Back when we first started our career in real estate, some 20 years ago, the process for buying a house was quite different from how it’s done today.
If home buyers wanted to see what was on the market, they would browse through newspaper and magazine ads or stop in to see a real estate agent, who would search for listings in a card file or a book. And if you wanted to know what the house looked like, you’d have to get in your car and go see it. Computers were just starting to be used in real estate, but their application was limited by technology designed more for engineers and academics.
In 1994, the most expensive computers couldn’t hold a candle to the processing power of today’s $50 cellphone, and the Internet was still in its infancy. At that time, there were only about 10,000 websites and 2 million computers connected to the Internet, just a tiny fraction of 45 billion websites and 4 billion web users currently in place. If you wanted to download your favorite song from the Internet, it could take up to 30 minutes, something a child can now do in about four seconds.
Equipped with powerful pocket computers, continuously connected to the web, the current generation of home buyers is no longer tethered to an agent. They can access just about all of the same information available to real estate professionals. That doesn’t mean agents are no longer necessary. After all, the benefit of raw information is limited if you don’t have the experience and training to know what it means or how to use it. So, home buyers still believe agents are a critical part of the process, but how many buyers use agents has changed.
Recently, the National Association of Realtors released its 2014 study of home buyer and seller trends. The report contains an in-depth analysis of how buyers and sellers go about the home sale process and what they find important regarding interaction with agents, use of the Internet and all other forms of real estate advertising. Furthermore, the NAR study also compares responses by age group. Many of the findings confirm our expectations, but some were a bit surprising. For home buyers, here are some highlights from the report:
One of the most profound changes relates to how buyers start the process. Traditionally, they would contact an agent pretty early in the process. Now that the Internet has provided buyers with a wealth of detailed information, they do quite a bit of groundwork before calling an agent.
According to the study, more than half (56 percent) start their home search by looking for properties online. Only 17 percent start by contacting a real estate agent. Essentially, buyers make the first cut on their own. Then they go to see an agent once they’ve narrowed the search to a few specific neighborhoods and homes.
The study also said that only 6 percent of buyers spent any time with a mortgage banker in the initial part of their search. We wish more buyers would meet with a lender upfront, so they have a better idea of what they can afford. But we also understand how the excitement of buying a new home inspires many to first see what’s for sale.
Not surprising, most buyers found the home they purchased on the Internet. For all age groups, 43 percent discovered their home online, 33 percent found it through an agent and only 1 percent used a print ad.
And, as you might expect, younger buyers relied even more heavily on the Internet. For those under 33, 52 percent found new homes online. Conversely, for the 68-plus age group, it was 24 percent online.
So, given that the Internet is the vehicle used for the vast majority of home searches, what are buyers most interested in finding online? For the most part, people want to see pictures.
Across all age groups, approximately 83 percent of buyers turn to the Internet for photos. That’s closely followed by about 80 percent for detailed information about the property. After that, the numbers fall off considerably for other things, such as virtual tours (43 percent), interactive maps (40), real estate agent contact information (39) and neighborhood information (34).
Sellers would be well served to make sure their pictures are real eye candy and the words used to describe those pictures are both interesting and engaging. Virtual tours and video are nice, but not nearly as necessary as first-class pictures and descriptions. If the pictures and their descriptions don’t first grab the buyers, they’ll be on to another house before they ever find the video or virtual tour.
Next up in how the buying process has evolved is the use of mobile devices. Almost half of all buyers now use a cellphone or tablet to search for homes. And this preference extends to all age groups. However, younger buyers opt for a cellphone, whereas older groups tend to use a tablet.
Buyers love to drive around and see what’s new. There’s always the thrill of the hunt, and having the ability to download detailed property information on the fly makes that search even more exciting and fruitful. Real estate agents have responded with a variety of apps that help buyers turn their phones and tablets into a mobile multiple list system.
Through the use of GPS-enabled devices, buyers can now cruise neighborhoods they’re interested in, and their phone or tablet will provide what the industry calls “augmented reality.” The GPS in your phone or tablet knows the “reality” of where you’re located, and automatically “augments” the detection of that location with information from the Internet about what you’re seeing. That information might be about restaurants, retail shops or homes for sale.
Despite the extensive and growing use of technology, there’s one thing that never has and never will change about how we shop for homes. It will always remain a people business. Although technology is a great tool, the process of buying a home remains both complex and very personal. Consequently, we expect the comfort and communication of face-to-face interaction will always be an important part of the mix.
Bob and Donna McWilliams are practicing real estate agents in Maryland with more than 25 years of combined experience. Their email address is McWilliams@BobDonna.com.