Contents. off the fence. It s a good life!

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2 I hope you enjoy the latest edition of Brian Buffini s Real Estate Report. The goal of this piece is to help you stay educated on today s market and position yourself as a true professional and your clients trusted advisor. We hope you ll put this comprehensive report to use in your business. n Learn where the market is headed and how it affects your clients n Find out more about today s buyers and how to nudge them off the fence n Give sellers a little perspective and get them to take action n Further communicate why you work by referral in this industry It s a good life! Contents Industry Facts Page 2 Mortgage Stats Page 3 Buyer Facts, Trends & Demographics Page 4 First-Time Home Buyer Facts Page 5 Seller Stats, Trends & Demographics Page 6 Distressed Properties Page 7 Today s Real Estate Professional Page 8 Why Working by Referral Works Page Buffini & Company

3 Brian Buffini s Real Estate Report Page 2 industry facts THE TYPICAL HOUSE PURCHASED: is 1,900 sq. feet costs $190,000 70% of Americans view owning a home as part of the American dream Sacrifices for homeownership: 34% cut spending on luxury items or other nonessentials to purchase a home has 3 bedrooms & 2 baths was on the market for 9 weeks 74% of homeowners feel that owning a home is the best long-term investment 25% cut spending on entertainment 20% cut spending on clothes 12% cancelled their vacation plans Affordability is the top priority for consumers who are considering a home purchase in the next 12 months Home prices are projected to increase: 2-3% in % in EXISTING HOME SALES BY REGION (COMPARED TO Q3 2010): West up 16% 4% in 2014 Rent is projected to increase 3% In 2012, existing home sales are projected to increase 4% - 5% The median home price to median family income has fallen to 2.6% below the historical ratio of 2.9% There is currently 8.5 months of inventory Midwest up 25.1% South up 15.5% Northeast up 11.6% Five states with the highest price appreciation: Alaska 2.1% South Dakota 3.1% West Virginia 4.8% New York 3% District of Columbia 24% Nearly 1 out of 3 home sales in December 2011 went to buyers who paid cash Homes purchased by investors in December 2011 Of the nation s GDP, housing accounts for 22.8% 17% SOURCES: NAR Profile of Home buyers and sellers 2011, NAR, Orange County Register, Wall Street Journal, CNN Money, Bank of America: Mortgage Index Study, RISMedia

4 Brian Buffini s Real Estate Report Page 3 mortgage Stats GROUPS WHO FINANCED THEIR HOME PURCHASE: FIRST-TIME HOME BUYER MORTGAGE TYPES: 18% of refinances in 2011 were cash-out refinances, a drop from 88% at the peak in % 82% of repeat buyers Average amount of downpayment: 5% first-time buyers 15% repeat buyers 95% of first-time buyers BUYERS WHO USED A CONVENTIONAL LOAN: 50% of all buyers 64% of repeat buyers 30% of first-time buyers 35% put down 20% or more Typical first-time buyer s monthly mortgage principal and interest payment is $794 Typical repeat buyer s payment is $1,006 89% Average amount of purchase financed CONSUMERS MOST IMPORTANT FACTOR WHEN CHOOSING A LOAN: 39% 23% 76% of consumers preferred a higher, fixed-rate mortgage to a lower, variable-rate one 72% lowest possible monthly payment of borrowers plan to remain in their home for more than 7 years 8% of borrowers were at least one month behind on their mortgage payments as of Q3 2011, down from 9.1% in the previous year lowest possible interest rate 37% of refinances were cash-in refinances The median credit score in the US has remained constant over the last decade at around 700 Sources: NAR Profile of Home buyers and sellers 2011, NAR, Buffini & Company Magazine, Wall Street Journal, RISMedia

5 Brian Buffini s Real Estate Report Page 4 Buyer Facts, Trends & Demographics 19% of home buyers own more than one home FACTORS INFLUENCING NEIGHBORHOOD CHOICE: 67% Quality of neighborhood 49% Convenience to work 45% Overall affordability of homes 39% Convenience to family and friends 32% Neighborhood design 28% Convenience to shopping 27% Quality of school district 21% Convenience to entertainment or leisure activities HOME BUYERS BY HOUSEHOLD TYPE: 64% 18% 10% 7% 1% Sources: NAR Profile of Home buyers and sellers 2011, NAR married couples single women single men unmarried couples other 51% said that finding the right property was the most difficult part of the buying process AVERAGE DISTANCE BETWEEN PREVIOUS HOME & NEW HOME PURCHASED: West 11 miles 45% of recent home buyers believe their home is a better investment than stocks 84% purchased a previously owned home for a median price of $180,000 The average buyer searched for 12 weeks and visited12 homes The typical repeat buyer purchased a 2,100 square foot home for $219,500 Midwest 10 miles South 15 miles Northeast 10 miles 16% purchased a new home for a median price of $230,000 Age of Home Purchased: HOME BUYERS WITH CHILDREN UNDER Age 18: None 64% One 16% Two 14% Three + 6% Year built % % % % % % % % Before %

6 Brian Buffini s Real Estate Report First-time home Buyer Facts 43% 34% Northeast Midwest 42% 34% South 79% used savings 9% 73% detached single-family home West METHODS OF FINANCING: TYPE OF HOME PURCHASED: FIRST-TIME BUYERS BY REGION: First-time buyers searched for townhouse 6% other 3 weeks Page 5 12% 26% received a gift from a friend or relative 9% sold stocks or bonds 8% used their 401(k) condo 7% received a loan from a relative or friend before they contacted an agent 37% of the market in 2011 was comprised of first-time home buyers 76.6% of potential first-time homebuyers are millennials A TYPICAL FIRST TIME BUYER IS: years old 54% married couples 21% single women 12% single men bought a 1,570 square foot home for 31 FIRST-TIME HOME BUYERS BY HOUSEHOLD TYPE: $155,000 12% unmarried couples TOP PURCHASE MOTIVATIONS FOR FIRST-TIME HOME BUYERS: earns plans to spend 60% desire to own home in income in their new home 11% affordability of home $62, years SOURCES: NAR Profile of Home Buyers and Sellers 2011, Move, Inc.

7 Brian Buffini s Real Estate Report Page 6 Seller STATS, Trends & Demographics 35% of homes were on the market for less than 2 months before they sold 28% were on the market for more than 6 months 39% of sellers did not reduce their asking price 26% 14% 10% 10% The average price cut was reduced it once reduced it twice reduced it three times reduced it 4 or more times 8% 53 The average age of a seller Sellers Median Equity Gain: $57,900 (a gain of 39%, purchased years ago) Of Sellers: 46% traded up 38% of sellers have one or more children under 18 living at home 23% traded down $26,000 (a gain of 16%, purchased 9 years ago) 31% bought a comparably sized home 8.6 The average number of home showings in The average number of showings in 2010 Length sellers live in their homes: 18% 17% 16% for years for 8-10 years for 6-7 years 13% for 4-5 years 41% of sellers offered incentives to prospective buyers Most common incentives: n Reducing price n Paying closing costs n Making repairs n Buying home warranty n Paying origination fees or points 92% of sellers said that their home was listed or advertised online Sellers moved a median distance of 20 miles The average FSBO seller sold their home for $150,000 The average seller who used an agent sold their home for $215,000 Sources: NAR, NAR Profile of Home buyers and sellers 2011, CNN Money, RISMedia, JD Power and Associates

8 Brian Buffini s Real Estate Report Page 7 Distressed Properties Over 50% considered purchasing a foreclosure 29% didn t buy because they couldn t find the right house 15% didn t buy because of the poor condition of the property 15% didn t buy because of the difficult process 16 weeks Average time it takes lenders to sign off on a short sale On average, foreclosed homes sell for a 34% discount Short sales sell for a 24% discount In September 2011, default notices were down 23% compared to October 2010 In September 2011, total foreclosure filings were down 31% from September 2010 In 2005 and 2006, foreclosure sales consistently accounted for less than 5% of all sales nationwide Foreclosure related sales in Q accounted for 57% of all residential sales in Nevada, the highest percentage of any state 20% of all residential sales in Q were distressed homes, down from 22% in Q2 Sources: NAR Profile of Home buyers and sellers 2011, Reuters, RISMedia

9 Brian Buffini s Real Estate Report Page 8 TODAY S REAL ESTATE PROFESSIONAL WHAT BUYERS WANT FROM THEIR AGENT: 81% Almost 50% of agents are using social media 55% help them find the right home 13% help with price negotiations 12% help negotiating terms of sale of first-time buyers said their agent helped them understand the process 56 The typical agent has 12 years of experience 90% Median age of an agent of agents say they will remain in the business Getting sellers to price their home correctly is an agent s number one challenge Friendly service and reliability are the most important aspects of overall brand image for mortgage servicers 56% of agents had at least one client whose primary language was not English 21% of agents have a certification for short sales and foreclosures 91% of real estate agents own a home REAL ESTATE AGENTS SAY: 39% their market has already hit bottom 24% prices will stop dropping in 2012 In the real estate profession, women outnumber men 2:1 27% prices will reach lowest point in 2013 In 2010, the median income of an agent was $34,100 In 2011, Buffini & Company One2One Coaching Members earned an average gross commission of $186,140 80% AT&T 12:34 PM of agents 29 or younger use social media 75% of agents use a smart phone daily 66% of agents have had a website for at least 5 years Brokers tend to spend more money on their websites than agents SOURCES: Fast Company, NAR Profile of Home buyers and sellers 2011, NAR Member Profile 2011, RISMedia, JD Power and Associates, Buffini & Company

10 Why Working By Referral Works 41% found their agent through a referral from friends or family 9% used an agent they had worked with in the past 49% of first-time buyers and 36% of repeat buyers were referred to their agent by a friend, neighbor or relative There is no lead more powerful than one referred from someone you know someone who knows you, trusts you and will put their name to you. Brian Buffini 90% would use their agent again or recommend them to others 89% of sellers are likely to use the same agent again or recommend them to others 66% & sellers contacted only one agent Staying in consistent contact with your clients keeps you at the forefront of their minds! 61% of sellers used an agent referred by friends or family or had worked with them in the past WHEN CHOOSING AN AGENT: In 2011, 60% and sellers say their agent asked for a referral or recommendation, up from 47% in in 10 word of mouth conversations about brands occur offline 55% of consumers recommend a company because of its customer service The typical agent earned 18% of their business from past clients & customers; agents with 16 or more years of experience earned 35% 38% of sellers Brian Buffini s Real Estate Report Page 9 67% 3% of agents reported no business as a result of an open house of an agent s business came from their website 30% 20% of sellers 20% feel honesty is the most important factor feel reputation of the agent is most important Sources: NAR Profile of Home Buyers and Sellers 2011, JD Power and Associates, Word of Mouth Marketing Association, NAR Member Profile 2011