NATIONAL ASSOCIATION OF REALTORS. Profile of Home Buyers and Sellers 2007

Transcription

1 NATIONAL ASSOCIATION OF REALTORS Profile of Home Buyers and Sellers 2007

2 2007 OFFICERS President Pat V. Combs, ABR, CRS, GRI, PMN President-Elect Richard F. Gaylord, CIPS, CRB, CRS, GRI First Vice President Charles McMillan, GRI Treasurer Bruce F. Wolf Immediate Past President Thomas M. Stevens, CRB, CRS, GRI Vice President & Liaison to Committees PeggyAnn McConnochie, E-Pro, GRI Vice President & Liaison to Government Affairs Monty D. Newman, GRI Executive Vice President/CEO Dale Stinton, CAE, CPA, CMA, RCE NATIONAL ASSOCIATION OF REALTORS The Voice For Real Estate The NATIONAL ASSOCIATION OF REALTORS, The Voice for Real Estate, is America s largest trade association, representing more than 1.3 million members, including NAR s institutes, societies and councils, involved in all aspects of the real estate industry. NAR membership includes brokers, salespeople, property managers, appraisers, counselors and others engaged in both residential and commercial real estate. The term REALTOR is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS and subscribes to its strict Code of Ethics. Working for America's property owners, the National Association provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property.

3 NATIONAL ASSOCIATIOn OF REALTORS Profile of Home Buyers and Sellers National Association of realtors

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5 National Association of Realtors Contents Introduction... 4 Highlights...6 Chapter 1: Characteristics of Home Buyers...8 Chapter 2: Characteristics of Homes Purchased...22 Chapter 3: The Home Search Process...40 Chapter 4: Home Buying and Real Estate Professionals...55 Chapter 5: Financing the Home Purchase...66 Chapter 6: Home Sellers and Their Selling Experience Chapter 7: Home Selling and Real Estate Professionals...88 Chapter 8: For-Sale-by-Owner (FSBO) Sellers...96 Methodology List of Exhibits N O V E M B E R 2007

6 2007 Profile of Home Buyers and Sellers Introduction T he purchase or sale of a home is one of the most significant transactions most households undertake. From the moment a buyer begins looking for a home and throughout the process until the closing, there are a number of financial and life style considerations that must be assessed. For sellers, there is a different array of tasks and decisions, but the successful completion of each is necessary to assure that the home sale is accomplished in a timely and satisfactory manner. Most home buyers and sellers rely on real estate professionals to assist them with their transaction. Surveys of both buyers and sellers consistently reveal that consumers value the guidance and advice offered by real estate professionals. Consumers expect real estate professionals to display high levels of knowledge and integrity; more than eight in 10 consumers are very satisfied with their agent s performance in these areas. Consequently, a substantial majority of both buyers and sellers report that they would use the same real estate agent again or recommend that agent to others. 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 demographics, housing characteristics and the experience of consumers in the housing market. Buyers and sellers also share information on the role of real estate professionals in home sales transactions. This report provides real estate professionals with insights into the needs and expectations of their clients. What do consumers want when choosing a real estate professional? How do home buyers begin the process of searching for a home? Why do some sellers choose to forego the assistance of an agent? The answers to these questions, along with other findings in this report, will help real estate professionals better understand the housing market and also provide the information necessary to address the needs of America s real estate consumers. Paul C. Bishop, Ph.D Harika Anna Barlett Jessica Lautz

7 National Association of Realtors THE HOUSING ENVIRONMENT The environment in which consumers have been buying and selling homes has undergone a significant transition over the past two years. After reaching record-setting levels, home sales have fallen and prices have softened in a number of markets. While there were significant gains in homeownership during the first half of the decade, the turbulence in the mortgage and credit markets, along with an increase in foreclosures, contributed to the current cyclical downturn in the housing market. Over the near-term, housing market conditions will vary with high unemployment and slower growth regions experiencing a deeper retrenchment than markets benefiting from more pronounced stabilizing influences such as strong job growth and high household formations. Mortgage interest rates remain near generational lows, and short of some unexpected shock to the economy, are expected to remain favorable over the near-term. Although near-term considerations are important, housing is a longterm investment with both financial and non-financial rewards. The financial gains have been, and will continue to be, an influence on the desirability of owning a home. For those who have owned a home for several years, equity gains have been substantial and have contributed to growing household wealth. However significant the financial motivations for homeownership, buyers routinely point to other reasons - such as their desire to own a home to establish a household and lifestyle considerations such as a growing family or retirement - as driving factors in their home purchase decision. These influences are less tied to financial considerations of home ownership and more tied to the needs and expectations of households confronting each of these events. With an increase of approximately one million new households each year, supported by solid growth in legal immigration, the long-term demand for housing appears to be firmly anchored to favorable demographic trends.

8 2007 Profile of Home Buyers and Sellers Highlights Characteristics of Home Buyers n The typical home buyer is 39 years old, while the typical repeat buyer is 46 years old. n n n The 2006 median household income of buyers was $74,000. Among repeat buyers, the median income was $85,700. Nine percent of home buyers reported they were born outside the United States. Three quarters of home buyers between 18 and 24 purchased a home because of their desire to own a home of their own and establish a household. Characteristics of Homes Purchased n n n n The typical home purchased was 1,810 square feet in size. Sixty-seven percent of first-time buyers purchased a detached single-family home, compared with 79 percent of repeat buyers. The median distance recent buyers moved was 13 miles. Buyers typically plan to stay in their home for 10 years. The Home Search Process n Nearly one-third of recent buyers reported that their first step in the homebuying process was looking online for properties for sale. n n Eighty-four percent of home buyers used the Internet to search for homes. The typical home buyer searched for eight weeks and viewed 10 homes. n Real estate agents were viewed as a very useful information source by 70 percent of buyers searching for a home. Home Buying and Real Estate Professionals n Seventy-nine percent of buyers purchased their home through a real estate agent or broker n n n Forty-three percent of buyers found their agent through a referral from a friend or family member. The most important factor buyers consider when choosing an agent is their honesty and integrity. Sixty-eight percent of buyers would definitely use their real estate again or recommend the same agent to others.

9 National Association of Realtors Financing the Home Purchase n n n Ninety-three percent of home buyers financed their recent home purchase. Nearly three-quarters of first time buyers rely on savings for their downpayment. More than three-quarters of buyers felt their home purchase was at least as good an investment as stocks. Home Sellers and Their Selling Experience n n n n Eighty-five percent of sellers were assisted by a real estate agent when selling their home. Over half of recent home sellers reported that they undertook home improvement or remodeling projects within three months prior to putting their home on the market. More than half of home sellers traded up to a larger home when purchasing their next home. Recent sellers typically sold their homes for 97 percent of the listing price. Home Selling and Real Estate Professionals n For one-quarter of sellers, their most important expectation is that the real estate agent will help sell the home within a specific timeframe. n n n The most important factor when choosing a real estate professional, cited by 38 percent of recent sellers, is the reputation of the agent. Eighty-eight percent of sellers reported that their home was listed or advertised on the Internet. Among recent sellers, 81 percent reported that they used a real estate agent that provided a range of services and managed most aspects of the home sale. For-Sale-by-Owner (FSBO) Sellers n The share of home sellers who sold their home without the assistance of a real estate agent was 12 percent. n n n The chief reason that sellers choose to sell their home without the assistance of a real estate agent is that they do not want to pay a fee or commission. More than one-quarter of FSBO sellers took no action to market their home. For 18 percent of FSBO sellers, the most difficult task in selling their home was understanding and performing the necessary paperwork to complete the transaction.

10 2007 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers I chapter Characteristics of Home Buyers W ho is today s home buyer? What is the typical buyer s age, household income, household composition, race and ethnicity? How many are first-time buyers? Answering these questions helps the industry understand the market as a whole. Today s home buyers are younger and more diverse and have many different reasons for choosing to purchase a home. One in three buyers reported that the primary reason they purchased a home was a desire to own a home of their own or establish a household.

11 National Association of Realtors Exhibit 1-1 AGE OF HOME BUYERS The typical home buyer is 39 years old, with little variation in the median age among each of the four Census regions. Buyers in the Midwest tended to be younger (38 years), while buyers in the South tended to be older (40 years). The highest percent of buyers for all regions were in the 25-to-34-year-old range. AGE OF HOME BUYERS, BY region Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West years 5% 4% 7% 5% 5% years years years years years years or older Median age (years) Exhibit 1-2 HOUSEHOLD INCOME OF HOME BUYERS The 2006 median household income of buyers was $74,000, an increase of over $2,000 from The median income in the West ($78,000) was the highest compared to other regions, while the lowest median income was in the Midwest ($68,500). HOUSEHOLD INCOME OF HOME BUYERS, BY REGION, 2006 Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West Less than $25,000 4% 3% 5% 4% 3% $25,000 - $34, $35,000 - $44, $45,000 - $54, $55,000 - $64, $65,000 - $74, $75,000 - $84, $85,000 - $99, $100,000 - $124, $125,000 - $149, $150,000 - $174, $175,000 - $199, $200,000 or more Median income (2006) $74,000 $76,300 $68,500 $74,100 $78,000

12 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-3 ADULT COMPOSITION OF HOME BUYER HOUSEHOLDS Over the last decade, the share of married couples purchasing homes has decreased, while the share of single women purchasing homes has increased. Despite this upward trend, there was a slight decrease in the share of single women who purchased a home 20 percent, down from 22 percent in The share of single men and unmarried couples purchasing homes has remained unchanged since 2005 (9 percent and 7 percent, respectively). ADULT COMPOSITION OF HOME BUYER HOUSEHOLDS Married couple 64% 66% 68% 59% 62% 61% 61% 62% Single female Single male Unmarried couple Other NUMBER OF CHILDREN The majority of home buyers, 60 percent, do not have children under the age of 18 in their household. Seventeen percent of respondents reported having one child under the age of 18, and 15 percent reported having two children under the age of 18. Exhibit 1-4 NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOUSEHOLD (Percentage Distribution of Households) One 17% Two 15% None 60% Three or more 8%

13 National Association of Realtors 11 Exhibit 1-5 RACE/ETHNICITY OF HOME BUYERS Eighty-three percent of home buyers reported that they identified themselves as white. Seven percent of individuals identified themselves as black and 6 percent as Hispanic. In the West, one in 10 home buyers identified themselves as Asian, compared to 5 percent nationally. Ninety percent of individuals in the Midwest identified themselves as white. RACE/ETHNICITY OF HOME BUYERS, BY REGION (Percent of Respondents) Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West White/Caucasian 83% 87% 90% 79% 77% Black/African-American Hispanic/Latino Asian/Pacific Islander Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. Exhibit 1-6 RACE/ETHNICITY AND COMPOSITION OF HOUSEHOLD While nationally 83 percent of all home buyers identified themselves as white, this figure was lower (79 percent) for single female buyers. Twelve percent of single females reported they were black compared to 7 percent among all buyers and only 5 percent among married couples. Married couples and unmarried couples were slightly more likely to be white than other households. RACE/ETHNICITY OF HOME BUYERS, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other White/Caucasian 83% 84% 79% 83% 84% 70% Black/African-American Hispanic/Latino Asian/Pacific Islander Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. Exhibit 1-7 PRIMARY LANGUAGE SPOKEN Among all buyers, 5 percent reported that they primarily speak a language other than English. Home buyers in the West were most likely to speak a language other than English (8 percent). Buyers in the Midwest were most likely to speak English (97 percent) as their primary language. PRIMARY LANGUAGE SPOKEN IN HOME BUYER HOUSEHOLD, BY REGION Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West English 95% 94% 97% 95% 92% Other

14 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-8 NATIONAL ORIGIN OF HOME BUYERS Nine percent of home buyers reported they were born outside the U.S. The share of foreign-born buyers has decreased from 11 percent last year. There are some regional differences in the prevalence of foreign-born home buyers. There were more foreign-born buyers in the West, where 14 percent of buyers were born outside the U.S. Eleven percent of buyers in the Northeast were foreign-born. FIRST-TIME HOME BUYERS For the past decade, approximately 40 percent of buyers have been first-time home buyers. A drop was reported in the 2006 Profile to 36 percent. In 2007, the share of first-time buyers has once again increased to 39 percent. NATIONAL ORIGIN OF HOME BUYERS, BY REGION Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West Born in U.S. 91% 89% 95% 91% 86% Not born in U.S Exhibit 1-9 FIRST-TIME HOME BUYERS (Percent of all Home buyers) 45% 42% 42% 42% 42% 40% 40% 40% 40% 39% 36% 35% 30% 25% 20% Exhibit 1-10 FIRST-TIME HOME BUYERS, BY REGION FIRST-TIME HOME BUYERS, BY REGION (Percent of all Home Buyers) While 39 percent of all buyers are first-time buyers, there are some regional differences. The highest percentage of first-time buyers was in the Northeast (43 percent). The West and South had the smallest share of first-time buyers at 36 45% 40% 35% 39% 43% 42% 36% 36% percent in each region. 30% 25% 20% All Buyers Northeast Midwest South West

15 National Association of Realtors 13 Exhibit 1-11 FIRST-TIME AND REPEAT HOME BUYERS BY HOUSEHOLD TYPE A much larger share of first-time buyers are single individuals and unmarried couples compared with repeat buyers. Among all repeat buyers, 69 percent are married couples, while married couples account for 51 percent of first-time buyers. Singles make up a larger share of first-time buyers; one quarter are single females and one in 10 are single males. FIRST-TIME AND REPEAT HOME BUYERS BY HOUSEHOLD TYPE (Percentage Distribution of Households) Single male 11% Unmarried couple 11% FIRST-TIME HOME BUYERS Other 2% Married couple 51% Single female 25% REPEAT HOME BUYERS Single female 17% Single male 8% Unmarried couple 5% Other 2% Married couple 69%

16 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-12 AGE OF FIRST-TIME AND REPEAT BUYERS The typical first-time buyer is 31- years-old, 15 years younger than the typical repeat buyer. More than one in 10 first-time buyers are under the age of 25. The typical repeat buyer is 46 years old; half of repeat buyers are between 35 and 54 years old. Among all groups of buyers, unmarried couples tend to be the youngest at 32 years old and also the youngest among first-time buyers. AGE OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers years 5% 13% 1% years years years years years years or older 2 * 3 Median age (years) Married couple Single female Single male Unmarried couple Other * Less than one percent Exhibit 1-13 HOUSEHOLD INCOME OF FIRST-TIME AND REPEAT BUYERS The median 2006 income among all buyers was $74,000, with first-time buyers reporting a median of $58,600 and repeat buyers a median of $85,700. First-time single female buyers had the lowest income compared to other groups at $44,500. Married couple buyers generally had the highest income, a pattern also evident among both first-time and repeat buyers. HOUSEHOLD INCOME OF FIRST-TIME AND REPEAT BUYERS, 2006 All Buyers First-time Buyers Repeat Buyers Less than $25,000 4% 5% 3% $25,000 - $34, $35,000 - $44, $45,000 - $54, $55,000 - $64, $65,000 - $74, $75,000 - $84, $85,000 - $99, $100,000 - $124, $125,000 - $149, $150,000 - $174, $175,000 - $199, $200,000 or more Median income (2006) $74,000 $58,600 $85,700 Married couple $85,400 $68,000 $96,200 Single female $49,000 $44,500 $54,400 Single male $61,000 $51,900 $73,800 Unmarried couple $73,400 $67,700 $92,800 Other $48,300 $46,400 $50,000

17 National Association of Realtors 15 Exhibit 1-14 RACE/ETHNICITY OF FIRST- TIME AND REPEAT BUYERS Overall, first-time buyers tend to be more racially diverse than repeat buyers. While 87 percent of repeat buyers considered themselves white, only 76 percent of first-time buyers reported they were white. Among first-time buyers the largest minority representation was among African-American at 10 percent and Hispanics at 8 percent. RACE/ETHNICITY OF FIRST-TIME AND REPEAT BUYERS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers White/Caucasian 83% 76% 87% Black/African-American Hispanic/Latino Asian/Pacific Islander Other Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. Exhibit 1-15 PRIMARY LANGUAGE SPOKEN IN FIRST-TIME AND REPEAT BUYER HOUSEHOLD First-time buyers are more racially and ethnically diverse and are also more likely to speak a language other than English as their primary language in their household. Seven percent of recent firsttime buyers spoke a language other than English as their primary language, while only 4 percent of repeat buyers did so. PRIMARY LANGUAGE SPOKEN IN FIRST-TIME AND REPEAT BUYER HOUSEHOLD All Buyers First-time Buyers Repeat Buyers English 95% 93% 96% Other Exhibit 1-16 NATIONAL ORIGIN OF FIRST- TIME AND REPEAT BUYERS Overall, 9 percent of buyers report they were born outside the United States; among first-time buyers the share was 12 percent. NATIONAL ORIGIN OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Born in U.S. 91% 88% 92% Not born in U.S

18 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-17 PRIOR LIVING ARRANGEMENT OF FIRST-TIME AND REPEAT BUYERS Three-quarters of first-time buyers rented an apartment or house before making their home purchase. In comparison, three-quarters of repeat buyers owned their previous residence. More surprising is that nearly 20 percent of repeat buyers rented an apartment or house before buying their current home, reflecting situations in which some households move between owning and renting depending on financial and lifestyle considerations. PRIOR LIVING ARRANGEMENT OF FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Owned previous residence 47% 4% 74% Rented an apartment or house Lived with parents, relatives or friends Rented the home buyer ultimately purchased Not applicable or no change in living arrangement Note: After selling their previous home, buyers may have rented a home or apartment before purchasing their next home. A first-time buyer could have acquired ownership of their previous home (as an inheritance or gift, for example) without having been the buyer of the home. Thus, a first-time buyer could have owned a home prior to their first home purchase. PRIOR LIVING ARRANGEMENT HOUSEHOLD COMPOSITION The majority of married home buyers (55 percent) owned their previous residence. Single males and single females were most likely to report renting an apartment or house prior to their recent home purchase. Over one-third of both single females and single males owned their previous residence prior to their recent home purchase. The majority of unmarried couples (57 percent) rented an apartment or house prior to their home purchase. Exhibit 1-18 PRIOR LIVING ARRANGEMENT, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Owned previous residence 47% 55% 35% 35% 26% 42% Rented an apartment or house Lived with parents, relatives or friends Rented the home buyer ultimately purchased Not applicable or no change in living arrangement Note: After selling their previous home, buyers may have rented a home or apartment before purchasing their next home. A first-time buyer could have acquired ownership of their previous home (as an inheritance or gift, for example) without having been the buyer of the home. Thus, a first-time buyer could have owned a home prior to their first home purchase.

19 National Association of Realtors 17 Exhibit 1-19 PRIMARY REASON FOR PURCHASING A HOME One in three buyers reported that the primary reason they purchased a home was a desire to own a home of their own or establish a household. An additional 12 percent of all home buyers indicated that their primary reason for buying was a job-related relocation or move, with another 12 percent wanting a larger home. Among first-time buyers 70 percent reported they purchased a home so they could own their own home or establish a household, compared with 9 percent of repeat buyers. Repeat buyers were most likely to report that they purchased their home because of a job-related relocation or their desire for a larger home. PRIMARY REASON FOR PURCHASING A HOME, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Desire to own a home of my own/ 33% 70% 9% establish household Job-related relocation or move Desire for larger home Change in family situation Desire for a home in a better area Desire to be closer to family/friends/ relatives Desire for smaller home 4 * 6 Desire to be closer to job/school/ transit Retirement Desire for a newly built or custom-built home Financial security Desire for vacation home/investment property Tax benefits Purchased home for family member 1 * 1 or relative Other * Less than one percent

20 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-20 REASON FOR PURCHASING A HOME AND BUYER S AGE Reasons for a home purchase vary quite substantially among different age groups. Three-quarters of younger home buyers, those between 18 and 24, reported purchasing a home because of their desire to own a home of their own or establish a household. This remains the most frequently cited primary reason for purchasing a home for buyers 64 or younger. Home buyers 65 years and older reported that their primary reason for purchasing a home was to downsize to a smaller home (19 percent), purchase a home due to retirement (18 percent), or because they wanted to be closer to family, friends, and relatives (18 percent). PRIMARY REASON FOR PURCHASING A HOME, BY AGE AGE All Buyers or older Desire to own a home of my 33% 74% 42% 17% 5% own/establish household Job-related relocation or move Desire for larger home Change in family situation Desire for a home in a better area Desire to be closer to family/friends/relatives Desire for smaller home 4 * Desire to be closer to job/ school/transit Retirement 3 N/A * 6 18 Desire for a newly built or 2 * custom-built home Financial security Desire for vacation home/ 1 * investment property Tax benefits Purchased home for family 1 * * 2 1 member or relative Other * Less than one percent

21 National Association of Realtors 19 REASON FOR PURCHASING AND COMPOSITION OF HOUSEHOLD The primary reason most unmarried couples purchased a home stems from a desire to own a home of their own or establish a household (53 percent). A significant share of married couples purchased a home to own a home of their own or to establish a household, but many also reported purchasing their home due to a job-related relocation or the desire for a larger home. In addition to having their own home or establishing a household, 12 percent of singles reported that a change in their family situation was the primary factor in their home purchase. Exhibit 1-21 PRIMARY REASON FOR PURCHASING A HOME, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Desire to own a home of my own/establish household 33% 25% 43% 44% 53% 37% Job-related relocation or move Desire for larger home Change in family situation Desire for a home in a better area Desire to be closer to family/friends/relatives Desire for smaller home Desire to be closer to job/school/transit Retirement Desire for a newly built or custom-built home Financial security Desire for vacation home/investment property Tax benefits * Purchased home for family member or relative Other * Less than one percent

22 Profile of Home Buyers and Sellers CHAPTER 1: Characteristics of Home Buyers Exhibit 1-22 NUMBER OF HOMES CURRENTLY OWNED A majority of home buyers (85 percent) own one home, the home they recently purchased. One in 10 buyers reported they own two homes. The number of homes owned is strongly correlated with the age of the buyer. Nearly all buyers (99 percent) in the 18-to-24 age group own one home, however, 21 percent of buyers over 65 own at least two homes. NUMBER OF HOMES CURRENTLY OWNED, BY AGE Age All Buyers or older One 85% 99% 90% 77% 79% Two Three or more 3 * * Less than one percent Exhibit 1-23 OTHER HOMES OWNED Eighty-one percent of recent buyers own no home other than the home they recently purchased; 5 percent noted that they are in the process of selling their previous home. Eight percent of home buyers own at least one investment property, rising to one in 10 buyers in the 45-to-64 age group. Seven percent of recent buyers who are 65 or older reported that they own one or more vacation homes. OTHER HOMES OWNED, BY AGE All Buyers or older None 81% 93% 86% 72% 72% One or more vacation 3 * homes One or more investment properties Primary residence Previous homes that the buyer is trying to sell Other 2 * * Less than one percent Age

23 National Association of Realtors 21 Exhibit 1-24 LIKELIHOOD OF PURCHASING ANOTHER HOME Eighteen percent of home buyers reported that they were inclined to purchase another home within two years. The likelihood of purchasing another home is correlated with the age of the home buyer. Twenty-three percent of 18-to-24-year-old buyers indicated that they plan to buy another home within two years, compared with 10 percent of buyers over 65. LIKELIHOOD OF PURCHASING ANOTHER HOME WITHIN TWO YEARS, BY AGE Age All Buyers or older Very likely 7% 8% 8% 7% 4% Somewhat likely Somewhat unlikely Very unlikely Don t know Exhibit 1-25 USE OF SOCIAL NETWORKING WEB SITES Social networking Web sites, such as, MySpace, Facebook, LinkedIn, and Friendster, are becoming an increasingly common way to connect with friends, relatives, and colleagues. One in 10 home buyers reported using social networking Web sites every day or nearly every day. An additional 17 percent of home buyers use them at least a few times a month to a few times a week. Buyers in the 18-to-24 age group are most likely to use social networking Web sites; more than 50 percent use social networking sites at least a few times a week. Fewer than one in five buyers 45 or older use social networking sites with any frequency. USE OF SOCIAL NETWORKING WEB SITES, BY AGE Age All Buyers or older Every day or nearly 10% 28% 12% 4% 2% every day A few times a week A few times a month A few times a year Never use social networking Web sites

24 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased 2 chapter P Characteristics of Homes Purchased references of home buyers are determined by a complex interaction of factors such as age, income, previous homeownership experience and expectations about future housing needs. These preferences are revealed in a number of ways, including the type of home that buyers choose to purchase, its location, size and price. While every buyer is unique, there are general trends in the kinds of homes they gravitate toward and the compromises they are willing to make. The quality of the neighborhood characterized as the level of upkeep and appeal of the neighborhood and surrounding areas continues to be ranked as the most important factor by 65 percent of recent home buyers in this year s survey.

25 National Association of Realtors 23 NEW AND PREVIOUSLY OWNED HOMES New home construction provides additional supply to the residential real estate market in places where the stock of previously owned homes falls short of meeting demand. As demographic patterns shift and new households are formed, as households relocate, and as home buyers look for new features and larger homes, new homes are built to accommodate these changing requirements. Nationally, the share of new homes purchased has been steady at slightly over 20 percent for a number of years. In 2007, 23 percent of recent home buyers reported purchasing a new home, while the remaining 77 percent of buyers purchased an existing home. Exhibit 2-1 NEW AND PREVIOUSLY OWNED HOMES PURCHASED, % 80% 82% 78% 79% 79% 77% 78% 77% 72% 60% 40% 28% 20% 18% 22% 21% 21% 23% 22% 23% 0% New Previously Owned

26 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased Exhibit 2-2 REGIONAL PATTERNS As in previous years, recent home buyers in the South purchased new homes more frequently than those in other regions of the country. Nearly three out of every 10 homes recently purchased in the South were newly built, a slight increase from last year. In contrast, about one-tenth of recent home purchases in the Northeast and 16 percent in the Midwest were of newly built homes. NEW AND PREVIOUSLY OWNED HOMES PURCHASED, BY REGION Buyers who Purchased a Home in THE: All Buyers Northeast Midwest South West New 23% 11% 16% 29% 27% Previously Owned TYPES OF HOMES PURCHASED The detached single-family home dominates the market. Overall, about three-quarters of recent home sales were detached single-family homes. Townhouse/row houses and apartment/ condominiums in buildings with five or more units each accounted for 9 percent of home sales; and duplex/apartment/ condos in two-to-four unit buildings comprised 2 percent of the sales. Types of homes purchased varied by location. Buyers in an urban area or central city, and in a resort or recreation area were much less likely to purchase a detached single-family home, and much more likely to purchase an apartment/ condo in buildings with five or more units. Exhibit 2-3 TYPE OF HOME PURCHASED, BY LOCATION Buyers who Purchased a Home in A: All Buyers Suburb/ Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area Detached single-family home 74% 79% 78% 52% 78% 57% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other

27 National Association of Realtors 25 NEW AND PREVIOUSLY OWNED HOMES, AND HOMES OF FIRST- TIME AND REPEAT BUYERS First-time and repeat buyers differ in their preferences and purchase patterns. For example, 67 percent of first-time buyers purchased a detached singlefamily home, compared with 79 percent of repeat buyers. First-time buyers were nearly twice as likely as repeat buyers to purchase a townhouse, row house or condo in a building with five or more units, mainly because they tend to be less expensive than detached singlefamily homes. The percentage of detached singlefamily home sales was also slightly higher for previously owned homes, compared to the newly-built ones. Conversely, the share of townhouse and row houses was somewhat higher among new-home sales. Exhibit 2-4 TYPE OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Detached single-family home 74% 67% 79% 73% 75% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other TYPE OF HOME PURCHASED BY TYPE OF HOUSEHOLD The type of home purchased also varies by the type of household. Married couples were much more likely to purchase a detached singlefamily home, while singles were more likely to purchase an apartment or condo in a building with five or more units. Compared with other types of households, single females were also the most likely to purchase a townhouse or row house. Exhibit 2-5 TYPE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Detached single-family home 74% 83% 56% 63% 70% 68% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other

28 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased Exhibit 2-6 LOCATION OF HOMES PURCHASED The suburbs are the most popular location for today s home buyers. Fifty-six percent of recent home sales occurred in suburban areas. This percentage varies distinctly across regions, from 43 percent in the Northeast to 63 percent in the South, mainly because of the urbansuburban composition of the regions. Buyers in the Northeast more often purchased a home in a small town or rural area than buyers elsewhere. Buyers in the West were more likely to purchase a home in an urban area or central city. LOCATION OF HOME PURCHASED, BY REGION Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West Suburb/Subdivision 56% 43% 59% 63% 51% Small town Urban/Central city Rural area Resort/Recreation area Exhibit 2-7 BUYER LOCATION PREFERENCES First-time and repeat buyers have somewhat different location preferences as do buyers of new and previously owned homes. While both first-time and repeat buyers most frequently purchased homes in the suburbs, repeat buyers were somewhat more likely to buy in the suburbs. On the other hand, first-time buyers were more likely to purchase a home in an urban area or central city, which is consistent with a finding described earlier that first-time buyers were more likely to purchase a townhouse or condo, the types that are more often located in urban areas. Sixtytwo percent of new-home sales were in the suburbs, compared to 55 percent of previously owned home sales. LOCATION OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES All Buyers First-time Buyers Repeat Buyers New Homes Buyers of: Previously Owned Homes Suburb/Subdivision 56% 53% 59% 62% 55% Small town Urban/Central city Rural area Resort/Recreation area

29 National Association of Realtors 27 CHANGES IN LOCATION Among recent home buyers who also sold a home, most purchase a home in the same type of location. Fortytwo percent of this year s respondents both sold and purchased a home in the suburbs, a slight increase from last year. Over four in 10 buyers purchased a home in a different type of location compared with the location of the home they sold. Exhibit 2-8 LOCATION OF HOME PURCHASED VERSUS LOCATION OF HOME SOLD (Percentage Distribution Among those that Sold a Home) * Less than one percent LOCATION OF HOME PURCHASED LOCATION OF HOME SOLD Suburb/ Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area Suburb/Subdivision 42% 5% 3% 4% 1% Small town * Urban area/central city * Rural area * Resort/Recreation area 1 * * * * Exhibit 2-9 DISTANCE FROM PREVIOUS HOME Buyers typically don t move very far from their previous residence. The median distance recent buyers moved when they purchased their latest home was 13 miles. Buyers in the Midwest and the Northeast tended to move the shortest distance (a median of 10 and 11 miles, respectively), while buyers in the South moved the greatest distance (a median of 15 miles). DISTANCE BETWEEN HOME PURCHASED AND PREVIOUS RESIDENCE (Median Miles) U.S. Northeast Midwest South West

30 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased NEIGHBORHOOD CHOICE Neighborhoods really do matter to home shoppers. The quality of the neighborhood characterized as the level of upkeep and appeal of the neighborhood and surrounding areas continues to be ranked as the most important factor by 65 percent of recent home buyers in this year s survey. Convenience to the home buyer s job was ranked as the second most important feature, followed by overall affordability of homes in the area and convenience to friends and family. The reasons home buyers chose a specific neighborhood varies markedly by location. Those who purchased a home in an urban area or a central city ranked convenience to their job, to entertainment and leisure activities, to shopping, to public transportation, and to airports higher than the buyers who purchased in other locations. For those who purchased a home in a rural area, availability of larger lots or acreage was the second most cited factor. For suburban buyers, the quality of the neighborhood, quality of the school district, and convenience to schools were frequently viewed as important factors. Those who purchased a home in a resort/recreation area ranked having a home in a planned community, convenience to park and recreational facilities and to entertainment and leisure activities much higher than other buyers. Exhibit 2-10 FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY LOCATION (Percent of Respondents) Buyers who Purchased a Home in a: All Buyers Suburb/ Subdivision Small town Urban/ Central city Resort/ Recreation area Rural Quality of the neighborhood 65% 71% 61% 61% 48% 51% Convenient to job Overall affordability of homes Convenient to friends/family Quality of the school district Convenient to shopping Design of neighborhood Convenient to schools Convenient to entertainment/leisure activities Convenient to parks/recreational facilities Availability of larger lots or acreage Convenient to health facilities Home in a planned community Convenient to public transportation Convenient to airport Other

31 National Association of Realtors 29 NEIGHBORHOOD CHOICE BY HOUSEHOLD TYPE The reasons buyers prefer a specific neighborhood also varies by type of household. Among married couples, quality of the school district, convenience to schools, and availability of larger lots or acreage were more important factors compared to the other groups of buyers. Among single female purchasers, those three factors ranked much lower than the average, while convenience to friends and family and overall affordability of homes ranked higher than the average. Single males rated convenience to jobs higher than any other household type. They rated quality of the school district, convenience to schools, and quality of the neighborhood lower than the others. Among unmarried couples, overall affordability of homes ranked high, while quality of the school district and convenience to schools ranked lower. Exhibit 2-11 FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Quality of the neighborhood 65% 68% 63% 56% 66% 64% Convenient to job Overall affordability of homes Convenient to friends/family Quality of the school district Convenient to shopping Design of neighborhood Convenient to schools Convenient to entertainment/leisure activities Convenient to parks/recreational facilities Availability of larger lots or acreage Convenient to health facilities Home in a planned community Convenient to public transportation Convenient to airport Other

32 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased Exhibit 2-12 HOME PRICES The median price paid by home buyers from mid-2006 to mid-2007 was $215,000, basically the same as the median price paid among survey respondents in last year s survey. The median price, which includes all types of homes, both new and existing, varied widely by region. In the Northeast, it was $220,000, a decline from last year. In the Midwest and the West the median price paid remained unchanged from last year, at $175,000 and $319,000, respectively. In the South, the median price of a home purchased by survey respondents increased by 7 percent from last year to $196,000. PRICE OF HOME PURCHASED, BY REGION (Percentage Distribution Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West Less than $75,000 4% 6% 7% 4% 1% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $215,000 $220,000 $175,000 $196,000 $319,000 Exhibit 2-13 PRICES OF NEW AND PREVIOUSLY OWNED HOMES The median price recent buyers paid for a newly built home from mid-2006 to mid-2007 was $260,000, 4 percent higher than the median price of a new home reported in the 2006 survey. The median price of an existing home was reported as $199,000, the same as one year earlier. PRICE OF HOME PURCHASED, NEW AND PREVIOUSLY OWNED Buyers OF: All Buyers New Homes Previously Owned Homes Less than $75,000 4% 1% 5% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $215,000 $260,000 $199,000

33 National Association of Realtors 31 Exhibit 2-14 HOME PRICE OF FIRST-TIME BUYERS First-time buyers generally purchase less expensive homes than repeat buyers. Over the most recent survey period, the median price paid by first-time buyers was $165,000, versus a median of $250,000 among repeat buyers. The median prices paid by both groups remained steady since last year. Within each group, there were differences by the type of household. On average, married couples purchased more expensive homes. Homes purchased by single males were more expensive than the ones purchased by single females, but less expensive than those purchased by unmarried couples. PRICE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Less than $75,000 4% 7% 3% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $215,000 $165,000 $250,000 Married couple $246,000 $184,000 $275,000 Single female $164,000 $138,000 $196,000 Single male $175,000 $164,000 $200,000 Unmarried couple $190,000 $166,000 $247,500 Other $191,000 $183,000 $200,000

34 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased Exhibit 2-15 PURCHASE PRICE AND ASKING PRICE The purchase price and asking price of a home usually differ. In softer markets, sellers may have to lower their asking price, while in strong markets several competing buyers bidding for the same home may lead to a final purchase price higher than the asking price. Overall, 26 percent of homes were purchased at the asking price (6 percentage points lower than last year), while 10 percent sold for a price higher than the asking price (3 percentage points lower than last year). In the Northeast, 21 percent of homes were sold for the asking price, a 7 percentage point decrease from last year. In the West, while nearly one-in-five homes (19 percent) sold for more than the seller s asking price last year, this percentage dropped to nearly one-in-10 (11 percent) in the current survey period. PURCHASE PRICE COMPARED WITH ASKING PRICE, BY REGION buyers who purchased a Home in the: Percent of asking price: All Buyers Northeast Midwest South West Less than 90% 12% 15% 12% 11% 9% 90% to 94% % to 99% % % to 110% More than 110% Median (purchase price as 98% 96% 97% 98% 98% a percent of asking price) Overall, 26 percent of homes were purchased at the asking price.

35 National Association of Realtors 33 Exhibit 2-16 HOME SIZE The typical home purchased was 1,810 square feet in size. First-time buyers typically purchased smaller homes (1,510 square feet), mainly because they are more likely to purchase condos or townhouses. Repeat buyers purchased somewhat larger homes, with a median size of 2,015 square feet. While the typical home purchased by the first-time buyers was slightly smaller compared to last year, the typical home purchased by repeat buyers was slightly larger. This difference was partly due to the fact that repeat buyers tend to purchase new homes more frequently than the first-time buyers, and the typical newly built home purchased (2,125 square feet in size) was slightly larger than that of last year. SIZE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES All Buyers First-time Buyers Repeat Buyers New Homes Buyers of: Previously Owned Homes 1,000 sq ft or less 8% 13% 4% 3% 9% 1,001 to 1,500 sq ft ,501 to 2,000 sq ft ,001 to 2,500 sq ft ,501 to 3,000 sq ft ,001 to 3,500 sq ft ,501 sq ft or more Median (sq ft) 1,810 1,510 2,015 2,125 1,735 Exhibit 2-17 HOME SIZE BY HOUSEHOLD TYPE Married couples typically purchase larger homes. The median size of a home purchased by married couples was 2,000 square feet. Single females purchased smaller homes (a median of 1,470) than single males (a median of 1,510). While 14 percent of single females and 17 percent of single males purchased homes smaller than 1,000 square feet, only 3 percent of married couples and 9 percent of unmarried couples purchased homes at that size. SIZE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other 1,000 sq ft or less 8% 3% 14% 17% 9% 13% 1,001 to 1,500 sq ft ,501 to 2,000 sq ft ,001 to 2,500 sq ft ,501 to 3,000 sq ft ,001 to 3,500 sq ft ,501 sq ft or more Median (sq ft) 1,810 2,000 1,470 1,510 1,650 1,550

36 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased SIZE AND COST The cost per square foot of a home varies both by type of home and by region. The median price per square foot was $116 for all homes purchased, but this ranged from $103 in the South and Midwest to $178 in the West. Some of this variation is due to differences in the composition of housing types in each region. Overall, condos in buildings with at least five units were the most costly while detached single-family homes were the least costly. Detached singlefamily homes in the South tended to be larger than similar homes elsewhere, while being the least costly. The largest variation by region in cost per square foot was among condos in buildings with at least five units. The typical apartment/ condo in buildings with at least five units in the West was more than twice the price per square foot than the same type unit in the Midwest, even though smaller in size. Exhibit 2-18 HOME SIZE AND PRICE PER SQUARE FOOT, BY REGION (Median) Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West All homes purchased Square feet 1,810 1,730 1,770 1,890 1,750 Price per square foot $116 $133 $103 $103 $178 Detached single-family home Square feet 1,940 1,850 1,860 2,020 1,930 Price per square foot $110 $125 $102 $98 $170 Townhouse or row house Square feet 1,630 1,550 1,690 1,670 1,530 Price per square foot $138 $130 $114 $134 $209 Duplex/apartment/condo in 2-4 unit building Square feet 1,550 1,650 1,640 1,470 1,310 Price per square foot $112 $130 $106 $112 $141 Apartment/condo in building with 5 or more units Square feet 1,110 1,000 1,200 1,140 1,070 Price per square foot $199 $221 $123 $190 $272

37 National Association of Realtors 35 MAKING COMPROMISES Buyers consider many factors and frequently make trade-offs when deciding which home to purchase. The most frequent compromises buyers reported was on the size and the price or planned expenditures of the home. Nearly one-in-five buyers nationally reported compromising on the size of their home, compared with a quarter of urban buyers, who were the most likely to trade-off on home size. Again, nearly one-in-five buyers cited the price of the home or planned expenditures as the next most likely compromise they made, mainly in urban and suburban areas. Urban buyers were less likely than buyers in other areas to make compromises on distance from their job, while making the biggest compromise on the quality of the neighborhood. Overall, 35 percent of buyers reported that they made no compromises when purchasing a home. Exhibit 2-19 CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, BY LOCATION (Percent of Respondents) Buyers who Purchased a Home in a: All Buyers Suburb/ Subdivision Small town Urban/ Central city Rural Resort/ Recreation area Size of home 18% 16% 17% 25% 17% 15% Planned expenditures/price of home Lot size Condition of home Distance from job Style of home Distance from friends or family Quality of the neighborhood Quality of the schools Distance from school * Other compromises not listed None - Made no compromises * Less than one percent

38 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased COMPROMISES BY FIRST-TIME AND REPEAT BUYERS First-time buyers are somewhat more likely to make compromises when purchasing a home than repeat buyers, due to their financial resources, preferences and demographic characteristics. First-time buyers compromised most often on the size of the home. One-fifth of first-time buyers, compromised on size, compared with 17 percent of repeat buyers. Nearly equal percentages of first-time and repeat buyers compromised on the home price. First-time buyers were also somewhat more willing than repeat buyers to compromise on the distance of the home from their job. Thirty-one percent of firsttime buyers reported that they made no compromises compared with 37 percent of repeat buyers. Buyers of new homes had to adjust their expectations most often on the lot size. Twenty-one percent of new-home buyers listed this as a compromise they made, compared with only 12 percent of previously owned home buyers. Recent new-home buyers were also more likely than those who purchased previously owned homes to compromise on distance from job and from friends and family, and were less likely to compromise on the size, price, or condition of the home. Exhibit 2-20 CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percentage of Respondents) Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Size of home 18% 20% 17% 15% 19% Planned expenditures/price of home Lot size Condition of home Distance from job Style of home Distance from friends or family Quality of the neighborhood Quality of the schools Distance from school Other compromises not listed None - Made no compromises * Less than one percent

39 National Association of Realtors 37 Exhibit 2-22 EXPECTED LENGTH OF TENURE Typical buyers today plan to stay in their home for 10 years. First-time buyers reported that they plan to own their home for a shorter period of time than repeat buyers, typically for seven years. The median expected tenure among buyers of new and previously owned homes was the same at 10 years. EXPECTED LENGTH OF TENURE IN HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes 1 year or less 1% 1% 1% 1% 1% 2 to 3 years to 5 years to 7 years to 10 years to 15 years or more years Don t Know Median (years) Exhibit 2-23 EXPECTED TENURE AND AGE Younger home buyers, whose job or family situation may be less certain, generally plan to stay in the home they purchase a shorter period of time than older buyers. The typical buyer who is 24 years old or younger expects to remain in their home for five years, while buyers 25-to-64 years old expect to stay in their home for a median of 10 years, and those 65 years or older for a median of 15 years. Younger buyers were also more certain than their older counterparts on how long they expect to own the homes they purchased. EXPECTED LENGTH OF TENURE IN HOME PURCHASED, BY AGE Age OF HOMEBUYERS All Buyers or older 1 year or less 1% 1% 1% 1% * 2 to 3 years to 5 years to 7 years * 8 to 10 years to 15 years or more years Don t Know Median * Less than one percent

40 Profile of Home Buyers and Sellers Chapter 2: Characteristics of Homes Purchased Exhibit 2-24 PRIMARY RESIDENCES AND SECOND HOMES A majority of buyers intend to use their home as their primary residence. Among recent buyers who purchased their home as a primary residence, the median price paid was $215,000. Among those who purchased a non-primary home or second-home, the median price paid was $211,000. PURCHASE PRICE, PRIMARY RESIDENCE AND SECOND HOME Buyers who Purchased a: Non-primary All Buyers Primary Residence Residence/ Second Home Less than $75,000 4% 4% 9% $75,000 to $99, $100,000 to $124, $125,000 to $149, $150,000 to $174, $175,000 to $199, $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $499, $500,000 or more Median price $215,000 $215,000 $211,000 Exhibit 2-25 TYPES OF PRIMARY RESIDENCES AND SECOND HOMES Some of the price difference between homes purchased as a primary residence and those purchased as a second-home is reflected in to the type of home. While three-quarters of homes purchased as primary residences were detached single-family homes, less than half of second homes fit this description. Instead, the type of home purchased as a second-home was much more likely to be a condo or a townhouse. TYPE OF HOME, PRIMARY RESIDENCE AND SECOND HOME Buyers who Purchased a: Primary All Buyers Residence Detached single-family home 74% 75% 49% Townhouse/row house Apartment/condo in building with 5 or more units Non-primary Residence/ Second Home Duplex/apartment/condo in to 4 unit building Other

41 National Association of Realtors 39 Exhibit 2-26 LOCATION OF PRIMARY RESIDENCES AND SECOND- HOMES Most primary residences are located in the suburbs 57 percent according to this survey. While second-homes were most often reported to be located in the suburbs, as well, the percentage of second-homes in the suburbs was only 40 percent. More often, second homes were located in a resort/recreation area (12 percent). Eighteen percent of second-homes were in small towns, and another 18 percent were in urban areas. LOCATION OF HOME, PRIMARY RESIDENCE AND SECOND HOME Buyers who Purchased a: All Buyers Primary Residence Non-primary Residence/ Second Home Suburb/Subdivision 56% 57% 40% Small town Urban/Central city Rural area Resort/Recreation area

42 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process 3 chapter A The Home Search Process variety of information sources are available to home buyers when searching for a home. Real estate agents and the Internet are the two most frequently used options. They also are among the most useful in the home search process. The share of those who first learned through the Internet about the home they purchased has been increasing. However, buyers are more likely to first learn about the home they purchase through a real estate agent. Nearly one-third of recent buyers reported that their first step in the home-buying process was looking online for properties for sale.

43 National Association of Realtors 41 Exhibit 3-1 THE FIRST STEP OF THE HOME BUYING PROCESS Home buyers have access to many information sources when they start the process of searching for and purchasing a home. Nearly one-third of recent buyers reported that their first step in the homebuying process was looking online for properties for sale. Repeat buyers more often (36 percent) started with this step than first-time buyers (26 percent), even though looking online for properties was the most frequently mentioned activity among both groups. Another popular first step, cited by one-fifth of all buyers, was contacting a real estate agent. Repeat buyers were more likely to take this step than first-time buyers (23 percent versus 16 percent). Sixteen percent of first-time buyers started by talking to their friends or relatives about the home buying process, and 15 percent looked online for information about the home buying process. FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, FIRST-TIME AND REPEAT BUYERS * Less than one percent All Buyers First-time Buyers Repeat Buyers Looked online for properties for sale 32% 26% 36% Contacted a real estate agent Looked online for information about the home buying process Talked with a friend or relative about home buying process Contacted a bank or mortgage lender Visited open houses Looked in newspapers, magazines, or home buying guides Contacted a home seller directly Attended a home buying seminar 1 3 * Read books or guides about the home 1 3 * buying process Drove-by homes/neighborhoods 1 * 1 Contacted builder/looked at builder 1 * 1 models Other 2 1 2

44 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process Exhibit 3-2 FIRST STEP TAKEN AND BUYER S AGE Younger buyers were more likely to begin the buying process by using online information resources or talking to their friends and family, while older buyers were more likely to start by contacting a real estate agent, visiting open houses, or looking in newspapers, magazines, or home buying guides. FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, BY AGE Age OF HOMEBUYER: All Buyers or older Looked online for 32% 30% 36% 29% 14% properties for sale Contacted a real estate agent Looked online for information about the home buying process Talked with a friend or relative about home buying process Contacted a bank or mortgage lender Visited open houses Looked in newspapers, magazines, or home buying guides Contacted a home seller directly Attended a home buying * seminar Read books or guides * about the home buying process Drove-by homes/ 1 * neighborhoods Contacted builder/looked 1 * * 1 2 at builder models Other * Less than one percent

45 National Association of Realtors 43 Exhibit 3-3 INFORMATION SOURCE Choosing from a variety of information sources available to home buyers in their home search, 84 percent used a real estate agent, and 84 percent used the Internet. There was not much difference between first-time and repeat buyers use of an agent. However, a higher percentage of first-time buyers (87 percent) used the Internet compared with repeat buyers (82 percent). Yard signs were the next most frequently cited source of information, which was used more often by repeat buyers (62 percent) than first-time buyers (55 percent). Buyers of previously owned homes were more likely to use these three information sources than buyers of newly built homes, who also received a significant amount of information directly from builders. Half of home buyers used print newspaper advertisements, and slightly less than half used open houses to gather more information when searching for a home. INFORMATION SOURCES USED IN HOME SEARCH, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES (Percent of Respondents) Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Real estate agent 84% 84% 84% 72% 87% Internet Yard sign Print newspaper advertisement Open house Home book or magazine Home builder Television Billboard Relocation company Exhibit 3-4 INFORMATION SOURCE USED AND BUYER S AGE There was little difference among buyers of different ages in the use of real estate agents as a source of information. However, nine of 10 home buyers in the 25 to 44-year-old age group used the Internet to search for a home, the highest share among buyers of all ages. Buyers 65 or older relied on yard signs, open houses, and home books or magazines to a lesser extent than their younger counterparts, but were more likely to use a home builder in their search for a home. INFORMATION SOURCES USED IN HOME SEARCH, BY AGE (Percent of Respondents) Age OF HOMEBUYER: All Buyers or older Real estate agent 84% 84% 84% 84% 83% Internet Yard sign Print newspaper advertisement Open house Home book or magazine Home builder Television Billboard Relocation company

46 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process FREQUENCY OF USE OF VARIOUS SOURCES While at least half of home buyers used real estate agents, the Internet, yard signs, and print newspaper advertisements as sources of information, the frequency of use varied. Overall, 66 percent of home buyers noted that they used the Internet frequently, while an additional 18 percent reported that they used it occasionally. Similarly, 64 percent of buyers reported using real estate agents frequently, and another 20 percent occasionally. While six in 10 buyers used yard signs in their home search, a much smaller share used them frequently when compared with either the Internet or real estate agents. Exhibit 3-5 FREQUENCY OF USE OF DIFFERENT INFORMATION SOURCES Internet Real estate agent 66% 18% 16% 64% 20% 16% Yard sign 25% 34% 41% Print newspaper advertisement 17% 34% 50% Open house 16% 32% 52% Home book or magazine 10% 21% 69% Home builder 10% 14% 76% Relocation company 2%3% 95% Billboard 2% 6% 93% Television 2% 7% 91% Frequently Occasionally Rarely or not at all

47 National Association of Realtors 45 USEFULNESS OF INFORMATION SOURCES Of the many resources available to home buyers when searching for a home, some are viewed as more useful than others. Seventy-eight percent of buyers rated the Internet as very useful, with an additional 21 percent rating it somewhat useful. Real estate agents were viewed as a very useful information source by 70 percent of buyers, and as a somewhat useful source by an additional 18 percent. No other information sources were considered very useful by more than 30 percent of home buyers. Exhibit 3-6 USEFULNESS OF INFORMATION SOURCES (Percentage Distribution Among Buyers that Used Each Source) Internet Real estate agent 78% 21% 1% 70% 18% 12% Yard sign 29% 39% 33% Open house 24% 30% 46% Print newspaper advertisement 17% 35% 48% Home builder 12% 16% 71% Home book or magazine 11% 23% 66% Billboard 2% 8% 90% Television 2% 11% 87% Relocation company 2% 6% 93% Very Useful Somewhat Useful Not Useful

48 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process Exhibit 3-7 LENGTH OF SEARCH The typical home buyer searched for eight weeks and viewed 10 homes. The length of search has varied little in recent years. On a regional basis, buyers in the Northeast searched for a longer period than buyers in other regions, typically for 12 weeks. Although buyers in the Midwest searched for a median of eight weeks, the same length as those in the South and West, they typically saw 12 homes, more than buyers elsewhere. Both first-time and repeat buyers searched for a median of eight weeks, but repeat buyers viewed more homes during that period. The typical repeat buyer viewed 11 homes, while first-time buyers viewed a median of 10 homes. There was no discernable difference in these search patterns between buyers of different age groups. LENGTH OF SEARCH, BY REGION (Median) Buyers who Purchased a Home in the: Number of Weeks Searched All Buyers Northeast Midwest South West Number of homes viewed Exhibit 3-8 LENGTH OF SEARCH FOR BUYERS WHO USED AN AGENT, BY FIRST-TIME AND REPEAT BUYERS (Median Weeks) SEARCH TIME WITH AN AGENT The typical search time for buyers who used an agent and for those who did not was the same for both first-time and repeat buyers. Among those home buyers who used an agent, both firsttime and repeat buyers reported that they spent a median of two weeks searching on their own before contacting an agent. There was also little difference among buyers of different age groups who used an agent in both total search time, and the length of time they searched before contacting the agent All Buyers 2 2 Buyers who Used an Agent Total number of weeks searched 2 First-time Buyers 2 Repeat Buyers Number of weeks searched before contacting an agent

49 National Association of Realtors 47 FIRST LEARNING ABOUT HOME PURCHASED While the typical home buyer views several homes before purchasing a specific home, some information sources play a more significant role in the home purchase decision. Thirty-four percent of home buyers first found out about the home they purchased through a real estate agent, a slight decrease from 36 percent in the 2006 survey, following a downward trend from 50 percent in The second most frequently mentioned way of learning about a home was the Internet, cited by 29 percent of buyers, an increase of 5 percentage points from last year. The next most frequently mentioned source, yard signs or open house signs, was indicated by 14 percent of the buyers. Exhibit 3-9 WHERE BUYER FOUND THE HOME THEY PURCHASED, Real estate agent 50% 49% 48% 41% 38% 36% 36% 34% Internet Yard sign/open house sign Home builder or their agent Friend, relative or neighbor Print newspaper advertisement Directly from sellers/knew the sellers Home book or magazine Other * * Less than one percent

50 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process INTERNET USAGE TRENDS Use of Internet in the home search process has steadily increased over the past decade. Overall usage of the Internet increased from 80 percent in 2006 to 84 percent in 2007, while the percentage of buyers who reported that they used the Internet frequently rose from 59 percent to 66 percent in the last year. Exhibit 3-10 USE OF INTERNET TO SEARCH FOR HOMES, % 90% 79% 80% 80% 77% 71% 70% 21% 22% 24% 60% 28% 50% 84% 18% 40% 30% 20% 71% 42% 53% 57% 59% 66% 10% 0% Frequently Occasionally Exhibit 3-11 ACTIONS TAKEN After gathering information online, nearly three-quarters of home buyers reported that they drove by specific properties, while 57 percent walked through a property viewed online. Twentythree percent of buyers found a real estate agent, and 22 percent requested more information about a property. Firsttime buyers were more likely than repeat buyers to find a real estate agent to search for or buy a home, request more information, or pre-qualify for a mortgage online. ACTIONS TAKEN AS A RESULT OF INTERNET HOME SEARCH, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among Buyers Who Used the Internet) All Buyers First-time Buyers Repeat Buyers Drove by or viewed a home 73% 73% 73% Walked through a home viewed online Found the agent used to search for or buy a home Requested more information Contacted builder or developer Pre-qualified for a mortgage online Applied for a mortgage online Found a mortgage lender online 4 6 4

51 National Association of Realtors 49 Exhibit 3-12 CHARACTERISTICS OF INTERNET SEARCHERS There are some notable differences in the demographic characteristics of buyers who use the Internet to search for a home and those who do not. Among recent buyers, Internet searchers were more often married couples (64 percent versus 53 percent of those who did not use the Internet to search for homes) and less likely to be single females (18 percent versus 28 percent) or single males (9 percent versus 12 percent). The typical Internet searcher was younger, 37 years old, compared to those who did not use the Internet in their home search, whose median age was 52. The median income of Internet searchers was also higher, at $76,900, compared with $60,400 among those who did not use the Internet. The length of time buyers spent searching for a home was also influenced by their use of the Internet as part of their search strategy. Among all buyers who used the Internet to search, the typical buyer spent eight weeks searching, while the typical buyer who did not use the Internet spent six weeks. Among those who did not use the Internet in their home search, first-time buyers typically spent five weeks to search for their home, and repeat buyers spent six weeks. Those who did not use the Internet, but worked with an agent spent a median of six weeks, typically one week of which was prior to contacting an agent. Home buyers who used the Internet also visited more homes than buyers who did not use the Internet to search, a median of 12 versus seven homes. CHARACTERISTICS OF HOME SEARCHERS AND SEARCH ACTIVITY, BY USE OF INTERNET Household Compostion For three-quarters of first-time buyers, the desire to own a home and establish their own household was the primary motivating factor underlying their home purchase. Used Internet to Search Did Not Use Internet to Search Married couple 64% 53% Single female Single male 9 12 Unmarried couple 7 5 Other 2 2 Median age Median income (2006) $76,900 $60,400 Length of Search (Median weeks) All buyers 8 6 First-time buyers 10 5 Repeat buyers 8 6 Buyers using an agent 8 6 Before contacting agent 2 1 Number of Homes Visited None 2% 11% 1 to to to to to or more Median 12 7

52 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process Exhibit 3-13 SOURCES OF INFORMATION Internet searchers use most information sources more frequently than buyers who do not use the Internet in their search, with the exception of home builders. Survey results suggest that Internet searchers place an emphasis on gathering as much information as possible. Those who do not use the Internet and view fewer homes more often purchase newly built homes directly from the builder. Among those who used the Internet, 86 percent used a real estate agent, compared with 75 percent of those who did not use the Internet. Similarly, 60 percent of Internet searchers used yard signs, compared with 52 percent of those who did not use the Internet to search. Fifty-one percent of Internet searchers used print newspaper ads and 50 percent of them attended open houses. INFORMATION SOURCES USED IN HOME SEARCH, BY USE OF INTERNET (Percent of Respondents) Used Internet to Search Did Not Use Internet to Search Real estate agent 86% 75% Yard sign Print newspaper advertisement Open house Home book or magazine Home builder Television 9 8 Billboard 7 6 Relocation company 5 3 Exhibit 3-14 FIRST LEARNING ABOUT THE HOME Home buyers who did not use the Internet to search for a home most often found the home they purchased through a real estate agent (38 percent). For those who used the Internet, a real estate agent was the second most frequent way (33 percent). Among buyers using the Internet to search 34 percent of them learned about the home they purchased online. Home buyers who did not use the Internet more often reported that they first found their homes through a yard sign or open house sign, a home builder or friends and relatives. WHERE BUYERS FOUND THE HOME THEY PURCHASED, BY USE OF INTERNET Used Internet to Search Did Not Use Internet to Search Internet 34% 2% Real estate agent Yard sign/open house sign Home builder or their agent 7 13 Friend, relative or neighbor 6 15 Print newspaper advertisement 3 5 Directly from sellers/ 2 7 Knew the sellers Home book or magazine 1 2

53 National Association of Realtors 51 Exhibit 3-15 METHOD OF PURCHASE Eighty-two percent of buyers who used the Internet to search for a home noted they used a real estate agent in their purchase, compared with 65 percent of buyers who did not use the Internet to search. Those who did not use the Internet were nearly twice as likely to purchase their home directly from a builder, and more than three times as likely to purchase a home directly from the previous owner whom they knew. METHOD OF HOME PURCHASE, BY USE OF INTERNET Used Internet to Search Did Not Use Internet to Search Through a real estate agent/ 82% 65% broker Directly from builder or builder s agent Directly from previous owner 4 6 whom buyer didn t know Directly from previous owner 2 7 whom buyer knew Foreclosure or trustee sale 1 1 Other 1 2 * Less than one percent Exhibit 3-16 WHAT BUYERS LOOK FOR ONLINE While a wide variety of real estate information about home purchasing and financing are available online, nearly all buyers, 95 percent, were focusing on the basic information about properties for sale. About one in five also reported they looked for information about a specific area. WHAT HOME BUYERS WERE LOOKING FOR ONLINE, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among Buyers Who Used the Internet) All Buyers First-time Buyers Repeat Buyers Properties for sale 95% 96% 94% General information about an area A real estate agent A real estate company Information about price or affordability Builders 1 * 1 Virtual tour * * * Other * Less than one percent Exhibit 3-17 WHAT BUYERS OF DIFFERENT AGES LOOK FOR ONLINE Buyers of all ages are most often looking for information about properties for sale when using the Internet to search for a home. Over 90 percent of buyers 64 or younger were looking for properties for sale, while those 65 or older were somewhat less likely to look for properties for sale (82 percent), and somewhat more likely to look for information about a specific area. WHAT HOME BUYERS WERE LOOKING FOR ONLINE, BY AGE (Percent of Respondents Among Buyers Who Used the Internet) Age OF HOMEBUYER: All Buyers or older Properties for sale 95% 96% 96% 94% 82% General information about an area A real estate agent A real estate company Information about price or affordability 1 * Builders 1 * * 1 1 Virtual tour * * * 1 * Other * Less than one percent

54 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process Exhibit 3-18 VALUE OF WEB SITE FEATURES When searching for homes online, over 80 percent of recent homebuyers found photos (84 percent) and detailed property information (82 percent) very useful. Nearly all buyers used both photos and property information when viewing Web sites. Nearly 95 percent of buyers also used virtual tours, and 60 percent rated them as very useful. About 90 percent used interactive maps and neighborhood information. VALUE OF WEB SITE FEATURES (Percentage Distribution Among Buyers Who Used the Internet) Very Useful Somewhat Useful Not Useful Did Not Use Photos 84% 14% 1% 1% Detailed information about properties for sale Virtual tours Interactive maps Neighborhood information Real estate agent contact information Detailed information about recently sold properties Exhibit 3-19 WEB SITES USED IN SEARCH Multiple listing service (MLS) Web sites were used by over half of recent home buyers in their search, and REALTOR.com was used by nearly half of buyers. One-fifth of buyers used for-sale-by-owner (FSBO) Web sites, while twice as many used real estate company or agent Web sites. First-time buyers were slightly more likely to use an MLS Web site, or the Web site of a real estate company, real estate agent, or a newspaper; repeat buyers were more likely to use REALTOR.com, or a FSBO Web site. WEB SITES USED IN HOME SEARCH BY FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among Buyers Who Used the Internet) All Buyers First-time Buyers Repeat Buyers Multiple Listing Services (MLS) Web site 54% 55% 53% REALTOR.com Real estate company Web site Real estate agent Web site For-sale-by-owner (FSBO) Web site Newspaper Web site Real estate magazine Web site Other Web sites with real estate listings

55 National Association of Realtors 53 Exhibit 3-20 WEB SITES USED AND BUYER S AGE Multiple listing service (MLS) Web sites and for-sale-by-owner Web sites were most frequently used by buyers aged 25 to 44. Younger buyers were more likely to use a real estate company or a newspaper Web site than their older counterparts. Buyers aged 65 or older were less likely than younger buyers to use any of the Web sites investigated. WEB SITES USED IN HOME SEARCH, BY AGE (Percent of Respondents Among Buyers Who Used the Internet) Age OF HOMEBUYER: All Buyers or older Multiple Listing Services 54% 49% 57% 51% 46% (MLS) Web site REALTOR.com Real estate company Web site Real estate agent Web site For sale by owner Web site Newspaper Web site Real estate magazine Web site Other Web sites with real estate listings Exhibit 3-21 NUMBER OF VISITS TO HOME PURCHASED PRIOR TO CLOSING Once home buyers found the home they planned to purchase, typically they made three visits to the home prior to closing. There was little difference between first-time and repeat buyers in the number of visits to a home before closing. However, buyers of new homes typically paid more visits to their homes. Nearly one-in-five new-home buyers reported that they visited their homes more than 10 times prior to closing. NUMBER OF VISITS TO HOME PRIOR TO CLOSING, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Did not visit the home 1% 1% 2% 2% 1% to 6 times to 10 times More than 10 times Median

56 Profile of Home Buyers and Sellers Chapter 3: The Home Search Process Exhibit 3-22 TIME FROM CONTRACT TO CLOSING The typical period from contract to closing among recent buyers was five weeks. First-time buyers typically closed in a somewhat shorter time, while buyers of newly built homes had a median of seven weeks to close. Among buyers of previously owned homes, 90 percent closed within eight weeks, compared with only 54 percent of new-home buyers. One-quarter of new-home buyers reported a period of at least 21 weeks between execution of the sales contract and closing. NUMBER OF WEEKS FROM SALES CONTRACT TO CLOSING, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES BUYERS OF: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes 2 weeks or less 10% 12% 9% 7% 11% 3 to 4 weeks to 6 weeks to 8 weeks to 12 weeks to 16 weeks to 20 weeks weeks or more Median

57 National Association of Realtors 55 chapter T 4 Home Buying and Real Estate Professionals he majority of buyers use a real estate agent as part of the home search process as well as in completing the purchase transaction. The home buying process can be confusing, stressful, and emotional, however working with a trusted advisor is one reason most buyers opt for the assistance of a real estate professional. In fact, a strong majority of buyers are very satisfied with their agent s performance. Buyers want a trusted advisor by their side during the transaction to make it go as smoothly as possible. The most important factor buyers considered when choosing an agent was their honesty and integrity (28 percent) followed by the agent s reputation (22 percent).

58 Profile of Home Buyers and Sellers Chapter 4: Home Buying and Real Estate Professionals METHOD OF HOME PURCHASE Buyers can purchase a home in any one of several ways through a real estate agent, through a builder, or directly from the previous owner. In 1997, 79 percent of buyers purchased their home through a real estate agent or broker. In 2001, that share dropped to 69 percent, but since 2001, the share has steadily increased. In the current market, the share of buyers who purchased their home through a real estate agent or broker has once again increased to 79 percent. The share of home buyers who purchased their home directly from the previous owner has decreased from a high of 15 percent in 2001, to a low of 7 percent in The share of buyers who purchased their home through a builder has remained fairly steady over the past decade; in percent of buyers purchase their home through a builder. Exhibit 4-1 METHOD OF HOME PURCHASE, Through a real estate agent or broker 79% 79% 69% 75% 77% 77% 77% 79% Directly from builder or builder s agent Directly from the previous owner Through a foreclosure or trustee sale * 1 1 * Less than one percent Exhibit 4-2 METHOD OF HOME PURCHASE BY REGION There are regional differences in how buyers purchased their home. Buyers in the Northeast and Midwest are more likely to purchase their home through a real estate agent or broker than buyers in other regions (83 percent and 81 percent, respectively). Buyers in the South and West reported more frequently than buyers in other regions that they had purchased their home directly from a builder. METHOD OF HOME PURCHASE, BY REGION Buyers who Purchased a Home in the: All Buyers Northeast Midwest South West Through a real estate agent 79% 83% 81% 77% 79% or broker Directly from builder or builder s agent Directly from the previous owner Knew previous owner Did not know previous owner Through a foreclosure or trustee sale

59 National Association of Realtors 57 Exhibit 4-3 PURCHASING NEW AND PREVIOUSLY OWNED HOMES Eighty-eight percent of buyers of previously owned homes purchased their home through a real estate agent or broker compared to 50 percent of buyers of new homes. Nearly half, 49 percent, of buyers of new homes used the builder or builder s agent to purchase their home. METHOD OF HOME PURCHASE, NEW AND PREVIOUSLY OWNED HOMES Buyers of: Through a real estate agent or broker Directly from builder or builder s agent All Buyers New Homes Previously Owned Homes 79% 50% 88% Directly from the previous owner Knew previous owner Did not know previous owner 4 * 5 Through a foreclosure or trustee sale 1 * 1 * Less than one percent METHOD OF PURCHASE AND TYPE OF HOUSEHOLD Regardless of household type, a majority of home buyers choose to purchase their home with the assistance of a real estate agent. While 79 percent of all buyers used an agent, the percentage tops 80 percent for singlefemale and single-male buyers. Married couples are more likely than other segments to purchase their home from a builder, while single males are least likely. Exhibit 4-4 METHOD OF HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Through a real estate agent or broker 79% 78% 82% 81% 79% 79% Directly from builder or builder s agent Directly from the previous owner Knew previous owner Did not know previous owner Through a foreclosure or trustee sale * 1 5 * Less than one percent

60 Profile of Home Buyers and Sellers Chapter 4: Home Buying and Real Estate Professionals Exhibit 4-5 AGENT REPRESENTATION DISCLOSURE An agent representation disclosure statement describes who the agent represents in the transaction. Nearly two-thirds of all buyers signed an agent representation disclosure form at some time during the purchase process, whether at the first meeting, when a contract was written or at some other time. Repeat buyers are more likely than first-time buyers to sign a disclosure statement. AGENT REPRESENTATION DISCLOSURE, FIRST-TIME AND REPEAT BUYERS Disclosure Statement Signed? All Buyers First-time Buyers Repeat Buyers Yes, at first meeting 30% 26% 33% Yes, when contract was written Yes, at some other time No Don t know Exhibit 4-6 BUYER REPRESENTATION ARRANGEMENT Forty-three percent of buyers had a written buyer representation arrangement with their agent, meaning the agent represented only the buyer in the transaction and not the seller. An additional 19 percent had an oral arrangement with their agent. BUYER REPRESENTATIVE ARRANGEMENT WITH AGENT, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Yes, a written arrangement 43% 41% 45% Yes, an oral arrangement No Don t know Exhibit 4-7 REAL ESTATE AGENT COMPENSATION Among all home buyers, 65 percent reported that the agent was compensated by the seller, while 15 percent of buyers were responsible for their agent s compensation. There was little difference in the compensation arrangements between those with a buyer representation agreement and those with some other type of arrangement. HOW REAL ESTATE AGENT WAS COMPensated Type of Agent Representation All Types of Seller or Representation Buyer Only Seller and Buyer Paid by seller 65% 66% 64% Paid by buyer and seller Paid by buyer only Percent of sales price Flat fee Per task fee * * * Other * * * Don t know Other Don t know * Less than one percent

61 National Association of Realtors 59 Exhibit 4-8 WHAT BUYERS WANT MOST Buyers have clear expectations about what they want from their real estate agent. The most important expectation of buyers is that their real estate agent find the right home for them (49 percent). In addition to finding a home, buyers also expect their agent to negotiate the terms of sale (13 percent), and help with price negotiations (11 percent). WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS Help find and arrange Other financing 3% 4% Help determining how much buyer can afford to spend on a home 5% Determine what comparable homes were selling for 8% Help with paperwork 9% Help find the right home to purchase 49% Help with the price negotiations 11% Help buyer negotiate the terms of sale 13% Exhibit 4-9 WHAT FIRST-TIME AND REPEAT BUYERS WANT MOST Whether a first-time buyer, a repeat buyer or the buyer of new or previously owned home, approximately half expect their agent to find the right home for them to purchase. Expectations are quite similar among all groups of buyers with help negotiating the terms of sale and negotiation of the price as the next most important expectations. WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Buyers of: All Buyers First time Buyers Repeat Buyers New Homes Previously Owned Homes Help find the right home to 49% 47% 50% 50% 48% purchase Help buyer negotiate the terms of sale Help with the price negotiations Help with paperwork Determine what comparable homes were selling for Help determine how much buyer can afford to spend on a home Help find and arrange financing Help find renters for buyer s property * * * * * Other * Less than one percent

62 Profile of Home Buyers and Sellers Chapter 4: Home Buying and Real Estate Professionals Exhibit 4-10 BUYERS EXPECTATIONS AND HOUSEHOLD TYPE Buyers across all types of households want their real estate agent to find them the right home to purchase. Compared with other household types, single male households less often wanted their agent to help negotiate the terms of sale, but were somewhat more likely to want their agent to help with the paperwork involved with the transaction. WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, BY ADULT COMPOSITION OF HOUSEHOLD Help find the right home to purchase Help buyer negotiate the terms of sale Help with the price negotiations All Buyers Married couple Adult Composition of Household Single female Single male Unmarried couple Other 49% 48% 49% 50% 51% 53% Help with paperwork Determine what comparable homes were selling for Help determining how much buyer can afford to spend on a home Help find and arrange financing Help find renters for buyer s property * * * * * * Other * Less than one percent NUMBER OF REAL ESTATE AGENTS USED IN THE HOME SEARCH Agents are one of the most important sources of information when buyers search for a home. Since many buyers choose an agent based on a referral or as a result of previous experience with that agent, most buyers use only one agent in their home search. Eighty percent of buyers used only one agent during the home search process, while 15 percent used two agents. Exhibit 4-11 NUMBER OF REAL ESTATE AGENTS USED IN THE HOME SEARCH Two 15% Three 3% Four 1% Five or more 1% One 80%

63 National Association of Realtors 61 Exhibit 4-12 BENEFITS PROVIDED BY REAL ESTATE AGENT Real estate agents provide a number of benefits during the home buying process. The most frequently cited benefit was that the agent helped buyers better understand the process (57 percent). For seasoned buyers, the most important benefit was that agents pointed out unnoticed features and faults with properties (45 percent). Still, 44 percent of repeat buyers found that agents were beneficial in helping them understand the process. An even higher percentage of first-time buyers found their agent provided this benefit (77 percent). BENEFITS PROVIDED BY REAL ESTATE AGENT DURING HOME PURCHASE PROCESS, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents) All Buyers First-time Buyers Repeat Buyers Helped buyer understand the process 57% 77% 44% Pointed out unnoticed features/faults with property Improved buyer s knowledge of search areas Negotiated better sales contract terms Provided a better list of service providers Shortened buyer s home search Negotiated a better price Provided better list of mortgage lenders Narrowed buyer s search area Expanded buyer s search area Other Exhibit 4-13 FINDING A REAL ESTATE AGENT Buyers rely on friends, relatives, and neighbors for referrals to help them find their real estate agent (43 percent). First-time buyers are most reliant on referrals (54 percent), while many repeat buyers (17 percent) used an agent they previously used to buy or sell a home. HOW BUYER FOUND REAL ESTATE AGENT, FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Referred by (or is) a friend, neighbor or 43% 54% 36% relative Used agent previously to buy or sell a home Internet Web site Visited an open house and met agent Saw contact information on For Sale sign Referred by another real estate agent/broker Walked into or called office and agent was on duty Referred through employer or relocation company Personal contact by agent (telephone, , etc.) Newspaper, Yellow Pages or home book ad Direct mail (newsletter, flyer, postcard, etc.) * * * Advertising specialty (calendar, * * * magnet, etc.) Other * Less than one percent

64 Profile of Home Buyers and Sellers Chapter 4: Home Buying and Real Estate Professionals Exhibit 4-14 FINDING A REAL ESTATE AGENT AND HOUSEHOLD TYPE Among all types of households, home buyers rely on referrals from friends, relatives, and neighbors to help them find their real estate agent. Married couples are slightly more likely than other household segments to use an agent they had previously used for buying or selling a home. HOW BUYER FOUND REAL ESTATE AGENT, BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Married Single Single Unmarried Buyers couple female male couple Other Referred by (or is) a friend, 43% 41% 48% 45% 49% 46% neighbor or relative Used agent previously to buy or sell a home Internet Web site Visited an open house and met agent Saw contact information on For Sale sign Referred by another real estate agent/broker Walked into or called office and agent was on duty Referred through employer or relocation company Personal contact by agent (telephone, , etc.) Newspaper, Yellow Pages or home book ad Direct mail (newsletter, * * 1 * * * flyer, postcard, etc.) Advertising specialty * * * * 1 * (calendar, magnet, etc.) Other * Less than one percent Exhibit 4-15 NUMBER OF REAL ESTATE AGENTS INTERVIEWED Good first impressions mean a lot to buyers. The majority of buyers (68 percent) interviewed only one agent before determining who would assist them with their home purchase. Firsttime buyers were more likely than repeat buyers to contact at least two agents (36 percent). Unlike most first-time buyers, many repeat buyers have the option of contacting an agent with whom they have previous experience. NUMBER OF REAL ESTATE AGENTS INTERVIEWED BY FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers One 68% 64% 70% Two Three Four Five or more 2 1 2

65 National Association of Realtors 63 Exhibit 4-16 MOST IMPORTANT FACTORS WHEN CHOOSING AN AGENT For many buyers the idea of purchasing a home can be a stressful undertaking. Buyers want a trusted advisor by their side during the transaction to make it go as smoothly as possible. The most important factor buyers considered when choosing an agent was their honesty and integrity (28 percent) followed by the agent s reputation (22 percent). MOST IMPORTANT FACTORS WHEN CHOOSING AN AGENT Professional designations Other held by real 5% estate agent 1% Agent has caring personality/ good listener 10% Agent's knowledge of the neighborhood 12% Agent's association with a particular firm 4% Agent is honest and trustworthy 28% Agent is friend or family member 17% Reputation of agent 22% Exhibit 4-17 IMPORTANCE OF REAL ESTATE AGENT SKILLS AND QUALITIES Home buyers place considerable trust and reliance on their real estate agent to assist them with the purchase of their home. Nearly all, 97 percent, rated their real estate agent s honesty and integrity as a very important quality. More than 90 percent of buyers also ranked knowledge of the purchase process, responsiveness of their agent, and knowledge of the real estate market as very important qualities. IMPORTANCE OF REAL ESTATE AGENT SKILLS AND QUALITIES Very Important Somewhat Important Not Important Honesty and integrity 97% 2% * Knowledge of purchase process Responsiveness 92 7 * Knowledge of real estate market Communication skills Negotiation skills People skills Knowledge of local area Skills with technology * Less than one percent

66 Profile of Home Buyers and Sellers Chapter 4: Home Buying and Real Estate Professionals Exhibit 4-18 SKILLS CONSIDERED VERY IMPORTANT BY FIRST-TIME AND REPEAT BUYERS First-time and repeat buyers value the same qualities in their real estate agent. Both first-time buyers and repeat buyers considered their real estate agent s honesty and integrity as the most important quality, followed by knowledge of the purchase process and responsiveness. AGENT SKILLS AND QUALITIES CONSIDERED VERY IMPORTANT BY FIRST-TIME AND REPEAT BUYERS All Buyers First-time Buyers Repeat Buyers Honesty and integrity 97% 97% 98% Knowledge of purchase process Responsiveness Knowledge of real estate market Communication skills Negotiation skills People skills Knowledge of local area Skills with technology Exhibit 4-19 SKILLS CONSIDERED VERY IMPORTANT BY TYPE OF HOUSEHOLD Regardless of household type, the top three skills of real estate agents listed by buyers as very important were honesty and integrity, knowledge of the purchase process and responsiveness. Single females were more likely than other household segments to rate negotiation skills of their agent as very important. AGENT SKILLS AND QUALITIES CONSIDERED VERY IMPORTANT BY ADULT COMPOSITION OF HOUSEHOLD Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other Honesty and integrity 97% 97% 98% 96% 96% 99% Knowledge of purchase process Responsiveness Knowledge of real estate market Communication skills Negotiation skills People skills Knowledge of local area Skills with technology

67 National Association of Realtors 65 Exhibit 4-20 SATISFACTION WITH REAL ESTATE AGENT SKILLS AND QUALITIES The two most important skills of agents were also the two skills and qualities with which buyers were most satisfied. Home buyers were most satisfied with their agent s knowledge of the purchase process (86 percent were very satisfied) followed by their agent s honesty and integrity (84 percent were very satisfied). Home buyers were least satisfied with their agent s negotiation skills; 70 percent were very satisfied, but 7 percent were not satisfied. SATISFACTION WITH REAL ESTATE AGENT SKILLS AND QUALITIES Very Satisfied Somewhat Satisfied Not Satisfied Knowledge of purchase 86% 12% 2% process Honesty and integrity Knowledge of real estate market People skills Responsiveness Communication skills Knowledge of local area Negotiation skills Skills with technology Exhibit 4-21 USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS Due to the high satisfaction level buyers have with many of their real estate agent s skills and qualities, it is not surprising that 68 percent of buyers would definitely use their real estate again or recommend the same agent to others. An additional 19 percent of buyers reported that they would probably use their real estate agent again or recommend them to others. WOULD BUYER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS (Percent distribution) 70% 60% 50% 40% 30% 68% 20% 19% 10% 0% 7% 5% 1% Definitely Probably Probably Not Definitely Not Don't Know

68 Profile of Home Buyers and Sellers Chapter 5: Financing the Home Purchase 5 chapter A Financing the Home Purchase home purchase is often the largest investment that many people make in their lifetime. There are numerous facets to home financing including, the percentage of buyers who finance their purchase, the percentage of the home financed, sources of downpayment, and loan options. Ideally, a home is a good financial investment, as well as shelter. The most common downpayment sources are savings, proceeds from the sale of a previous primary residence, and gifts from friends or relatives.

69 National Association of Realtors 67 Exhibit 5-1 BUYERS WHO FINANCED THEIR HOME PURCHASE Nearly all, 93 percent, of home buyers financed their recent home purchase. Younger home buyers are most likely to finance their home purchase as they often have less equity built up from properties they previously owned. Only 65 percent of home buyers over age 65 financed their home purchase; these buyers may have equity from a home they recently sold or financial resources that allow them to purchase their home without financing. BUYERS WHO FINANCED THEIR HOME PURCHASE, BY AGE (Percent of Respondents) 100% 97% 98% 93% 91% 80% 65% 60% 40% 20% 0% All Buyers or older AGE Exhibit 5-2 USE OF MORTGAGE FINANCING AMONG HOUSEHOLDS The majority of all buyers no matter their household type finance their home purchase. Overall, first-time home buyers are more likely than repeat buyers to finance their home purchase. Among all types of households, married first-time buyers are the most likely to finance their purchase (99 percent) while single female repeat buyers are among the least likely to use mortgage financing (87 percent). BUYERS WHO FINANCED THEIR HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents) Adult Composition of Household All Buyers Married couple Single female Single male Unmarried couple Other All buyers 93% 94% 92% 93% 95% 90% First-time buyers Repeat buyers

70 Profile of Home Buyers and Sellers Chapter 5: Financing the Home Purchase PERCENT OF HOME PURCHASE FINANCED While the majority of home buyers finance their home purchase, the amount financed varies based on several factors including the buyer s financial situation and resources. Among all recent home buyers, the median portion financed was 91 percent. More than one-quarter of home buyers financed the entire purchase price of their home. First-time buyers tend to finance a larger share of their home purchase than repeat buyers (a median of 98 percent and 84 percent, respectively). Forty-five percent of firsttime buyers financed 100 percent of their home purchase. Buyers of previously owned homes generally finance a larger share of their home purchase compared with buyers of new homes. Exhibit 5-3 PERCENT OF HOME FINANCED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Less than 50% 9% 4% 12% 12% 8% 50% to 59% % to 69% % to 79% % to 89% % to 94% % to 99% % Financed the entire purchase price with a mortgage Median percent financed 91% 98% 84% 88% 92%

71 National Association of Realtors 69 Exhibit 5-4 SOURCES OF DOWNPAYMENT, FIRST-TIME AND REPEAT BUYERS The most common downpayment sources are savings, proceeds from the sale of a previous primary residence, and gifts from friends or relatives. Nearly three-quarters of first time buyers relied on savings for their downpayment. Twenty-two percent of first-time buyers used a gift from a friend or relative for some portion of their downpayment. Repeat buyers are most likely to rely on proceeds from the sale of their primary residence. Still, 43 percent of repeat buyers also drew on savings for their downpayment. SOURCES OF DOWNPAYMENT, FIRST-TIME AND REPEAT BUYERS (Percent of Respondents Among those who Made a Downpayment) All Buyers First-time Buyers Repeat Buyers Savings 52% 73% 43% Proceeds from sale of primary residence 43% 4 60 Gift from relative or friend Sale of stocks or bonds Equity from primary residence buyer continue to own 5 * 6 401k/pension fund including a loan Loan from relative or friend Inheritance Proceeds from sale of real estate other than primary residence Individual Retirement Account (IRA) Loan from financial institution other than a mortgage Sale of personal property Life insurance Investment property sales (1031 exchange) Loan or financial assistance through employer * 1 * * Less than one percent

72 Profile of Home Buyers and Sellers Chapter 5: Financing the Home Purchase SOURCES OF DOWNPAYMENT AND HOUSEHOLD TYPE While buyers can often draw on several sources for their downpayment, there are some differences across types of households. Single male and Exhibit 5-5 unmarried couple buyers are most likely to rely on savings. Married couples are equally likely to use savings or proceeds from the sale of a previous home. Unmarried couples, single females, and single males are the most frequent recipients of gifts used toward a downpayment. Single males are also more likely than other household segments to use funds from the sale of stocks or bonds as a source for their downpayment. SOURCES OF DOWNPAYMENT, BY ADULT COMPOSITION OF HOUSEHOLD (Percent of Respondents Among those who Made a Downpayment) Adult Composition of Household: All Buyers Married couple Single female Single male Unmarried couple Other Savings 52% 50% 49% 65% 62% 47% Proceeds from sale of primary residence Gift from relative or friend Sale of stocks or bonds Equity from primary residence buyer continue to own k/pension fund including a loan Loan from relative or friend Inheritance Proceeds from sale of real estate other than primary residence Individual Retirement Account (IRA) * Loan from financial institution other than a mortgage Sale of personal property Life insurance 1 * * Investment property sales (1031 exchange) * * Loan or financial assistance through employer * * * * 1 1 * Less than one percent Exhibit 5-6 TYPE OF MORTGAGE, FIRST- TIME AND REPEAT BUYERS Among recent home buyers with a mortgage, most reported that they have fixed-rate mortgages (81 percent). One in 10 buyers has a mortgage with a fixed interest rate at the start of the loan term that then converts to an adjustable rate. While first-time buyers may be more inexperienced at the home buying process, they typically take out the same types of loans as repeat buyers. TYPE OF MORTGAGE, FIRST-TIME AND REPEAT BUYERS (Percentage Distribution Among those who Financed their Home Purchase All Buyers First-time Buyers Repeat Buyers Fixed-rate mortgage 81% 81% 81% Fixed- then adjustable-rate mortgage 10% Adjustable-rate mortgage Don t know Other 2 2 3

73 National Association of Realtors 71 Exhibit 5-7 HOME PURCHASE AS AN INVESTMENT While each buyer may have several reasons for purchasing a home, the motivations for home ownership often include an investment component. More than three-quarters of all buyers felt their home purchase was at least as good an investment as stocks. One in 10 felt their home purchase was a good investment, but not as good as stocks. Buyers in each segment of the market whether first-time or repeat buyers or buyers of new or previously owned homes were in close agreement about the investment potential of their homes, HOME PURCHASE IS A GOOD FINANCIAL INVESTMENT, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Buyers of: All Buyers First-time Buyers Repeat Buyers New Homes Previously Owned Homes Yes, better than stocks 47% 48% 46% 44% 48% Yes, about as good as stocks Yes, but not as good as stocks No Don t know Exhibit 5-8 HOME AS A FINANCIAL INVESTMENT BY TYPE OF HOUSEHOLD A larger share of home buyers are single females than single males and they also are more confident that their home purchase is a good investment. Fiftythree percent of single females reported that they believe their home purchase is a better investment than stocks, compared with 45 percent of single male buyers. HOME PURCHASE IS A GOOD FINANCIAL INVESTMENT, BY ADULT COMPOSITION OF HOUSEHOLD Yes, better than stocks Yes, about as good as stocks Yes, but not as good as stocks All Buyers Married couple Adult Composition of Household Single female Single male Unmarried couple Other 47% 45% 53% 45% 47% 47% No Don t know

74 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience chapter T 6 Home Sellers and Their Selling Experience he decision to sell a home is a significant one for most sellers, often resulting from a desire for a larger home, job relocation or in anticipation of retirement. Because the reasons for a home sale can vary quite significantly, the needs of sellers, based on factors such as the urgency of the sale and the distance of the impending move, can also differ considerably. Fortunately, sellers can choose from many options when looking to successfully complete a home sale. Sellers can work with a real estate agent who will manage the entire transaction, or they can take on the entire selling and marketing responsibility themselves, without the assistance of an agent. Among recent home sellers, 85 percent were assisted by a real estate agent, while 12 percent chose to sell their home themselves. Eighty-five percent of sellers used an agent to sell their home, including 3 percent who first tried to sell their home themselves but then used an agent.

75 National Association of Realtors 73 Exhibit 6-1 AGE The median age of sellers who sold a home between mid-2006 and mid was 45 years. Home sellers in the Midwest tended to be somewhat younger, with a median age of 44 years, compared with sellers in the South and West, where the median age was 46. AGE OF HOME SELLERS, BY REGION Sellers who Sold a Home in the: All Sellers Northeast Midwest South West years * * 1% * 1% years years years years years years or older Median age (years) * Less than one percent Exhibit 6-2 INCOME Among all sellers, the median 2006 household income was $89,400. Fortythree percent reported an income of at least $100,000. Sellers in the Northeast typically had higher incomes than sellers in other regions; 46 percent of households reported an income of more than $100,000, compared with 37 percent in the Midwest. HOUSEHOLD COMPOSITION Three quarters of home sellers were married a slight increase from previous years. Single females, with their growing influence on the home buying market, made up a significant share of sellers, although their share declined slightly from 17 percent last year to 15 percent in the current survey. Relatively few home sellers were single males or unmarried couples. HOUSEHOLD INCOME OF HOME SELLERS, 2006 Sellers who Sold a Home in the: All Sellers Northeast Midwest South West Less than $25,000 3% 2% 3% 3% 3% $25,000 - $34, $35,000 - $44, $45,000 - $54, $55,000 - $64, $65,000 - $74, $75,000 - $84, $85,000 - $99, $100,000 - $124, $125,000 - $149, $150,000 - $174, $175,000 - $199, $200,000 or more Median income (2006) $89,400 $95,000 $86,000 $90,600 $87,300 Exhibit 6-3 ADULT COMPOSITION OF HOME SELLER HOUSEHOLDS, Married couple 74% 71% 72% 75% Single female Single male Unmarried couple Other

76 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience Exhibit 6-4 CHILDREN Overall, 56 percent of sellers had no children under age 18 living at home. Slightly more than one-third of seller households had one or two children at home. NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOME SELLER HOUSEHOLD (Percentage Distribution of Homeseller Households) One 16% Two 19% None 56% Three or more 9% Exhibit 6-5 RACE AND ETHNICITY While 90 percent of home sellers consider themselves white, the racial and ethnic composition varies by region. In the Northeast and Midwest, 7 percent of sellers reported a racial or ethnic background other than white, compared with 11 percent in the South and 14 percent in the West. RACE/ETHNICITY OF HOME SELLERS, BY REGION (Percent of Respondents) Sellers who Sold a Home in the: All Sellers Northeast Midwest South West White/Caucasian 90% 93% 93% 89% 86% Black/African-American Asian/Pacific Islander Hispanic/Latino Other 1 * * 1 2 * Less than one percent Note: Respondents were permitted to select as many races and ethnicities as they felt applicable. The percentage distribution may therefore sum to more than 100 percent. Exhibit 6-6 PRIMARY LANGUAGE Nearly all (97 percent) home sellers considered English their primary language, a percentage that varied little across regions of the country. PRIMARY LANGUAGE SPOKEN IN HOME SELLER HOUSEHOLD, BY REGION Sellers who Sold a Home in the: All Sellers Northeast Midwest South West English 97% 96% 99% 97% 96% Other

77 National Association of Realtors 75 Exhibit 6-7 LOCATION OF HOMES SOLD LOCATION OF HOME SOLD Most homes sold (57 percent) were in suburban locations. Seventeen percent were in an urban area or central city, and 15 percent were in a small town. Urban area/ Central city 17% Rural area 10% Resort/Recreation area 1% Suburb/ Subdivision 57% Small Town 15% Exhibit 6-8 PROXIMITY OF HOME SOLD TO HOME PURCHASED When buying a home, less than one third of home sellers reported that they purchased a home in a different state. Seventy percent of home sellers purchased a home in the same state; 13 percent purchased a home in another state within the same region (Northeast, Midwest, South, and West); and 17 percent purchased in another region. PROXIMITY OF HOME SOLD TO HOME PURCHASED Same region* 13% Other region 17% Same state 70% * Region refers to the U.S. Census Bureau definition of the Northeast, Midwest, South and West.

78 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience LOCATION AND TYPE OF HOME SOLD Over 80 percent of homes sold in suburban and small-town locations were detached single-family homes. In urban and central city areas, detached singlefamily homes accounted for 62 percent of sales. Condo sales accounted for 24 percent of homes sold in urban areas, compared with 5 percent to 6 percent in suburban areas or small towns. In resort areas, slightly less than half of the homes sold were detached single-family homes, and 18 percent were condos. Exhibit 6-9 TYPE OF HOME SOLD, BY LOCATION Sellers who Sold a Home in a: All Sellers Suburb/ Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area Detached single-family home 78% 83% 81% 62% 78% 49% Townhouse/row house Apartment/condo in a building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building Other TRADING UP OR TRADING DOWN Whether sellers choose to buy a smaller or a larger home depends on several factors including anticipated future housing needs, such as a growing family or preparing for children to leave home. More than half of sellers (53 percent) traded up to a larger home. Slightly over one in five repeat buyers sold a home that was 1,001-to-1,500 square feet in size and purchased a home that was larger. Most often buyers in this group purchased a home that was moderately larger at between 1,501 and 2,000 square feet in size. About one quarter of sellers purchased a home nearly the same size, and about one-fifth traded down. Exhibit 6-10 SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD Size of Home Sold 1,000 sq ft or less 1,001 sq ft to 1,500 sq ft Size of Home Purchased 1,501 sq ft to 2,000 sq ft 2,001 sq ft to 2,500 sq ft 2,501 sq ft to 3,000 sq ft 1,000 sq ft or less 1 3% 2% 1% * * 1,001 to 1,500 sq ft * ,501 to 2,000 sq ft ,001 to 2,500 sq ft * ,501 to 3,000 sq ft * More than 3,000 sq ft * More than 3,000 sq ft * Less than one percent n Trading Down n Trading Up

79 National Association of Realtors 77 Exhibit 6-11 INFLUENCE OF AGE ON SIZE OF HOME PURCHASED Sellers who were 64 or younger tended to buy larger homes, while those 65 and older tended to buy smaller homes than the ones they sold. Among sellers 44 or younger, the typical home purchased was over 600 square feet larger than the home they sold. While sellers 65 years or older tended to downsize, the median difference in size between the home sold and the home purchased was relatively small at less than 100 square feet. SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD, BY AGE OF SELLER (Median Square Feet) Size of home sold Size of home purchased Difference 18 to 34 years 1,488 2, to 44 years 1,786 2, to 54 years 2,016 2, to 64 years 1,987 2, to 74 years 1,937 1, years or older 1,842 1, Exhibit 6-12 REASONS FOR SELLING HOME Reasons for selling a home also are often correlated with the age of the seller. For example, 20 percent of sellers sold their homes because they thought it was too small. However, among sellers 18 to 24 years old, 40 percent sold their homes for this reason as did 32 percent of sellers 25 to 34 years old. Twenty-one percent of sellers sold their homes due to job relocation, again highly correlated with age. Eleven percent of sellers sold because the neighborhood became less desirable and 10 percent because of a change in family situation. Sellers at least 65 years old often have different reasons for selling compared with younger sellers. For one quarter of these sellers, the most important reason was a desire to move closer to family or friends; for 15 percent downsizing to a smaller home was the primary reason. PRIMARY REASON FOR SELLING PREVIOUS HOME, BY AGE * Less than one percent All Sellers or older Job relocation 21% 33% 24% 22% 2% Home is too small Neighborhood has 11 * become less desirable Change in family situation 10 * (e.g., marriage, birth of a child, divorce) Want to move closer to friends or family Home is too large 6 * Want to move closer to my job Moving due to retirement 4 N/A Upkeep of home is too 3 * difficult due to health or financial limitations Can not afford the 2 * mortgage and other expenses of owning home Other Age

80 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience TENURE IN PREVIOUS HOME Among recent home sellers, the typical tenure in the previous home was six years, as it has been for a number of years. The sellers of condos in buildings with five or more units, townhouse or row houses and of cabins or cottages had a median tenure of five years in the home they sold, while 40 percent owned their homes for three years or less. The sellers of detached single-family homes, condos in two-to-four unit buildings, and mobile homes had a median tenure of seven years. More than one in 10 sellers of detached single-family homes and mobile homes reported that they owned the home they sold for at least 21 years. Exhibit 6-13 TENURE IN PREVIOUS HOME, BY TYPE OF HOME * Less than one percent All Types Cabin/ cottage Duplex/ apartment/condo in 2-4 unit structure Apartment/condo in building with 5 or more units Townhouse/ row house Detached single-family home Mobile/ manufactured home 1 year or less 6% * 4% 7% 7% 6% 10% 1% 2 to 3 years to 5 years to 7 years to 10 years to 15 years 12 * to 20 years 7 * year or more Median Other Exhibit 6-14 TENURE IN PREVIOUS HOME AND SELLER S AGE Tenure in the home sold is correlated with the age of seller, ranging from two years for sellers 18 to 24 years old to 15 years for sellers 65 and older. While nearly 40 percent of sellers 25 to 44 years old owned their previous homes for three years or less, this percentage decreased to 20 percent among those 45 to 64 years old, and to 13 percent among those 65 years old or older. TENURE IN PREVIOUS HOME, BY AGE OF SELLER Age All Sellers or older 1 year or less 6% 19% 6% 5% 2% 2 to 3 years to 5 years to 7 years 13 * to 10 years 13 * to 15 years 12 * to 20 years 7 * year or more 10 * * Median * Less than one percent

81 National Association of Realtors 79 Exhibit 6-15 NUMBER OF HOMES OWNED The typical home seller today has owned three homes, with about onethird reporting ownership of two homes. Some home sellers have considerable experience in the buying and selling of homes. Among sellers 45 to 64 years old, 43 percent have owned at least four homes, while among those 65 years old or older, 37 percent have owned at least five homes. DISTANCE MOVED The median distance sellers moved after selling one home and buying another was 18 miles. Those who sold a home in the West moved the greatest distance a median of 36 miles. Among sellers in the West, over one-fifth reported that they purchased a home in another geographic region and 14 percent reported that they purchased a home in another state in the same region. DISTANCE MOVED AND SELLER S AGE Those home sellers aged 45 to 64 moved the greatest distance when they sold their previous homes, a median of 23 miles. Only one tenth of sellers in this age group purchased a home within five miles of the home they sold, compared with 25 percent of those 25 to 44 years old and 31 percent of those 18 to 24 years old. One quarter of sellers between the ages of 45 and 64 moved more than 500 miles from their previous home. NUMBER OF HOMES PREVIOUSLY OWNED, BY AGE Age All Sellers or older One 16% 21% 12% 10% Two Three Four Five or more Median 3 homes 2 homes 3 homes 4 homes Exhibit 6-16 DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY REGION (Median Miles) Exhibit U.S. Northeast Midwest South West 19 Region of Home Sold DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY AGE AGE All Sellers or older 5 or less miles 23% 31% 25% 21% 22% 6 to 10 miles to 15 miles to 20 miles to 50 miles to 100 miles 4 * to 500 miles to 1,000 miles More than 1,000 miles Median (miles) * Less than one percent 36

82 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience TASKS PERFORMED Sellers can choose the level of service they would like their real estate agent to provide. Some sellers want their agent to perform many tasks and manage the process from start to finish; others choose to perform some tasks themselves. In most cases, real estate agents assisted recent home sellers with several tasks. Seventy-four percent of sellers worked with their agents to determine the asking price, while 81 percent reported that their agent entered their property in the Multiple Listing Service. The task that sellers most often did themselves without assistance was determining the asking price (21 percent). Sellers were least likely to enter the property on the Multiple Listing Service, arrange advertising, place the listing on the Internet or pre-qualify buyers for a mortgage. Some sellers chose not to perform or seek assistance with certain tasks. Thirtyeight percent of sellers did not hold an open house and about one quarter did not place ads in newspapers or contact potential buyers directly. Exhibit 6-18 TASKS PERFORMED IN THE SELLING PROCESS * Less than one percent Performed by Seller without Assistance Assisted by Real Estate Agent Seller Paid another Professional for Assistance Task not Performed Determine asking price 21% 74% 3% 1% * Hold open house * Schedule showings with potential buyers * Enter property in Multiple Listing Service Place ads in newspapers, mags, etc Contact buyers by phone, mail, etc Advertise or place listing on Internet Review sales contracts/purchase offers Negotiate with buyers Coordinate appraisal, home inspection, etc Pre-qualify buyers for a mortgage Manage paperwork, contracts, etc Attend closing Don t know

83 National Association of Realtors 81 Exhibit 6-19 METHOD USED TO SELL HOME Sellers can sell their home in a number of ways, one of which is by working with an agent. Eighty-five percent of sellers used an agent to sell their home, including 3 percent who first tried to sell their home themselves but then used an agent. For-sale-by-owner (FSBO) sellers accounted for 12 percent of home sales. Sellers in the South were the least likely to work with an agent. METHOD USED TO SELL HOME, BY REGION Sellers who Sold a Home in the: All Sellers Northeast Midwest South West Sold home using an agent or broker 85% 87% 86% 82% 87% Seller used agent/broker only Seller first tried to sell it themselves, but then used an agent For-sale-by-owner (FSBO) Seller sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Sold home to a homebuying company Other Exhibit 6-20 URGENCY OF HOME SALE Those sellers who had to sell their home at least somewhat urgently were more likely to use a real estate agent (86 percent to 87 percent), compared with those who felt little urgency in completing the sale of their home (81 percent). Among those sellers who did not need to sell urgently, 15 percent sold their home themselves, compared with 10 percent of those who needed to sell their home very urgently. Additionally 2 percent of the sellers who needed to sell very urgently used a home buying company. METHOD USED TO SELL HOME, BY SELLER URGENCY Seller Needed to Sell: * Less than one percent All Sellers Very urgently Somewhat urgently Not urgently Sold home using an agent or broker 85% 86% 87% 81% Seller used agent/broker only Seller first tried to sell it them selves, but then used an agent For-sale-by-owner (FSBO) Seller sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Sold home to a homebuying company * Other

84 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience Exhibit 6-21 BUYER AND SELLER RELATIONSHIP AND METHOD OF SALE The relationship between the seller and the buyer is often reflected in the method used to sell a home. Among those sellers who used a real estate agent, 96 percent sold their home to someone they did not know prior to the sale. Ninety-two percent of those who first tried to sell their home as a FSBO but then used an agent also sold to someone they did not know. In contrast, about four-in-10 sellers who sold their home as a FSBO and never used an agent sold it to someone they knew prior to the transaction, reflecting a high percentage of FSBO transactions that do not occur in the open market. Among sellers who sold their home to a buyer they knew prior to the transaction, 40 percent ultimately used an agent, including 3 percent who first tried to sell it themselves, but then used an agent. Fifty-two percent of those who sold their home to someone they knew sold it as a FSBO, including 5 percent who first tried to sell their home using an agent. Among those sellers who sold their home to someone they did not know, 89 percent used an agent. Only 8 percent of sales among unrelated parties who did not know each other prior to the sale were open market FSBOs. METHOD OF SALE, BY BUYER AND SELLER RELATIONSHIP Buyer and Seller Relationship Seller Knew Buyer Seller did not Know Buyer All sellers 9% 91% Sold home using an agent or broker 4 96 Sold it using a licensed real estate agent or broker First tried to sell home themselves, but then used an agent For-sale-by-owner (FSBO) Sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Other Method of Home Sale All Sellers Seller Knew Buyer Seller did not Know Buyer Sold home using an agent or broker 85% 40% 89% Sold it using a licensed real estate agent or broker First tried to sell home themselves, but then used an agent For-sale-by-owner (FSBO) Sold home without using a real estate agent or broker First listed with an agent, but then sold home themselves Other 3 8 2

85 National Association of Realtors 83 Exhibit 6-22 METHOD OF SALE OVER TIME The share of home sellers who used an agent or broker has risen over time from about 80 percent in the late 1990s to 85 percent today. At the same time, the share of FSBO sellers has declined from 18 percent in 1997 to 12 percent today. METHOD USED TO SELL HOME, Sold home 80% 77% 79% 83% 82% 85% 84% 85% using an agent or broker For-sale-by-owner (FSBO) Sold to home buying company Other SALES PRICE AND LISTING PRICE Recent sellers typically sold their home for 97 percent of the listing price. While 22 percent sold their homes at the listing price, 59 percent eventually sold at a price up to 10 percent below the listing price; 12 percent reduced the listing price over 10 percent. Comparable numbers from last year s survey show that 26 percent of sellers sold their homes at the listing price. Sellers in the Northeast and the Midwest sold their homes most frequently at less than the listing price, while those in the West typically sold their home below the listing price least frequently. Exhibit 6-23 SALES PRICE COMPARED WITH LISTING PRICE, BY REGION (Percentage Distribution of Sales Price as a Percent of List Price) Sellers who Sold a Home in the: All Sellers Northeast Midwest South West Less than 90% 12% 14% 14% 10% 11% 90% to 94% % to 99% % % to 110% More than 110% Median (sales price as a percent of listing price) 97% 97% 97% 98% 98% Exhibit 6-24 SALES PRICE AND URGENCY OF SALE A seller s urgency to sell their home has an impact on the final sales price. Seventy-four percent of sellers who needed to sell their home urgently sold it for less than the listing price, compared with 66 percent who faced little urgency when selling. SALES PRICE COMPARED WITH LISTING PRICE, BY SELLER URGENCY (Percentage Distribution of Sales Price as a Percent of Listing Price) All Sellers Very urgently Somewhat urgently Not urgently Less than 90% 12% 18% 13% 6% 90% to 94% % to 99% % % to 110% More than 110% Median (sales price as a percent of listing price) 97% 97% 97% 98%

86 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience Exhibit 6-25 HOME IMPROVEMENTS PRIOR TO PUTTING HOME ON THE MARKET Over half of recent home sellers (55 percent) reported that they undertook home improvement or remodeling projects within three months prior to putting their home on the market. Those who sold a townhouse or row house, a manufactured home, or a home in a resort/recreation area were least likely to undertake home improvement projects prior to selling their home, while those who sold a home in an urban area were the most likely to make home improvements. Tenure in the home has a small impact on the likelihood that sellers carry out home improvement projects prior to selling their home. While at least 60 percent of sellers who owned their homes for 8 to 20 years undertook home improvement projects, the comparable number was less than 50 percent among those who owned their homes for 2 to 3 years. Relative to sales price, home improvements were most likely undertaken by sellers of homes priced at less than $300,000. Nearly six in 10 sellers of homes in this price range completed home improvements while only half of sellers of more expensive home undertook improvements prior to the sale. Sellers who face some urgency in selling their home are more likely to carry out home improvement projects than sellers compelled to sell either very urgently or with no urgency. UNDERTOOK HOME IMPROVEMENT OR REMODELING PROJECTS WITHIN 3 MONTHS PRIOR TO PUTTING HOME ON THE MARKET Who Undertakes Home Improvement Projects All Sellers 55% Type of Home Sold Cabin/cottage 59% Duplex/apartment in 2 to 4 unit building 53 Apartment/condo in building with 5 or more units 54 Townhouse/row house 44 Detached single-family home 56 Mobile/manufactured home 42 Other 63 Location of Home Sold Small town 51% Rural area 53 Urban area/central city 61 Suburb/Subdivision 54 Resort/Recreation area 45 Seller s Tenure in Home 1 year or less 50% 2 to 3 years 48 4 to 5 years 52 6 to 7 years 53 8 to 10 years to 15 years to 20 years year or more 54 Asking Price for the Home Sold Less than $100,000 57% $100,000 to $199, $200,000 to $299, $300,000 to $499, $500,000 or more 52 Urgency of Home Sale Very urgently 55% Somewhat urgently 59 Not urgently 49

87 National Association of Realtors 85 HOME IMPROVEMENTS BY HOME TYPE The cost of the typical home improvement project undertaken by sellers prior to putting their home on the market was $2,975. However, one third of sellers who undertook home improvements spent $1,000 or less. Sellers who sold a detached single-family home typically spent $3,030. Exhibit 6-26 AMOUNT SPENT ON HOME IMPROVEMENT PROJECTS, BY TYPE OF HOME (Percentage Distributions Among Sellers Making Improvements) * Less than one percent All Types Cabin/ cottage Duplex/ apartment/ condo in 2 to 4 unit structure Apartment/ condo in building with 5 or more units Townhouse/ row house Detached single-family home Mobile/ manufactured home $1,000 or less 33% 30% 25% 38% 35% 32% 67% 18% $1,001 to $5, $5,001 to $10, $10,001 to $25, * $25,001 to $50,000 2 * 5 * 1 3 * 9 $50,001 or more 2 * * 3 * 2 * 2 Median $2,975 $6,000 $3,200 $2,800 $2,490 $3,030 $750 $4,560 Other Exhibit 6-27 HOME IMPROVEMENTS AND LISTING PRICE Sellers of more expensive homes who undertake improvements typically spend more on home improvement projects immediately before selling their home. While sellers typically spent $1,300 on improvements for homes priced at less than $100,000, this amount increased to $3,230 for homes priced between $200,000 and $300,000, and to $5,760 for homes priced at $500,000 or more. AMOUNT SPENT ON HOME IMPROVEMENT PROJECTS, BY ORIGINAL LISTING PRICE (Percentage Distributions Among Sellers Making Improvements) $1,000 or less $1,001 to $5,000 $5,001 to $10,000 $10,001 to $25,000 $25,001 to $50,000 $50,001 or more All Sellers Less than $100,000 $100,000 to $199,999 Original Asking Price: $200,000 to $299,999 $300,000 to $499,999 $500,000 or more 33% 47% 43% 29% 27% 12% * * * Median $2,975 $1,300 $1,850 $3,230 $3,530 $5,760 * Less than one percent

88 Profile of Home Buyers and Sellers Chapter 6: Home Sellers and Their Selling Experience Exhibit 6-28 TIME ON THE MARKET Overall, the typical seller s home was on the market for eight weeks, two weeks longer compared with survey results of the previous year. About four in 10 sellers sold their homes within four weeks, and 27 percent in two weeks or less. The median time on the market varied across regions, from six weeks for those who sold a home in the West or the South to 10 weeks in the Midwest. NUMBER OF WEEKS RECENTLY SOLD HOME WAS ON THE MARKET, BY REGION Sellers who Sold a Home in the: All Sellers Northeast Midwest South West Less than 1 week 7% 6% 5% 7% 9% 1 to 2 weeks to 4 weeks to 6 weeks to 8 weeks to 10 weeks to 16 weeks or more weeks Median (weeks) Exhibit 6-29 TIME ON THE MARKET AND SALES PRICE Determining the price at which a home is offered on the market is one of the most important and difficult tasks that sellers face. When a home is priced higher than what buyers are willing to pay, the home will likely remain on the market a significant period of time; and the longer a home is on the market, the more likely the selling price will be lower than the listing price. Those homes that were on the market for less than one week typically sold at their listing price. As the time on the market lengthened, the share of homes that sold below their listing price increased from slightly over half among those that were on the market for one-to-two weeks to 76 percent among those that remained on the market between five and eight weeks, and to 92 percent among those that were on the market for 17 weeks or longer. SALES PRICE COMPARED WITH LISTING PRICE, BY NUMBER OF WEEKS HOME WAS ON THE MARKET (Percentage Distribution of Sales Price as a Percent of Listing Price) All Sellers Sellers whose Home was on the Market for: Less than 1 week 1 to 2 weeks 3 to 4 weeks 5 to 8 weeks 9 to 16 weeks 17 or more weeks Less than 90% 12% 4% 1% 1% 8% 9% 34% 90% to 94% % to 99% % % to 110% More than 110% Median (sales price as a percent of listing price) 97% 100% 99% 98% 97% 96% 92%

89 National Association of Realtors 87 Exhibit 6-30 PRICE REDUCTIONS The number of times a home s price is reduced is also related to the time on the market. Overall, 43 percent of home sellers did not reduce their asking price, compared to 53 percent in last year s survey. While one third of sellers reduced their asking price one time, nearly one in 10 reduced it three or more times. Among homes on the market less than one week, 13 percent reduced their asking price at least once; among homes on the market for at least 17 weeks and that ultimately sold, 91 percent reduced the price at least once. NUMBER OF TIMES ASKING PRICE WAS REDUCED, BY NUMBER OF WEEKS HOME WAS ON THE MARKET None, did not reduce the asking price * Less than one percent All Sellers Sellers whose Home was on the Market for: Less than 1 week 1 to 2 weeks 3 to 4 weeks 5 to 8 weeks 9 to 16 weeks 17 or more weeks 43% 86% 77% 59% 39% 27% 9% One Two 15 * Three or more 9 * SATISFACTION WITH THE SELLING PROCESS Overall, 63 percent of sellers reported they were very satisfied with the selling process, while an additional 26 percent were somewhat satisfied. Exhibit 6-31 SATISFACTION WITH THE SELLING PROCESS Somewhat Dissatisfied 8% Very Dissatisfied 4% Very Satisfied 63% Somewhat Satisfied 17%

90 Profile of Home Buyers and Sellers Chapter 7: Home Selling and Real Estate Professionals 7 chapter Home Selling and Real Estate Professionals MMost home sellers choose to use a real estate agent to assist them with the complex process of selling a home. To choose an agent, sellers largely rely either on referrals from friends or family or on their own experience with the agent in a previous home sale transaction. In addition to choosing an agent, sellers also must consider the level of service that is appropriate. All of this contributes to the satisfaction of sellers with their agent and the process of selling their home. The most important factor when choosing a real estate professional, cited by 38 percent of recent sellers, is the reputation of the agent.

91 National Association of Realtors 89 Exhibit 7-1 FINDING A REAL ESTATE AGENT Most home sellers rely on referrals from a friend or family member or on their own experience with a particular agent when they look for a real estate professional to assist in their home sale. Among recent sellers, 41 percent reported that they found the agent they used in their home sale as a result of a referral, while 23 percent used the agent in a previous home sale or purchase transaction. Other methods of finding an agent were far less significant. Although there are a number of other ways that sellers can find an agent, no more than 5 percent reported finding an agent by each of several methods such as visiting an open house or through agent-initiated personal contact. METHOD USED TO FIND REAL ESTATE AGENT Referred by (or is) a friend, neighbor or relative 41% Used agent previously to buy or sell a home 23 Visited an open house and met agent 5 Walked into or called office and agent was on duty 4 Personal contact by agent (telephone, , etc.) 4 Referred through employer or relocation company 4 Saw contact information on For Sale/Open House sign 4 Internet Web site 3 Direct mail (newsletter, flyer, postcard, etc.) 3 Referred by another real estate or broker 3 Newspaper, Yellow pages or home book ad 1 Advertising specialty (calendar, magnet, etc.) 1 Other 5 Exhibit 7-2 NUMBER OF AGENTS CONTACTED Not surprisingly, since a majority of home sellers find their agent through a referral or as a result of previous experience, nearly two-thirds reported that they contacted only one agent before selecting one to assist in their home sale. One in five sellers contacted two agents. NUMBER OF AGENTS CONTACTED BEFORE SELECTING ONE TO ASSIST WITH SALE OF HOME Percentage Distribution) 70% 60% 50% 64% 40% 30% 20% 20% 10% 0% 9% 3% 3% One Two Three Four Five or more

92 Profile of Home Buyers and Sellers Chapter 7: Home Selling and Real Estate Professionals Exhibit 7-3 USING THE SAME AGENT FOR PURCHASE AND SALE Depending on a number of factors, such as the distance of the move, sellers may choose to use the same agent in both the sale and purchase of their next home. Among recent sellers, slightly fewer than half reported that they used the same agent in their recent home purchase. DID SELLER USE THE SAME REAL ESTATE AGENT FOR THEIR HOME PURCHASE? (Percentage Distribution Among Those who Used an Agent to Purchase a Home) No 53% Yes 47% Exhibit 7-4 WHAT SELLERS WANT Sellers have several expectations of their real estate agent depending on the particular circumstances of each sales transaction. These expectations vary among sellers in part because some sellers are willing to take on more of the tasks associated with selling a home, while other sellers want an agent to closely manage the entire process. For one-quarter of sellers, the most important expectation is that the real estate agent will help sell the home within a specific timeframe. Nearly an equal percentage expects their agent to help find a buyer for their home. WHAT SELLERS MOST WANT FROM REAL ESTATE AGENTS Help sell the home within specific timeframe 25% Help find a buyer for home 22 Help seller market home to potential buyers 17 Help price home competitively 16 Help seller find ways to fix up home to sell it for more 8 Help with negotiation and dealing with buyers 5 Help with paperwork/inspections/preparing for settlement 4 Help see homes available for seller to purchase 2 Other 2

93 National Association of Realtors 91 CHOOSING AN AGENT Sellers evaluate several factors when choosing an agent to assist them in the sale of their home. The most important factor when choosing a real estate professional, cited by 38 percent of recent sellers, is the reputation of the agent. For 20 percent of sellers, the agent s honesty and trustworthiness was the most important consideration. Both of these agent qualities are closely tied to the manner in which most sellers find an agent through referrals or as a result of their own experience with a particular agent, both of which can serve to validate reputation and trustworthiness. Exhibit 7-5 MOST IMPORTANT FACTOR IN CHOOSING A REAL ESTATE AGENT TO SELL HOME Agent has caring personality/ good listener Agent's 5% association with a particular firm 5% Agent's knowledge of the neighborhood 11% Professional designation(s) held by real estate agent 1% Other 6% Reputation of real estate agent 38% METHODS USED TO MARKET HOME Marketing the home is one of the most important tasks that real estate agents perform when selling a home. In fact, 17 percent of sellers reported that help with marketing the home was their chief expectation of their agent. Real estate agents usually do not depend on only one method to market a home, but rather employ several methods to increase the exposure of the home to potential buyers. Eighty-eight percent of sellers reported that their home was listed on the Internet, the most often-cited method overall and in each region, as well. Yard signs remain a significant marketing method employed by 8 in 10 sellers. Videos, often posted online on a number of real estate and consumer-oriented Web sites, are a relatively recent addition to the marketing options sellers may use. Overall, 9 percent of sellers indicated that they used video. Agent is friend or family member 14% Exhibit 7-6 Agent is honest and trustworthy 20% METHODS REAL ESTATE AGENT USED TO MARKET HOME, BY REGION (Percent of Respondents Among Sellers Who Used an Agent) Sellers who Sold a Home in the: All Sellers Northeast Midwest South West Listing on the Internet 88% 89% 88% 87% 83% Yard sign Open house Print newspaper advertisement Real estate magazine Direct mail (flyers, postcards, etc.) Video Television

94 Profile of Home Buyers and Sellers Chapter 7: Home Selling and Real Estate Professionals Exhibit 7-7 MULTIPLE LISTING SERVICE One of the most frequently used marketing methods is the Multiple Listing Service (MLS). The MLS allows sellers to make the availability of their home known to a substantial segment of real estate agents and potential buyers. In fact, 90 percent of sellers reported that their home was listed on an MLS. HOME LISTED ON MULTIPLE LISTING SERVICE Don t know No 5% 5% Yes 90% LEVEL OF SERVICE Real estate agents, and the firms with which they are affiliated, provide a variety of services that sellers can choose to use when selling their home. Some agents provide a broad range of services that generally entails managing the entire process of selling a home, while other agents perform a minimal set of services requiring that the seller actively participate in completing tasks such as holding open houses or contacting potential buyers. Among recent sellers, 81 percent reported that they used a real estate agent that provided a range of services and managed most aspects of the home sale. About one in 10 sellers used an agent who performed a limited set of services as requested by the seller. A similar percentage of sellers reported that their agent listed the home on the MLS and performed few, if any, additional services. Exhibit 7-8 LEVEL OF SERVICE PROVIDED BY THE REAL ESTATE AGENT A limited set of services as requested by the seller 9% The agent listed the home on the MLS and performed few if any additional services 9% A broad range of services and management of most aspects of the home sale 81%

95 National Association of Realtors 93 SELLER CHARACTERISTICS AND SERVICE LEVEL There are few discernable differences in the characteristics of sellers and the level of service they choose when working with an agent. The median age and income of sellers using each Exhibit 7-9 of the three broad service categories are similar. There are not any significant differences in the types of households that use different service levels. Sellers choosing limited or minimal service levels are somewhat more likely to reside in rural areas than sellers using an agent who provides a broad range of services. Sellers using an agent providing minimal services reported a lower median sale price and typically sold a smaller home than sellers using an agent offering a greater range of services. LEVEL OF SERVICE SOUGHT FROM THE AGENT, BY CHARACTERISTICS OF SELLERS AND HOMES SOLD (Percentage Distribution Among Sellers Who Used an Agent) * Less than one percent All Sellers Level of Service Sought from the Agent by the Seller A Broad Range of Services and Management of most Aspects of the Home Sale A Limited Set of Services as Requested by the Seller The Agent Listed the Home on the MLS and Performed Few if Any Additional Services Age of seller (median years) Median household income of seller (2006) Adult composition of seller household $91,950 $92,600 $90,300 $90,100 Married couple 76% 76% 77% 74% Single female Single male Unmarried couple Other Location of the home sold Suburb/Subdivision 58% 58% 57% 55% Small town Urban/Central city Rural area Resort/Recreation area Type of the home sold Detached single-family home 79% 79% 80% 76% Townhouse/row house Apartment/condo in building with 5 or more units Duplex/apartment/condo in 2 to 4 unit building * 2 Other Price of the home sold $240,000 $242,000 $245,000 $188,000 Size of the home sold (median) 1,830 1,840 1,860 1,710 Distance between the home purchased and home sold (median miles)

96 Profile of Home Buyers and Sellers Chapter 7: Home Selling and Real Estate Professionals Exhibit 7-10 AGENT COMPENSATION Sellers customarily pay the commission or fee associated with selling their home. Among recent sellers, 79 percent reported that they paid the agent who assisted them, and in nearly all cases this compensation was based on a percentage of the sales price of the home. HOW REAL ESTATE AGENT WAS COMPENSATED Paid by seller 79% Percent of sales price 74 Flat fee 4 Per task fee * Other 1 Don t Know 1 Paid by buyer and seller 8 Paid by buyer only 5 Other 5 Don t Know 2 * Less than one percent Exhibit 7-11 NEGOTIATING THE COMMISSION OR FEE Determining the compensation that the real estate agent receives for assisting with the sale of a home is often one of several points of negotiation when sellers choose an agent. Sometimes the real estate agent initiates the discussion of the commission or fee for selling the home and other times the seller raises the topic. Among recent sellers, 39 percent reported that the real estate agent raised the topic of compensation, while an additional 31 percent of sellers reported that they initiated the negotiation over the fee or commission. NEGOTIATING THE COMMISSION RATE OR FEE WITH THE REAL ESTATE AGENT Real estate agent brought up the topic 39% Client brought up the topic and the real estate agent was willing to negotiate their commission or fee Client brought up the topic and the real estate agent was not willing to negotiate their commission or fee Client did know commissions and fees could be negotiated but did not bring up the topic Client did not know commissions and fees could be negotiated

97 National Association of Realtors 95 Exhibit 7-12 RECOMMENDING THE AGENT Whether or not sellers would recommend the agent who assisted in their sale is a critical measure of the sellers satisfaction. Moreover, the important role of referrals and wordof-mouth in the process of selecting an agent suggests that potential home sellers value the experience of others when choosing an agent. Among recent sellers, 62 percent reported that they would definitely use the same agent again or recommend that agent to others. An additional 19 percent would probably use the agent again. WOULD SELLER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS 70% 60% 50% 40% 30% 20% 10% 62% 19% 9% 7% 0% Definitely Probably Probably Not Definitely Not Don't Know/ Not Sure 1%

98 Profile of Home Buyers and Sellers Chapter 8: For-Sale-by-Owner (FSBO) Sellers chapter A 8 For-Sale-by-Owner (FSBO) Sellers lthough a majority of home sellers depend on the assistance of a real estate agent to sell their home, some sellers take on the tasks associated with completing a sale themselves. Many of these sales are between a seller and buyer who knew each other prior to the sale, which in most cases would not require the assistance of a real estate professional. Despite a number of cross-currents in the housing market, the share of sellers who sell their home themselves has changed little in recent years. The share of home sellers who sold their home without the assistance of a real estate agent was 12 percent for the period from mid-2006 to mid-2007.

99 National Association of Realtors 97 FSBO SALES The share of home sellers who sold their home without the assistance of a real estate agent was 12 percent for the period from mid-2006 to mid Consistent with recent survey results, a significant share of FSBO sellers knew the buyer of their home prior to the transaction, suggesting that many sales in this segment are not open-market transactions. Rather, a significant share is between family members or personal acquaintances, a situation that often does not require the assistance of a real estate professional. FSBO sales account for a larger share of all sales in small town and rural locations, areas where real estate agents may not be as readily accessible as compared with urban or suburban areas. Although the overall FSBO rate varies between urban and rural areas, in both instances approximately half of sellers knew the buyer compared with just onethird of suburban FSBO sellers. Exhibit 8-1 FSBO AND AGENT-ASSISTED SALES, BY LOCATION Sellers who Sold a Home in a: All Sellers Suburb/Subdivision Small town Urban/ Central city Rural area Resort/ Recreation area For-sale-by-owner (FSBO) 12% 11% 14% 11% 17% 8% Seller knew buyer * Seller did not know buyer Agent-assisted Other * Less than one percent Exhibit 8-2 FSBO TRENDS The FSBO share was unchanged from 2006 at 12 percent of sales. All of the decrease in the FSBO share in recent years can be attributed to a decline in the percentage of open-market FSBO transactions, from 10 percent of home sales in 2004 to 7 percent in the current survey. FSBO AND AGENT-ASSISTED SALES, All FSBO (For-sale-by-owner) 14% 14% 13% 12% 12% Seller knew buyer Seller did not know buyer Agent-assisted Other

100 Profile of Home Buyers and Sellers Chapter 8: For-Sale-by-Owner (FSBO) Sellers CHARACTERISTICS OF FSBO SELLERS The demographic characteristics of FSBO sellers differ from those who use an agent. The typical FSBO seller reported an income of $79,000 compared with $92,000 for the typical agent-assisted seller. Those who first tried to sell their home as a FSBO and then used an agent tend to be somewhat younger and reported a lower median income than agent-assisted sellers. Among those FSBO sellers who knew the buyer of their home, a greater share were single male or single female households, compared with other seller categories. Exhibit 8-3 CHARACTERISTICS OF FSBO AND AGENT-ASSISTED SELLERS FSBO Agent-Assisted All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer All Agent-assisted Agent-assisted only First FSBO, then Agent-assisted Median age Median income (2006) $89,400 $79,000 $74,400 $84,800 $92,000 $92,400 $79,000 Household composition Married couple 75% 71% 66% 75% 76% 75% 78% Single female Single male Unmarried couple Other Number of homes owned One 15% 16% 24% 12% 14% 15% 17% Two Three Four Five or more Median (homes)

101 National Association of Realtors 99 Exhibit 8-4 TYPE OF HOME SOLD Homes sold without the assistance of a real estate agent are much more likely to be a mobile or manufactured home and less likely to be a detached singlefamily home. While three-quarters of FSBO sales were detached single-family homes, the share among FSBO sellers who knew the buyers was a somewhat smaller 71 percent. TYPE OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS FSBO Detached single-family home All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer Agentassisted 78% 75% FSBO 71% 76% 79% Townhouse/row house Duplex/apartment/condo in 2 to 4 unit building Apartment/condo in a building with 5 or more units Mobile/manufactured home Other Exhibit 8-5 LOCATION OF HOMES SOLD While most homes sold are in suburbs or subdivisions, a greater share of FSBO sales are in small towns and rural areas. Seventeen percent of FSBO sales were in small towns, compared with 14 percent of agent-assisted sales. Similarly, 14 percent of FSBO sales were in rural areas, compared with 9 percent of agentassisted sales. Even sharper distinctions are evident when considering FSBO sales among sellers who did and did not know the buyer of their home. One in five FSBO sales among sellers who knew the buyer of their home was in a small town, exceeding the share of both openmarket FSBOs and agent-assisted sales. A similar pattern is also evident among urban and rural home sellers. LOCATION OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS FSBO All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer Agentassisted Suburb/Subdivision 57% 53% 45% 58% 58% Small town Urban area/central city Rural area Resort/Recreation area 1 1 * 1 1 * Less than one percent

102 Profile of Home Buyers and Sellers Chapter 8: For-Sale-by-Owner (FSBO) Sellers FSBO SELLING PRICE The median price of homes sold as a FSBO ($180,000) is significantly less than the median price of homes sold with the assistance of a real estate agent ($240,000). Some of this difference is attributable to the sizable difference in the median price of open-market FSBO transactions ($207,900) as compared with homes sold as a FSBO between parties who knew each other ($142,400). Over two-thirds of home sales in the latter group were at the asking price, compared with 29 percent of openmarket FSBOs. Seven percent of all home sales were for a price exceeding the asking price, with only a modest variation among each group of FSBO and agent-assisted sellers. Among those who first attempted to sell their home as a FSBO but then worked with an agent, 78 percent reduced the asking price of their home at least once, and over 40 percent reduced it two or more times. Exhibit 8-6 SELLING PRICE, FSBO AND AGENT-ASSISTED SELLERS FSBO Agent-Assisted All Sellers All FSBO Seller Knew Buyer Seller did not Know Buyer All Agentassisted Agent-assisted only First FSBO, then Agent-assisted Median selling price $235,000 $180,000 $142,400 $207,900 $240,000 $242,000 $190,000 Sales price compared with asking price: Less than 90% 12% 6% 5% 6% 13% 12% 19% 90% to 94% % to 99% % % to 110% More than 110% 2 2 * Median (sales price as a percent of asking price) 97% 99% 100% 98% 97% 97% 96% Number of times asking price was reduced None 43% 57% 77% 45% 41% 42% 22% One Two Three or more * Less than one percent

103 National Association of Realtors 101 TIME ON THE MARKET The median time on the market for all home sales was eight weeks, up from six weeks in the previous survey. Among all FSBO sellers, the typical home was on the market for two weeks. Among openmarket FSBOs the median time on the market was four weeks, while sellers of FSBOs who knew the buyers reported a median of just one week. For a significant share of these sellers, a buyer may have already been identified, thus minimizing the length of time the home needed to remain on the market. For agent-assisted home sales, the median time on the market was eight weeks, up from six weeks in the previous year s survey. Exhibit 8-7 TIME ON THE MARKET, FSBO AND AGENT-ASSISTED SELLERS All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agentassisted Agent-Assisted Agent-assisted only First FSBO, then Agent-assisted Less than 1 week 7% 26% 49% 12% 4% 4% 2% 1 to 2 weeks to 4 weeks to 6 weeks to 8 weeks to 10 weeks to 16 weeks or more weeks Median (weeks) UREGENCY OF SALE The urgency of the home sale differs between FSBO and agent-assisted sellers. Among all FSBO sellers, 39 percent did not need to sell their home with any urgency, compared with 30 percent of agent assisted sellers. For open-market FSBO sellers, 42 percent reported that they were in no hurry to sell their home. Exhibit 8-8 SELLER URGENCY, FSBO AND AGENT-ASSISTED SELLERS Sellers needed to sell: All Sellers All FSBO FSBO Seller Knew Buyer Seller did not Know Buyer All Agentassisted Agent-Assisted Agent-assisted only First FSBO, then Agent-assisted Very urgently 19% 16% 14% 18% 19% 19% 28% Somewhat urgently Not urgently

104 Profile of Home Buyers and Sellers Chapter 8: For-Sale-by-Owner (FSBO) Sellers Exhibit 8-9 REASON FOR SELLING AS FSBO The chief reason that sellers chose to sell their home without the assistance of a real estate agent, cited by 56 percent, was that they did not want to pay a fee or commission. One in five FSBO sellers reported that their primary reason was that they sold their home to a friend or relative. Seventy percent of open-market FSBO sellers cited the fee or commission as the main reason, and 14 percent noted that a buyer contacted them directly. Among non-market FSBO sellers, the desire to avoid a fee or commission was important, but unlike open-market FSBO sellers, over half indicated that the most important reason was that they sold their home to a friend or relative. MOST IMPORTANT REASON FOR SELLING HOME AS FSBO All FSBO Seller Knew Buyer Seller did not Know Buyer Did not want to pay a commission or fee 56% 33% 70% Sold it to a relative, friend or neighbor Buyers contacted seller directly Did not want to deal with an agent Agent was unable to sell home Seller has real estate license * * 1 Could not find agent to handle transaction * * * Other * Less than one percent Exhibit 8-10 METHOD OF MARKETING HOME Half of FSBO sellers used a yard sign to market their home, and 29 percent indicated that their friends and family helped publicize the availability of the home to potential buyers. More than onequarter of FSBO sellers took no action to market their home. Seventy-one percent of open-market FSBO sellers used yard signs and one-third or more held open houses, listed their home on the Internet or used a print ad in a newspaper. For those sellers engaged in a non-market FSBO transaction, nearly half did not engage in any marketing activity. When marketing activities were undertaken, they most often took the form of friends and family spreading the word. METHOD USED BY FSBO SELLERS TO MARKET HOME (Percent of Respondents) All FSBO Seller Knew Buyer Seller did not Know Buyer Yard sign 50% 18% 71% Friends, relatives, or neighbors Open house Print newspaper advertisement Listing on the Internet Direct mail (flyers, postcards, etc) For-sale-by-owner magazine 4 * 7 Television * * * Video * * * None - Did not actively market home * Less than one percent

105 National Association of Realtors 103 Exhibit 8-11 MOST DIFFICULT TASKS For 18 percent of FSBO sellers, the most difficult task in selling their home was understanding and performing the necessary paperwork to complete the transaction. Preparing the home for sale and getting the price right were also frequently cited challenges. Among FSBO sellers who knew the buyer, the most difficult task was getting the price right, cited by 24 percent of sellers, suggesting that the price-setting in this case may be more accurately described as a negotiation between buyer and seller in a non-market transaction. By comparison, 10 percent of open-market FSBO sellers cited getting the price right as the most difficult task. MOST DIFFICULT TASK FOR FSBO SELLERS All FSBO Seller Knew Buyer Seller did not Know Buyer Understanding and performing paperwork 18% 15% 20% Preparing or fixing up the home for sale Getting the price right Selling within the length of time planned Attracting potential buyers Having enough time to devote to all aspects of the sale Helping buyer obtain financing Other Exhibit 8-12 BUYER REPRESENTATION Not surprisingly, just 4 percent of non-market FSBO sellers indicated that the buyer of their home worked with a real estate agent. In contrast, nearly onequarter of open-market FSBO sellers indicated that a real estate agent assisted the buyer of their home. BUYER OF FSBO HOME WAS ASSISTED BY A REAL ESTATE AGENT (Percentage of Distribution) All FSBO Seller Knew Buyer Seller did not Know Buyer Assisted by an agent 16% 4% 23% Not assisted by an agent Don t know 2 * 3 * Less than one percent Exhibit 8-13 COMPENSATION OF BUYER S AGENT Among all FSBO sellers who sold their home to a buyer using a real estate agent, over half reported that they paid the commission or fee of the agent. Over one-quarter of FSBO buyers reported that the compensation of the agent was paid by the buyer. Few FSBO sellers and buyers split the agent s fee. HOW REAL ESTATE AGENT USED BY THE BUYER OF FSBO HOME WAS COMPENSATED (Percentage of Distribution) All FSBO Seller Knew Buyer Seller did not Know Buyer Paid by seller 51% 43% 56% Paid by buyer Paid by both seller and buyer 2 * 3 Other * Less than one percent

106 Profile of Home Buyers and Sellers Chapter 8: For-Sale-by-Owner (FSBO) Sellers Exhibit 8-14 SELLING AS A FSBO AGAIN Among those FSBO sellers engaged in non-market sales transactions, 61 percent indicated that they were unsure if they would sell a home without the assistance of an agent again. For those FSBO sellers who successfully completed an open-market transaction, 42 percent were undecided about how they would sell their home. Having been successful once, 44 percent of these FSBO sellers noted that they would sell their current home without the assistance of a real estate agent. HOW FSBO SELLERS WILL SELL THEIR CURRENT HOME (Percentage of Distribution) Sell Themselves 19% Seller Knew Buyer Don't Know/ Not Sure 61% Use a Real Estate Agent 19% Seller Did Not Know Buyer Don't Know/ Not Sure 42% Sell Themselves 44% Use a Real Estate Agent 14%

107 National Association of Realtors 105 Imethodology N August 2007, the NATIONAL ASSOCIATION OF REALTORS mailed an eight-page questionnaire to 150,000 consumers who purchased a home between July 2006 and June The survey yielded 9,966 usable responses with a response rate, after adjusting for undeliverable addresses, of 6.9 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 comes from those buyers who also sold a home. All information in this Profile is characteristic of the 12-month period ending June 2007, with the exception of income data, which was reported for In some sections 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 For rounding three-quarters and omissions of first-time for space, buyers, percentage distributions may not the desire to own a home and establish add to 100 percent. their own household was the primary motivating factor underlying their home purchase.

108 Profile of Home Buyers and Sellers List of Exhibits Chapter 1: CHARACTERISTICS OF HOME BUYERS Exhibit 1-1 AGE OF HOME BUYERS, BY REGION Exhibit 1-2 HOUSEHOLD INCOME OF HOME BUYERS, 2006, BY REGION Exhibit 1-3 ADULT COMPOSITION OF HOME BUYER HOUSEHOLDS Exhibit 1-4 NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOUSEHOLD Exhibit 1-5 RACE/ETHNICITY OF HOME BUYERS, BY REGION Exhibit 1-6 RACE/ETHNICITY OF HOME BUYERS, BY ADULT COMPOSITION OF HOUSEHOLD Exhibit 1-7 PRIMARY LANGUAGE SPOKEN IN HOME BUYER HOUSEHOLD, BY REGION Exhibit 1-8 NATIONAL ORIGIN OF HOME BUYERS, BY REGION Exhibit 1-9 FIRST-TIME HOME BUYERS Exhibit 1-10 FIRST-TIME HOME BUYERS, BY REGION Exhibit 1-11 FIRST-TIME AND REPEAT HOME BUYERS BY HOUSEHOLD TYPE Exhibit 1-12 AGE OF FIRST-TIME AND REPEAT BUYERS Exhibit 1-13 HOUSEHOLD INCOME OF FIRST-TIME AND REPEAT BUYERS, 2006 Exhibit 1-14 RACE/ETHNICITY OF FIRST-TIME AND REPEAT BUYERS Exhibit 1-15 PRIMARY LANGUAGE SPOKEN IN FIRST-TIME AND REPEAT BUYER HOUSEHOLD Exhibit 1-16 NATIONAL ORIGIN OF FIRST-TIME AND REPEAT BUYERS Exhibit 1-17 PRIOR LIVING ARRANGEMENT OF FIRST-TIME AND REPEAT BUYERS Exhibit 1-18 PRIOR LIVING ARRANGEMENT, BY ADULT COMPOSITION OF HOUSEHOLD Exhibit 1-19 PRIMARY REASON FOR PURCHASING A HOME, FIRST-TIME AND REPEAT BUYERS Exhibit 1-20 PRIMARY REASON FOR PURCHASING A HOME, BY AGE Exhibit 1-21 PRIMARY REASON FOR PURCHASING A HOME, BY ADULT COMPOSITION OF HOUSEHOLD Exhibit 1-22 NUMBER OF HOMES CURRENTLY OWNED, BY AGE Exhibit 1-23 OTHER HOMES OWNED, BY AGE Exhibit 1-24 LIKELIHOOD OF PURCHASING ANOTHER HOME WITHIN TWO YEARS, BY AGE Exhibit 1-25 USE OF SOCIAL NETWORKING WEB SITES, BY AGE Chapter 2: CHARACTERISTICS OF HOMES PURCHASED Exhibit 2-1 NEW AND PREVIOUSLY OWNED HOMES PURCHASED, Exhibit 2-2 NEW AND PREVIOUSLY OWNED HOMES PURCHASED, BY REGION Exhibit 2-3 TYPE OF HOME PURCHASED, BY LOCATION Exhibit 2-4 TYPE OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Exhibit 2-5 Exhibit 2-6 Exhibit 2-7 Exhibit 2-8 Exhibit 2-9 TYPE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD LOCATION OF HOME PURCHASED, BY REGION LOCATION OF HOME PURCHASED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES LOCATION OF HOME PURCHASED VERSUS LOCATION OF HOME SOLD DISTANCE BETWEEN HOME PURCHASED AND PREVIOUS RESIDENCE

109 National Association of Realtors 107 Exhibit 2-10 Exhibit 2-11 Exhibit 2-12 Exhibit 2-13 Exhibit 2-14 Exhibit 2-15 Exhibit 2-16 Exhibit 2-17 Exhibit 2-18 Exhibit 2-19 Exhibit 2-20 Exhibit 2-21 Exhibit 2-22 Exhibit 2-23 Exhibit 2-24 Exhibit 2-25 Exhibit 2-26 FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY LOCATION FACTORS INFLUENCING NEIGHBORHOOD CHOICE, BY ADULT COMPOSITION OF HOUSEHOLD PRICE OF HOME PURCHASED, BY REGION PRICE OF HOME PURCHASED, NEW AND PREVIOUSLY OWNED PRICE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS PURCHASE PRICE COMPARED WITH ASKING PRICE, BY REGION SIZE OF HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES SIZE OF HOME PURCHASED, BY ADULT COMPOSITION OF HOUSEHOLD HOME SIZE AND PRICE PER SQUARE FOOT, BY REGION CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, BY LOCATION CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES CHARACTERISTICS OF HOME ON WHICH BUYER COMPROMISED, BY ADULT COMPOSITION OF HOUSEHOLD EXPECTED LENGTH OF TENURE IN HOME PURCHASED, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES EXPECTED LENGTH OF TENURE IN HOME PURCHASED, BY AGE PURCHASE PRICE, PRIMARY RESIDENCE AND SECOND HOME TYPE OF HOME, PRIMARY RESIDENCE AND SECOND HOME LOCATION OF HOME, PRIMARY RESIDENCE AND SECOND HOME Chapter 3: THE HOME SEARCH PROCESS Exhibit 3-1 FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, FIRST-TIME AND REPEAT BUYERS Exhibit 3-2 Exhibit 3-3 Exhibit 3-4 Exhibit 3-5 Exhibit 3-6 Exhibit 3-7 Exhibit 3-8 FIRST STEP TAKEN DURING THE HOME BUYING PROCESS, BY AGE INFORMATION SOURCES USED IN HOME SEARCH, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES INFORMATION SOURCES USED IN HOME SEARCH, BY AGE FREQUENCY OF USE OF DIFFERENT INFORMATION SOURCES USEFULNESS OF INFORMATION SOURCES LENGTH OF SEARCH, BY REGION LENGTH OF SEARCH FOR BUYERS WHO USED AN AGENT, BY FIRST-TIME AND REPEAT BUYERS Exhibit 3-9 WHERE BUYER FOUND THE HOME THEY PURCHASED, Exhibit 3-10 USE OF INTERNET TO SEARCH FOR HOMES, Exhibit 3-11 ACTIONS TAKEN AS A RESULT OF INTERNET HOME SEARCH, FIRST-TIME AND REPEAT BUYERS Exhibit 3-12 Exhibit 3-13 Exhibit 3-14 Exhibit 3-15 CHARACTERISTICS OF HOME SEARCHERS AND SEARCH ACTIVITY, BY USE OF INTERNET INFORMATION SOURCES USED IN HOME SEARCH, BY USE OF INTERNET WHERE BUYERS FOUND THE HOME THEY PURCHASED, BY USE OF INTERNET METHOD OF HOME PURCHASE, BY USE OF INTERNET

110 Profile of Home Buyers and Sellers Exhibit 3-16 Exhibit 3-17 Exhibit 3-18 Exhibit 3-19 Exhibit 3-20 Exhibit 3-21 Exhibit 3-22 WHAT HOME BUYERS WERE LOOKING FOR ONLINE, FIRST-TIME AND REPEAT BUYERS WHAT HOME BUYERS WERE LOOKING FOR ONLINE, BY AGE VALUE OF WEB SITE FEATURES WEB SITES USED IN HOME SEARCH BY FIRST-TIME AND REPEAT BUYERS WEB SITES USED IN HOME SEARCH, BY AGE NUMBER OF VISITS TO HOME PRIOR TO CLOSING, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES NUMBER OF WEEKS FROM SALES CONTRACT TO CLOSING, BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Chapter 4: HOME BUYING AND REAL ESTATE PROFESSIONALS Exhibit 4-1 METHOD OF HOME PURCHASE, Exhibit 4-2 METHOD OF HOME PURCHASE, BY REGION Exhibit 4-3 METHOD OF HOME PURCHASE, NEW AND PREVIOUSLY OWNED HOMES Exhibit 4-4 METHOD OF HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD Exhibit 4-5 AGENT REPRESENTATION DISCLOSURE, FIRST-TIME AND REPEAT BUYERS Exhibit 4-6 BUYER REPRESENTATIVE ARRANGEMENT WITH AGENT, FIRST-TIME AND REPEAT BUYERS Exhibit 4-7 HOW REAL ESTATE AGENT WAS COMPENSATED Exhibit 4-8 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS Exhibit 4-9 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES Exhibit 4-10 Exhibit 4-11 Exhibit 4-12 Exhibit 4-13 Exhibit 4-14 Exhibit 4-15 Exhibit 4-16 Exhibit 4-17 Exhibit 4-18 Exhibit 4-19 Exhibit 4-20 Exhibit 4-21 WHAT BUYERS WANT MOST FROM REAL ESTATE AGENTS, BY ADULT COMPOSITION OF HOUSEHOLD NUMBER OF REAL ESTATE AGENTS USED IN THE HOME SEARCH BENEFITS PROVIDED BY REAL ESTATE AGENT DURING HOME PURCHASE PROCESS, FIRST-TIME AND REPEAT BUYERS HOW BUYER FOUND REAL ESTATE AGENT, FIRST-TIME AND REPEAT BUYERS HOW BUYER FOUND REAL ESTATE AGENT, BY ADULT COMPOSITION OF HOUSEHOLD NUMBER OF REAL ESTATE AGENTS INTERVIEWED BY FIRST-TIME AND REPEAT BUYERS MOST IMPORTANT FACTORS WHEN CHOOSING AN AGENT IMPORTANCE OF REAL ESTATE AGENT SKILLS AND QUALITIES AGENT SKILLS AND QUALITIES CONSIDERED VERY IMPORTANT BY FIRST-TIME AND REPEAT BUYERS AGENT SKILLS AND QUALITIES CONSIDERED VERY IMPORTANT BY ADULT COMPOSITION OF HOUSEHOLD SATISFACTION WITH REAL ESTATE AGENT SKILLS AND QUALITIES WOULD BUYER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS

111 National Association of Realtors 109 Chapter 5: FINANCING THE HOME PURCHASE Exhibit 5-1 Exhibit 5-2 Exhibit 5-3 Exhibit 5-4 Exhibit 5-5 Exhibit 5-6 Exhibit 5-7 Exhibit 5-8 BUYERS WHO FINANCED THEIR HOME PURCHASE, BY AGE BUYERS WHO FINANCED THEIR HOME PURCHASE, BY ADULT COMPOSITION OF HOUSEHOLD PERCENT OF HOME FINANCED BY FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES SOURCES OF DOWNPAYMENT, FIRST-TIME AND REPEAT BUYERS SOURCES OF DOWNPAYMENT, BY ADULT COMPOSITION OF HOUSEHOLD TYPE OF MORTGAGE, FIRST-TIME AND REPEAT BUYERS HOME PURCHASE IS A GOOD FINANCIAL INVESTMENT, FIRST-TIME AND REPEAT BUYERS, AND BUYERS OF NEW AND PREVIOUSLY OWNED HOMES HOME PURCHASE IS A GOOD FINANCIAL INVESTMENT, BY ADULT COMPOSITION OF HOUSEHOLD Chapter 6: HOME SELLERS AND THEIR SELLING EXPERIENCE Exhibit 6-1 AGE OF HOME SELLERS, BY REGION Exhibit 6-2 HOUSEHOLD INCOME OF HOME SELLERS, 2006 Exhibit 6-3 ADULT COMPOSITION OF HOME SELLER HOUSEHOLDS, Exhibit 6-4 NUMBER OF CHILDREN UNDER THE AGE OF 18 RESIDING IN HOME SELLER HOUSEHOLD Exhibit 6-5 RACE/ETHNICITY OF HOME SELLERS, BY REGION Exhibit 6-6 PRIMARY LANGUAGE SPOKEN IN HOME SELLER HOUSEHOLD, BY REGION Exhibit 6-7 LOCATION OF HOME SOLD Exhibit 6-8 PROXIMITY OF HOME SOLD TO HOME PURCHASED Exhibit 6-9 TYPE OF HOME SOLD, BY LOCATION Exhibit 6-10 SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD Exhibit 6-11 SIZE OF HOME PURCHASED COMPARED TO HOME RECENTLY SOLD, BY AGE OF SELLER Exhibit 6-12 PRIMARY REASON FOR SELLING PREVIOUS HOME, BY AGE Exhibit 6-13 TENURE IN PREVIOUS HOME, BY TYPE OF HOME Exhibit 6-14 TENURE IN PREVIOUS HOME, BY AGE OF SELLER Exhibit 6-15 NUMBER OF HOMES PREVIOUSLY OWNED, BY AGE Exhibit 6-16 DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY REGION Exhibit 6-17 DISTANCE BETWEEN HOME PURCHASED AND HOME RECENTLY SOLD, BY AGE Exhibit 6-18 TASKS PERFORMED IN THE SELLING PROCESS Exhibit 6-19 METHOD USED TO SELL HOME, BY REGION Exhibit 6-20 METHOD USED TO SELL HOME, BY SELLER URGENCY Exhibit 6-21 METHOD OF SALE, BY BUYER AND SELLER RELATIONSHIP Exhibit 6-22 METHOD USED TO SELL HOME, Exhibit 6-23 SALES PRICE COMPARED WITH LISTING PRICE, BY REGION Exhibit 6-24 SALES PRICE COMPARED WITH LISTING PRICE, BY SELLER URGENCY Exhibit 6-25 UNDERTOOK HOME IMPROVEMENT OR REMODELING PROJECTS WITHIN 3 MONTHS PRIOR TO PUTTING HOME ON THE MARKET Exhibit 6-26 AMOUNT SPENT ON HOME IMPROVEMENT PROJECTS, BY TYPE OF HOME

112 Profile of Home Buyers and Sellers Exhibit 6-27 Exhibit 6-28 Exhibit 6-29 Exhibit 6-30 Exhibit 6-31 AMOUNT SPENT ON HOME IMPROVEMENT PROJECTS, BY ORIGINAL LISTING PRICE NUMBER OF WEEKS RECENTLY SOLD HOME WAS ON THE MARKET, BY REGION SALES PRICE COMPARED WITH LISTING PRICE, BY NUMBER OF WEEKS HOME WAS ON THE MARKET NUMBER OF TIMES ASKING PRICE WAS REDUCED, BY NUMBER OF WEEKS HOME WAS ON THE MARKET SATISFACTION WITH THE SELLING PROCESS Chapter 7: HOME SELLERS AND THEIR SELLING EXPERIENCE Exhibit 7-1 Exhibit 7-2 Exhibit 7-3 Exhibit 7-4 Exhibit 7-5 Exhibit 7-6 Exhibit 7-7 Exhibit 7-8 Exhibit 7-9 Exhibit 7-10 Exhibit 7-11 Exhibit 7-12 METHOD USED TO FIND REAL ESTATE AGENT NUMBER OF AGENTS CONTACTED BEFORE SELECTING ONE TO ASSIST WITH SALE OF HOME DID SELLER USE THE SAME REAL ESTATE AGENT FOR THEIR HOME PURCHASE? WHAT SELLERS MOST WANT FROM REAL ESTATE AGENTS MOST IMPORTANT FACTOR IN CHOOSING A REAL ESTATE AGENT TO SELL HOME METHODS REAL ESTATE AGENT USED TO MARKET HOME, BY REGION HOME LISTED ON MULTIPLE LISTING SERVICE LEVEL OF SERVICE PROVIDED BY THE REAL ESTATE AGENT LEVEL OF SERVICE SOUGHT FROM THE AGENT, BY CHARACTERISTICS OF SELLERS AND HOMES SOLD HOW REAL ESTATE AGENT WAS COMPENSATED NEGOTIATING THE COMMISSION RATE OR FEE WITH THE REAL ESTATE AGENT WOULD SELLER USE REAL ESTATE AGENT AGAIN OR RECOMMEND TO OTHERS Chapter 8: FOR SALE BY OWNERS SELLERS Exhibit 8-1 FSBO AND AGENT-ASSISTED SALES, BY LOCATION Exhibit 8-2 FSBO AND AGENT-ASSISTED SALES, Exhibit 8-3 CHARACTERISTICS OF FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-4 TYPE OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-5 LOCATION OF HOME SOLD, FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-6 SELLING PRICE, FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-7 TIME ON THE MARKET, FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-8 SELLER URGENCY, FSBO AND AGENT-ASSISTED SELLERS Exhibit 8-9 MOST IMPORTANT REASON FOR SELLING HOME AS FSBO Exhibit 8-10 METHOD USED BY FSBO SELLERS TO MARKET HOME Exhibit 8-11 MOST DIFFICULT TASK FOR FSBO SELLERS Exhibit 8-12 BUYER OF FSBO HOME WAS ASSISTED BY A REAL ESTATE AGENT Exhibit 8-13 HOW REAL ESTATE AGENT USED BY THE BUYER OF FSBO HOME WAS COMPENSATED Exhibit 8-14 HOW FSBO SELLERS WILL SELL THEIR CURRENT HOME

113 National Association of Realtors 111 The NATIONAL ASSOCIATION OF REALTORS RealtyCheck is the source for information about all aspects of the real estate industry. Let your organization harness the power of NAR s survey capabilities and analyses to broaden your understanding and strengthen your business. You can contract with NAR to provide insights like those seen in this survey for your state or local market. The behavioral and demographic information from NAR s national surveys can help your organization tailor products and services to your market. For all of our national surveys, your organization can commission NAR to (a) add proprietary questions or (b) more extensively sample defined geographies when conducting our national surveys. The custom information is provided only to your organization for re-sale, sharing, or release to the media. NAR Research also has the ability to create custom surveys, designed specifically for your organization, targeted to your business interests and focused on your geographic priorities. Leverage For three-quarters NAR s extensive of first-time survey buyers, data and market information to master dynamic the desire economic to own a and home real estate and establish trends on the local, regional, and their own household was the primary national level. NAR RealtyCheck provides valuable information to meet motivating factor underlying their home your purchase. organization s critical planning needs. For organizations that need to understand the impact of a turbulent economy and a dynamic industry, NAR RealtyCheck provides information to improve your operations and profitability. To learn more about NAR RealtyCheck products and services please visit or contact TJ Doyle at (202) or Hristina Toshkova at (202)