Andrew Wetzel's Musings

June 3, 2020

How Buyers Bought Real Estate in 2019:  Who is the Typical Buyer?  Part 2 of 2.

Today I want to discuss the 2019 NAR or National Association of REALTORS Profile of Buyers and Sellers.  The report comes from a survey using 125 questions mailed to over 159,750 recent home buyers who purchased a primary residence between July 2018 and June 2019.  This was a national survey so your market may be quite different.  Real Estate is local:  there is no national Real Estate market so please contact me for information about your local market.

This is Part 2 of 2.  In Part 1, I focused on buyer characteristics, meaning who is the typical buyer.  In Part 2, I will focus on the process the typical buyer used to find their home, the results they achieved and how they felt about the experience.  There will be some overlap between the parts.

As I learned years ago, buying a home is an emotional decision justified with logic.  This is what can make it fun or not.  The process can be interesting enough when there is only one buyer involved.  People have different ways of making decisions and we all handle challenges and stress differently.  Buying a home typically offers plenty of both.  When more than one buyer is involved, there can be quite a negotiation between the parties and they often seek my opinion.  Purchasing a home is typically the largest financial transaction anyone will ever make and it involves many lifestyle factors.  It is a serious process.  Here are some highlights:

  • 87% purchased existing homes; 13% bought new construction;
  • Nationally, buyers typically paid 98% of the asking price;
  • 55% of buyers said that finding the “right property” was the most difficult part of the process; 26% mentioned financing (including saving for a down payment (13%), getting a loan (8%) and the appraisal (5%)), 19% cited the paperwork and 18% mentioned understanding the process. And yet, buyers often avoid or delay seeking professional assistance.  Given 24/7 access to the Internet, some may find this interesting.  I am not surprised as it supports my belief that Realtors bring value to the process of buying Real Estate above and beyond simply providing houses to look at.  While that is obviously important, buyers need to arrange financing and determine what they want and need in a house so that they can evaluate their options and make the best choice for themselves, keeping in mind that they may have serious competition.  Some houses sell quickly.  Buying a home takes time and effort.  For example, I have worked with many buyers during my career and have been able to identify houses for them to consider that they did not or could not find on their own.  My experience working with sellers, especially those whose properties other agents could not sell, has taught me a great deal about marketing homes to ensure that they appear in buyer’s search results.  Think “Google search”.  This knowledge helps me with buyers.  I will be happy to explain this in detail;
  • 86% financed their purchase, typically financing 88% of the purchase price with first-timers financing 94% and repeat buyers financing 84%;
  • The median down payment was 12% for all buyers with 6% for “first-time” and 16% for “repeat”;
  • 9% found the mortgage application process to be much more difficult than expected with only a 1% difference between first-time and repeat buyers. This explains why so many wait to do this, perhaps to their detriment.  Sellers tend to focus on three parts of any agreement:  the amount of the offer, the buyer’s financing and the terms and conditions of the offer.  Sellers want to avoid or minimize the risk of a failed sale;
  • 13% reported that saving for a down payment was the most difficult step with 51% of those citing student loans. This is a problem that has been well reported.  It delays many aspects of life;
  • 50% of buyers found the home they purchased online; 28% through an agent; 7% from a “For Sale” or an open house sign. There is no doubt that the Internet has displaced agents as a valuable source of property listings.  No one can or should dispute that.  However, it has clearly NOT displaced the need for us to assist with the numerous tasks that are necessary to buying a house regardless of where or how it was identified.  One final point here is that it is important that a buyer provide accurate information as far as what is important for them.  Having a buyer search online for one set of criteria while their buyer-agent searches for something different can and will cause problems.  We should be finding the same possibilities!  Communication is critical;
  • 94% were “satisfied” with the process but only 63% reported being “very satisfied” while 7% were somewhat or very dissatisfied. Buying a house or investment property can be very frustrating.  Trying to justify the emotion of a home purchase with logic can be a challenge.  I have met a number of owners who told me that they made a mistake when they bought their home; some realized that sooner than others.  While their situations may have varied, this often meant that they would have some difficulty selling or achieving what they wanted or needed to make a move.  I can share some stories;
  • 61% were given agency disclosures at some point with 27% at the first meeting, 23% when the contract was written and 11% at some other time. In PA you may know this as the Consumer Notice form that we are required to use.  The purpose of this disclosure is to offer a buyer choices as far as how we are to work together.  Historically many buyers assumed we were representing “their best interests” even though they had not formally committed to using our services.  Prior to buyer agency all agents worked for the seller’s best interests!  The good news is that 61% received it, even if late.  20% say they never received it and 20% said they did not know.  In addition to being a REALTOR and Associate Broker, I am a Mediator and have spent years working on our Professional Standards Committee.  In those roles I have been involved in many situations where the consumer, meaning a buyer or seller, had quite a different perception of their relationship with an agent than their agent had.  Trust me when I tell you that this can cause problems;
  • Continuing with that thought, 39% said they had a written representation agreement with their agent; 19% said it was oral; 28% had no agreement and 15% did not know;
  • Buyers ranked a number of agent qualities as “very important”: 97% want honesty and integrity; 93% want them to be knowledgeable about the process; 93% want them to be responsive; 88% want communication skills, 83% want them to be able to negotiate and 46% mentioned technology skills.
  • The top three benefits Real Estate agents provided were: 61% said helping buyers understand the process, 60% said pointing out features or faults with properties, 48% said negotiating better terms, 47% said providing a list of service providers, 37% said negotiated a better price and 30% said shortened the home search.

Buying Real Estate is a unique purchase:  not only is it much less frequent than other purchases, it typically involves multiple steps, each offering their own challenges.  If you would like to discuss buying or selling or if you have any thoughts about this, please contact me.  Please look for Part 1.

There is no time for inexperience, empty promises or false expectations! 

Remember:  HIRE WISELY!  We are not all the same.

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