Today — perhaps for the first time ever — here is a quantified sample of what home shoppers say they are going to do, and what they actually did to become a homebuyer.
What follows is a small sample based on two major studies comparing what 984 home shoppers said they were going to do to what 8,501 homebuyers actually did.
This is such an unusual report that an explanation of the methodology used should prove helpful.
In July 2012, the National Association of Realtors mailed a 120-question survey to a random sample of 93,502 recent homebuyers. The respondents had to have purchased a home between July 2011 and June 2012. The tailored survey design method was used to survey the sample, which includes a pre-postcard mailing, the survey, a follow-up letter, and a re-mailing of the survey. Using this method, a total of 8,501 responses were received.
Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent homebuyers derived from county records.
In June 2012, Builder Homesite Inc. (BHI) — a consortium of 32 of the largest U.S. production homebuilders in the United States — undertook a confidential marketing study for its members.
Between June 7 and June 20, 2012, 984 potential homebuyers from 25 major markets responded to a 20-minute online questionnaire provided by BHI. Respondents were 25 or older, with household incomes of $50,000 or more, and likely to purchase a resale or new home priced from $150,000 to $500,000 within the next 12 months
Sixty percent of this group planned to purchase within six months and had taken one or more of the following actions:
- Met, spoken with or hired a Realtor.
- Sought preapproval for a home loan.
- Visited a model home in a new-home community.
- Visited an existing home with a Realtor.
- Bid on a property.
- Attended a homebuying seminar.
- Placed home on the market for sale.
Forty percent rated their likelihood to purchase in 12 months and were classified as "considering" a home purchase if they had taken one of the above steps, or one of the following:
- Regularly looked at home listings online or in the paper.
- Visited a Realtor and/or homebuilder website.
- Calculated living costs as a result of a new home purchase.
- Attended an open house.
- Watched a TV show about local homes and real estate for sale.
- Driven around neighborhoods looking for homes for sale.
In a perfect world, both studies would come from the same group over a period of time. Since this is not a perfect world, the topics to be compared were selected by me, with the hopes that the results would be of interest to both real estate agents and homebuilders.
Since the questions are not identical in both studies, license was taken to group relative answers to the most likely questions. Some were easier than others, such as the following two:
Use a Realtor
- BHI: Intend to use a Realtor — 84%
- NAR: Used a Realtor — 87%
Shop on Internet
- BHI: 90%*
- NAR: 87%
Relating to "looks like it applies here" data was difficult especially when the BHI results and NAR results were so far apart, such as:
"Why do you plan to use a Realtor?"
- BHI: Negotiate terms/price — 70%
- NAR: Realtor helped most with negotiations — 12%
- BHI: Find home with your specifications — 68%
- NAR: Helped me find the right home — 50%
- BHI: Draft offers and contracts — 65%
- NAR: Helped me with paperwork — 7%
- BHI: Determine what comparable homes sell for — 61%
- NAR: Tell me how much comparable homes are selling for — 8%
My opinion is in italics, such as the copy below.
One reason for the large differences in expectations and reality when it comes to using a Realtor may be the lack of knowledge and evolving appreciation for the services rendered by the Realtor as the shopping process evolves into the actual purchase.
Focus groups might help determine a clearer, stronger message for using a Realtor, especially when it comes to working with first-time homebuyers.
How long they search
- BHI: Almost two-thirds are unsure or expect to shop for up to nine months.
- NAR: Shopped 12 weeks, viewed 10 homes.
Many shoppers spend weeks and months before contacting a Realtor. Many of them have done their research and are ready to move forward, thus reducing the time they shopped before the purchase.
Home search resources
BHI asked: Which sources do you intend to use in your search for a home? Check all that apply.
Top nine sources
- Local real estate listing websites — 61%
- National real estate websites — 55%
- Online search engines — 49%
- Friends/family — 37%
- Local websites — 36%
- Model home visits — 35%
- New-home websites — 29%
- Builder websites — 25%
- Newspapers/news articles — 23%
NAR asked: Where buyer found the home they purchased.
Top nine sources
- Internet — 42%
- Real estate agent — 34%
- Yard sign/open house sign — 10%
- Friend, relative or neighbor — 6%
- Homebuilder or their agent — 5%
- Direct from seller/knew seller — 2%
- Print newspaper advertisement — 1%
- Home book or magazine — not rated
- Other — not rated
Print newspaper advertisement only 1 percent for buyers, 23 percent for shoppers! Homebuiders, which are you going to believe?
What they said they would buy
- BHI: Will purchase a new home — 19%
- NAR: Purchased a "new" home — 16%
What we really need to know is what percent of all homes sold in a market sold at the price point of the new homes. If new homes in your market start at $250,000, for example, you need to know what all homes from $250,000 and up are resales vs new.
Resales
- BHI: Insisted on resale — 48%
- NAR: Purchased a resale — 84%
BHI study says that an additional 35 percent are "indifferent," meaning they will purchase a resale or a new home. Are you qualifying the "indifferent" for both resale and new?
Factors influencing neighborhood choice (in order of preference)
- BHI: Quality of construction, neighborhood safety, better floor plans. BHI study said whether resale or new home, buyers were about equal concerning construction quality and safety.
- NAR: Quality of neighborhood, convenience of job, affordability of homes.
Location preference
Suburban area/close To urban area
- BHI: 54%
- NAR: 51%
Outlying suburban area
- BHI: 20%
- NAR not listed. A guess: a portion of the 51% above.
Heavily populated urban area
- BHI: 13%
- NAR: 17%
Small town
- BHI: Prospect — 5%
- NAR: Buyer — 18%
Rural
- BHI: Prospect — 5%
- NAR: Buyer — 12%
First-time homebuyers were more likely than repeat buyers to purchase a home in an urban or central city area. Buyers of new homes were most likely to purchase in a suburb. The highest percent of repeat buyers, 26 percent, both purchased a home and sold a home in a suburban area," according to the NAR study.
To summarize, as shoppers start to actually see, touch and feel homes they thought they wanted, they are no different than the rest of us. They adjust their dreams to better fit their budget or lifestyle.
Studies that show what home shoppers say they want vs. what they actually purchase help us better understand the process, and, therefore, be better real estate agents.
