How Homebuyers Shop

It wasn’t all that long ago that real estate professionals wondered whether the Internet would render their profession unnecessary. As it turned out, this worry was unfounded.

While homebuyers and sellers alike flock to the web for information, a 2013 survey conducted by the National Association of Realtors (NAR) reveals that 83 percent of Texas respondents purchased their homes through a real estate agent or broker (Table 1). The Texas Association of Realtors, Houston Association of Realtors and the Real Estate Center collaborated with NAR on the “2013 Profile of Home Buyers and Sellers” survey.

Another 13 percent of Texas buyers purchased their homes directly from a builder or builder’s agent. Only 3 percent purchased their homes directly from the previous owner. This data confirms that real estate agents still play a major role in the homebuying marketplace.

NAR historical data show an interesting trend in the “for sale by owner” (FSBO) market (Table 2). The data show that the percentage of houses purchased directly from the previous owner has been declining for years. Thirteen years ago, 15 percent of American buyers purchased a FSBO. Just 5 percent of buyers purchased a house directly from an owner in 2013. This means the FSBO market share has declined by 66 percent in the 21st century. Notice that the FSBO market in Texas is even smaller, with just 3 percent market share in 2013 (Table 1).

While real estate professionals have historically been the main information source for the home search, these days the Internet plays a key role. When Texans were asked about the first steps they take in looking for a home, 39 percent said they looked at houses online and 18 percent said they contacted a real estate agent (Table 3). Just 3 percent began their search by viewing open houses. Only 1 percent reported looking in newspapers and other print media.

Texans find several sources useful in their efforts to find the right home. Seventy-nine percent of Texans think the Internet provides “very useful” information, and 77 percent say the same about agents (Table 4). Thirty-three percent find open houses very useful. Those buying a new home find the home builder to be a very useful source of information.

The survey provided insight into what services buyers want from real estate agents. Helping to find the right house, negotiating the terms of sale and helping with price negotiations were the most-sought-after services (Table 5).

The survey also identified benefits provided by real estate agents during the homebuying process. Some differences were apparent between first-time homebuyers and repeat buyers. Many first-time buyers cited help with the homebuying process to be a key benefit, while repeat buyers felt that having agents point out unnoticed features or faults with the property to be a key benefit (Table 6).

Texas homebuyers typically don’t interview many agents before choosing one. In the survey, 68 percent reported interviewing only one agent. Another 20 percent said they interviewed two, and just 12 percent interviewed more than two agents. This suggests that if an agent is able to get the client in the door, they will likely represent that client.

How buyers have found the home they purchased has shifted dramatically over the past decade. Even though most buyers are working with a real estate agent in Texas, 37 percent found the home they wanted to buy from Internet searching. Real estate agents helped 32 percent of buyers find their homes and 10 percent found their homes from a yard sign or open house. A sizable 13 percent of buyers found their homes with the assistance of a home builder or a home builder’s agent (Table 7).

The 2013 survey also provided valuable information about the most important factors homebuyers consider when choosing a real estate agent to serve them (Table 8). The most important trait to Texans is honesty and integrity, closely followed by agent reputation.

Homebuyers have always valued communication with their real estate agent. This still holds true. Seventy nine percent of respondents to the survey said that personal calls from the agent to inform them of activities is important (Table 9). Getting posts about new listings or price changes to existing listings is also key, along with market reports. Having a mobile site, email newsletter, Facebook page or a blog are rated lower in terms of important communication.

The 2013 survey of homebuyers and sellers revealed that real estate is still a “people business.” While the Internet has made it easier for Americans to find information about homes for sale and the prices of those homes, real estate agents continue to play a huge role in facilitating home sales in Texas and throughout America.

The residential brokerage business is not being automated out of existence. Real estate professionals who are honest, know the market and communicate well with their clients are likely to be successful.

Dr. Dotzour ([email protected]) is chief economist and Kokel and Parulian are research assistants with the Real Estate Center at Texas A&M University.