation on the investment is tax free if held for at least 10 years).

And now, you can find the investment opportunities in seconds, generate reports for investors, connect with homeowners (via the “Mailing Labels” feature) in those areas, and so much more – the new RPR features combine to create one hell of a shortcut for you. Check it out:

Opportunity Zones

This is “Opportunity Zones” by Realtors Property Resource® on Vimeo, the home for high quality videos and the people who love them.

“With the Opportunity Zone initiative poised to transform American communities that have long been shunned by investors, NAR has developed resources to help facilitate and expedite investments in these areas. As our work continues, REALTORS® are committed to ensuring Americans can take full advantage of this valuable new initiative”, said Joseph Ventrone, NAR Vice President, Federal Policy and Industry Relations.

“These Opportunity Zones encourage private investment into low-income communities, with the intent of stimulating economic growth and job creation,” said Bob Turner, NAR’s 2019 Commercial Liaison and RPR Advisory Council Member. “Residential practitioners will notice homes that fall within Opportunity Zones gain a boost to their marketability because of increased attention, while Commercial practitioners will likely see properties once being skipped over turn into desirable investment opportunities.”

It’s not just a shortcut for practitioners and real estate investors, but meaningful help for underserved areas. Talk about a real win-win.

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Real Estate Big Data

NAR Report: How the home search process has changed in 2020

(REAL ESTATE BIG DATA) The 2020 National Association of Realtors annual report examined the home search process, with buyers utilizing online tools and agents to help find the perfect home.

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Woman holding phone in lap, doing an online home search.

There’s extensive data and topics to research when it comes to the National Association of Realtors annual report – everything from the trust home sellers place in agents, home financing, home sales (naturally), and real estate professionals and their relationship with buyers. Practically every angle of this important market has been broken down and examined to help deliver a clear picture of real estate sales across the nation. It’s all extremely valuable and highly worth perusing (psst: search “NAR report”).

Of course, searching for a home is a pivotal and significant part of the entire process, and the NAR report has delivered an in-depth analysis of everything as well. Let’s take a look and see what current trends were revealed.

Initial Search

When it comes to looking for a home initially, there are two main options that most buyers tend to go with – searching online versus contacting outside help (primarily a real estate agent, but family and friends were also viable resources).

With the advent of the pandemic in 2020 keeping several people at home, online searches were at their all-time highest (though this trend has continued to increase in recent years). In fact, a staggering 97% of all buyers utilized the internet at some point during the process.

With the advent of the digital listings and databases, it’s been shown that 43% of buyers are first looking for properties online, compared to 18% that go to a real estate agent first. Speaking broadly, first time buyers were more likely to take this step first, and there was a direct increase as buyers were older (though this percentage decreases after the
age of 64).

First Step Taken During the Home Buying Process, First-time and Repeat Buyers

Real estate agents were definitely the second most used avenue during the search process, and this did increase with aging demographics as well. Perhaps due to greater familiarity with searching online, younger generations did look up information on buying their first home at a higher rate than older counterparts (13% with the younger group versus 6% with the oldest).

First Step Taken During Home Buying Process, by Age

Information Sources

Of course, when it comes to where to find information and best to listen to, real estate professionals reigned supreme (91% reported successfully being helped by agents), and were the primary resources for every demographic – first time buyers, repeat buyers, new homes, and previously owned homes. Online searches and open houses came second and third respectively, and yard signs and online video sites also saw a lot of utilization. Methods after this – print advertisements, billboards, relocation companies, and television sources – finished out the bottom, but there was a wide margin between them and other methods.

Information Sources Used in Home Search, by First Time and Repeat Buyers, and Buyers of New and Previously Owned Homes

Length of Time From Searching to Buying

Perhaps again owing to the nature of the pandemic, the average time a buyer used from search to purchase decreased (a first since 2014), needing only eight weeks. A median of nine homes were looked at (five online only).

First time buyers needed a little more time on average than repeat buyers (nine versus eight weeks). Agents were still utilized frequently in all instances, and were usually contacted within three weeks of the initial search.

Length of Home Search, by Region

Difficulty During the Process

It should come as no surprise that searching for a home is a massive undertaking, and can prove to be an arduous process given the magnitude of what it entails. Just finding the right home to purchase is seen as the most difficult step, with 53% of buyers saying it gave them the most trouble. Paperwork followed at 17%, while simply understanding the process from start to finish was cited by 15% of buyers. As might be expected, first time buyers reported more difficulty across the board in all areas than repeat buyers.

Most Difficult Steps of Home Buying Process by First Time and Repeat Buyers and Buyers of New and Previously Owned Homes

Online Searching Trends

Online searching was first examined in 1995, where only 2% of buyers would utilize the internet during their home search process. This increased repeatedly until 2009 to 90%, dipped slightly until 2012, and has since generally been rising. It was almost an even split between mobile and desktop devices, with younger buyers focusing more on mobile and older more likely to use a desktop/laptop.

Percentage of Time Using Devices in Home Search, by Age

There’s actually a lot of information to process when it comes to online search trends – married couples versus single buyers generally searched online more, desktop searches utilizing video sites more often than mobile (46% versus 40%), and mobile users generally finding their home through their online searches while desktop might generally direct buyers to complete the process with a real estate agent.

Value of Website Features

Of course, how a website helps direct a buyer is extraordinarily important to the home search process. Photos were the clear primary resource here, with 89% of buyers saying that images were extremely useful in the process.

Detailed information about properties followed at 86%, and then there was a significant jump to the next most important feature, as buyers reported that floor plans were important 67% of the time).

Value of Website Features

Next Steps After Searches

Once homes were found online that proved attractive, more than half of first (51%) and repeat (59%) buyers would proceed to walk through the home. Following this, buyers might then see the home but choose to skip seeing the inside (37%), or would contact a real estate agent for additional information (35%). First time buyers tended to look for more information in general (on the home itself, about mortgages, and so on) to better prepare themselves.

Actions Taken as a Result of Internet Home Search, First-Time and Repeat Buyers

Method of Home Purchases

Perhaps the best conclusion to draw here is the home purchase itself. When that time comes, agents are still used the overwhelming majority of the time regardless of a buyer using mobile or desktop more than 50% of the time. With the former, an agent helps 88% of the time, and 90% of the time otherwise. Builder agents or direct contact with the previously owner – known or not – are far overshadowed here.

Method of Home Purchase, by Use of Internet

Satisfaction with the Search Process

Given all of the tools and data available to buyers, 64% reported that they were very satisfied with the entire process, 30% were somewhat pleased, and the remaining group said they were unhappy.

Satisfaction with Buying Process

Conclusion

The NAR Report really shows an incredibly exhaustive look into the home search process. Generally speaking, with so much information available online, buyers were eager to search with devices first and speak with real estate agents early on in the process. Further, digital resources such as photos, floor plans, and other data proved incredibly useful in helping determine if buyers should seek out the home or continue their search.

Perhaps the best conclusions to draw here are that first and repeat home buyers are actively consuming data from online sources, but still rely heavily on agents to help guide them through the process (including ultimately with purchasing the home). Given the unique circumstances of the 2020 Pandemic, it’s clear that searches and next steps are best started through websites and other repositories, and are then usually followed with experts that can provide their professional experience. It’s likely that these trends will – on average – continue in ensuring years.

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