Highlights from the 2009 NAR Profile of Home Buyers and Sellers
by Jessica Lautz, NAR Research
The National Association of REALTORS® surveys home buyers and sellers annually to gather detailed information about the home buying and selling process. These surveys provide information on buyer and seller demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also share information on the role that real estate professionals play in home sales transactions. NAR's Profile of Home Buyers and Sellers reports - based on results of those surveys - provide real estate professionals with insights into needs and expectations of their clients. This year's data provides valuable insight into how buyer and seller demographics have changed based on shifting market conditions. The latest 2009 NAR Profile of Home Buyers and Sellers* was released during NAR's annual conference and expo in November. Below we highlight some of the findings of that survey report that focus on home sellers.
Selling a home can often be just as complicated and confusing as buying a home. This was particularly true during the recent economic recession. Most home sellers turn to real estate professionals to help them sell their home.
Why They Sell
Home owners sell their homes for a variety of reasons. Some sellers sell their home because they are "trading up" to a larger property, because of changes in their financial or family situations, a job relocation, or to be closer to family and friends. The most frequently reported reason for selling a home was job relocation, cited by 21 percent of recent sellers. Nineteen percent of sellers reported they sold their home because it was "too small" and they wanted a larger property. (This reason was even more frequently cited by sellers aged 44 or younger.)
What Sold
Eighty-two percent of sellers sold a detached single-family home, with the townhouse/row house the second most frequent type of home sold. Sales of detached single-family homes accounted for a slightly larger share of sales in suburbs, small towns and rural areas than in other areas. Although single-family sales still dominated in each type of location, condos accounted for a much higher share of sales in urban and central city areas and resort areas.
The Selling Market
Among recently sold homes, the sales price was a median 95 percent of the listing price. The 2008 Profile reported that sales prices were typically 96 percent of the listing price. This is reflective of the final price the home was listed for and is a good indication that real estate professionals are pricing homes competitively in the current market. More than 44 percent
of homes sold for 94 percent or less of the listing price while one-third sold for 95 to 99 percent of the listing price.
Additionally, before settling on a final listing price, 60 percent of sellers reported they reduced the asking price at least once during the home sale process. About one-quarter reduced their asking price only once.
The median time on the market for recently sold homes was 10 weeks-up from eight weeks as reported in the 2008 Profile. One-third of homes were on the market for 17 weeks or more.
For homes on the market less than one week, the median sales to listing price was 100 percent; 58 percent of homes sold at the listing price. As time on market lengthened the difference between sales and listing price grew. For those homes that were on the market for at least 17 weeks, for example, the median sales to listing price was 90 percent with just 4 percent selling at the listing price.
Method of Home Sales
In a complex and difficult housing market, sellers understand the importance of working with real estate professionals. Eighty-five percent of home sellers sold their home with the assistance of a real estate agent, a share that has shifted more in favor of using a professional in the last several years. The share of For-sale-by-owner (FSBO) decreased - from 14 percent in the 2003 and 2004 survey to 11 percent in the current Profile.
Finding a Real Estate Professional
The Internet, open houses, for-sale signs, newspaper advertisements, and direct mail are all methods by which sellers find their real estate agent. But a referral from family or friends who knew the agent or if the seller used the agent in a previous transaction were still the most frequently cited. Forty percent of sellers who used a real estate agent found their agents through a referral. Twenty-six percent had previously worked with the agent either to sell or purchase a home.
And what do sellers want most from their real estate professional? Help with pricing the home competitively and finding a buyer for the home were the most frequently reported services with which sellers wanted help from their agents (22 and 21 percent, respectively). An equal share of sellers - 19 percent - most wanted help with marketing their home to potential buyers and assistance in selling their homes within a specific time frame.
Going it "Alone" -- FSBOs
As mentioned above, 11 percent of home sellers who sold a home between July 2008 and June of 2009 went the FSBO route. That is slightly less than in last year's survey. But in keeping with FSBO-trends, the median sales price of FSBO homes was less than those sold through a real estate professional, $172,000 vs. $215,000 respectively. One reason the typical FSBO home sold for much less than the typical agent-assisted home was because many FSBO homes were lower priced ones and nearly half were sold between buyers and sellers who were acquainted with each other. About half of FSBO sales were to buyers whom the sellers knew.
Why go FSBO? The primary reason that sellers chose to sell their home without the assistance of a real estate agent to a buyer they did not know was because they did not want to pay a fee or commission. This reason was cited by 49 percent of FSBO sellers.
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However, FSBOs face challenges in selling their homes themselves. Eighteen percent of FSBOs reported that preparing or fixing up their home for sale was their most difficult task. Pricing their properties right and dealing with the paperwork were each cited by 15 percent of FSBOs as the most difficult task in selling their homes themselves.
Even successful FSBO sellers are not necessarily sure they will "go it alone" the next time they sell a home. While the majority of FSBO sellers who knew their buyers (56 percent) indicated they weren't sure, only 15 percent said they would sell their current home themselves. Twenty-nine percent indicated that they would use a real estate professional for their next home sales transaction.
Building on Reputation
More than a third of recent home sellers who used an agent said the real estate professional's reputation was the most important factor in selecting that agent, and one-fifth of sellers indicated that the agent's honesty and trustworthiness were most important. That high level of integrity and professionalism will likely translate into repeat business for real estate professionals. Among recent sellers who used an agent, 81 percent reported they would definitely (59 percent) or probably (22 percent) use that real estate agent again or recommend their agent to others. To drive this point home, about two-thirds of sellers only contacted one agent during the home selling process.
Conclusion
The housing market has certainly seen its share of trials and tribulations during the recent recession. High levels of inventory, tight credit, and a weak job market have all presented challenges to homeowners who wanted to sell a home, and to the real estate professionals who assist them in those transactions.
But the situation has improved. Interest rates are at historical lows and - perhaps most important for housing - the first-time home buyer tax credit has been extended and expanded (so many trade-up buyers may qualify). While it is still a buyer's market, things are looking up for home sellers as demand remains high and home prices are on the road to stabilization. Going forward, real estate agents can be confident that their expertise and professionalism will also be "in demand" for home sellers.
*In July of 2009, the National Association of REALTORS® mailed an eight-page questionnaire to 120,038 consumers who purchased a home between July 2008 and June 2009. The survey yielded 9,138 usable responses with a response rate, after adjusting for undeliverable addresses, of 7.9 percent. Consumer names and addresses were obtained from Experian, a firm that maintains an extensive database of recent home buyers derived from county records. Information about sellers came from those buyers who also sold a home. All information in the Profile is characteristic of the 12-month period ending June 2009, with the exception of income data, which are reported for 2008. In some sections of the Profile, comparisons are also given for results obtained in previous surveys. Not all results are directly comparable due to changes in questionnaire design and sample size. Some results are presented for the four U.S. Census regions: Northeast, Midwest, South and West. The median is the primary statistical measure used throughout this report. Due to rounding and omissions for space, percentage distributions may not add to 100 percent.