April 5th - 2006

Technology and REALTOR use on the rise

Technology is transforming how North Americans buy and sell homes in unexpected ways, including how they work with real estate professionals, according to the 2005 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers.

Technology is transforming how North Americans buy and sell homes in unexpected ways, including how they work with real estate professionals, according to the 2005 National Association of REALTORS® (NAR) Profile of Home Buyers and Sellers.

The survey results show nine out of 10 homebuyers use a real estate agent in the search process, but use of the Internet to search for a home has risen dramatically over time, increasing from only 2 per cent of buyers in 1995 to 77 per cent in 2005. The next largest source of information for buyers is a yard sign, mentioned by 71 per cent of buyers.

When asked where they first learned about the home purchased, 24 per cent of buyers identified the Internet, up strongly from 15 per cent in 2004. Although most buyers use an agent to complete the transaction, 36 first learn about the home they buy from a real estate agent and 15 percent from yard signs.

The survey findings are based on more than 7,800 responses to a questionnaire NAR mailed to 145,000 homebuyers and sellers, based on county records, who purchased their homes between August 2004 and July 2005. NAR President Thomas M. Stevens said the findings underscore the complexity of the home buying process. “Buyers who use the Internet in searching for a home are more likely to use a real estate agent than non-Internet users, and consumers rely on professionals to provide context, negotiate the transaction and help with the paperwork.”

According to the survey, Realtor.com was the most popular Internet resource, used by 54 per cent of buyers, followed by multiple listing service (MLS) Web sites at 50 per cent, real estate company sites at 38 per cent, real estate agent Web sites at 31 per cent, and local newspaper sites at 15 per cent.

In response to criticism that REALTORS haven't made enough use of the Internet to produce positive change for consumers, Stevens says, “The real estate industry today bears little resemblance to the way we did business 10 years ago. It is hard to find another industry that has adopted technology so readily to its customers. REALTORS have invested a lot of time and money in building information technology, and because of these efforts, more consumers than ever are using the Internet in their home search.”

The survey shows 81 per cent of buyers use the Internet to search for a home purchase through a real estate agent, while 63 per cent of non-Internet users buy through an agent; non-Internet users are more likely to purchase directly from a builder or an owner they knew in advance of the transaction.

FSBOs declining
Some of the most interesting data surrounds for-sale-by-owner properties or FSBOs. The NAR survey has found a clear downward trend in FSBOs since that market share experienced a cyclical peak of 18 per cent in 1997. Only 13 per cent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were "closely held" between parties who knew each other in advance, up from 32 per cent in 2004. The FSBO market share was at 14 per cent in both 2003 and 2004.

While the use of technology appears to be on the rise, both buyers and sellers use traditional methods to choose a real estate agent. Word-of-mouth recommendation was cited as the most common way to learn about real estate professionals. The most important factor in choosing an agent was reputation, according to 41 percent of home buyers, followed by an agent’s knowledge of the neighbourhood at 24 percent. In terms of desired qualities in an agent, three categories were rated as very important by more than nine out of 10 buyers. They are: knowledge of the purchase process, responsiveness and knowledge of the market.

It appears the Internet has and will continue to play an important role in the real estate business. “The housing market today contrasts sharply with predictions a decade ago that the Internet would ‘disintermediate’ real estate agents, including speculation that NAR membership would fall in half. In reality, it’s grown dramatically.” Stevens said. To view the complete survey results visit www.realtor.org.

Generating leads
More REALTORS are using the Internet to generate leads for their businesses than ever before. The NAR 2005 Profile of Homebuyers and Sellers outlined several key areas in lead generation where there is potential for technology and efficiency improvement. Here are a few highlights:

Lead sources

  • 68% of respondents indicated they receive Internet leads, yet 72% are not satisfied with the amount or quality of the Internet leads they receive.
  • Nearly 70% of respondents get less than 10% of their leads from the Internet.
  • 40% of the respondents who get leads from the Internet say they do not get any sales from this lead source.
  • Other than third party lead generation programs, less than 12% use any service or technology to help qualify Internet leads.
  • 74% have not participated in any type of third party lead generation program.
  • Only 9% of the respondents have participated in any type of third party lead generation program for 12 months or more.
  • A small percentage, 5% of the total sample is getting over 40% of their leads from the Internet. This group has, on average, been in the business fewer years but generates approximately the same number of transaction sides. This group also relies more on Internet leads than referrals and repeat clients.
  • Company, agent and MLS public Web sites are the top sources of Internet leads.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

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