A new study of home buyers and sellers across the U.S. shows that For Sale By Owner (FSBO) activity fell to a 25-year low in 2006 and that homes sold with the assistance of a real estate professional typically had a median selling price that was 31.9 percent higher than homes sold by the property owner.
Locally, in Massachusetts, where many home sellers were reluctant to acknowledge the shift to a buyers market until this past summer, FSBO activity actually rose this past year to 18 percent of the market from 11 percent last year. However, nearly two-thirds of all FSBO sales in Massachusetts were closely held transactions where the seller knew the buyer, as a result just 7 percent of all FSBO properties were placed on the open market this past year.
Furthermore, like their counterparts nationally, Bay State homeowners who chose to hire a real estate agent or broker to sell their home were able to realize a median selling price that was 23.4 percent higher than homes sold by the property owner without the assistance of a real estate professional.
These findings, taken from the
2006 Profile of Home Buyers & Sellers report for Massachusetts, offer compelling data on the value REALTORS® provide to consumers during the property transaction process. The report, produced annually since 2003 by the Massachusetts and National Associations of REALTORS®, also contains a wealth of information on the demographics, housing preferences, and home buying and selling experiences of today’s consumers, including the role and service s they want a real estate agent to perform for them during the home search and sale processes.
Specifically, the study found that among Massachusetts homeowners who engaged a real estate broker to help sell their home, 93 percent used a full-service brokerage, 7 percent used a limited service agency, and less than 1 percent chose a minimum service firm, such as one in which “the agent listed the home on the MLS and performs few, if any, additional services.”
Meanwhile, as a possible reflection of today’s slower home sales pace, the tasks that most Bay State home sellers said they wanted their agent to perform was to price the home competitively (20%) and sell it within a specific timeframe (33%).
Among home buyers, nearly nine in 10 (89%) of those looking to purchase a home in Massachusetts during the past year sought the services of a real estate professional to assist them with their home search, and when they did over three-quarters (78%) opted to work with a buyer representative.
This compares to 64 percent of home buyers nationwide who chose to work with a buyer representative, and reflects a steady increase in the practice and popularity of buyer agency in the Bay State over the past two years – before MAR successfully worked to clarify the state’s agency law – when just 46.8 percent of buyers used a buyer agent to help them find a home.
Indicative of the growing influence technology has had on the real estate industry and the point at which agents are contacted during the home search process, the study found that nearly half (46%) of all Bay State home buyers in 2006 first learned about the home they purchased over the Internet, a measurable gain from last year when 38 percent of buyers said they first found out about the home they bought online and up sharply from 2003 when only 17 percent of buyers identified the Internet as the sources from which they first learned about the home they purchased.
The study further shows that the role of real estate agents has not been diminished by the Internet. In fact, the opposite has occurred, with local buyers who shopped for a home online more likely to use an agent to purchase their home than buyers who did not use the Internet during their home search (87% vs. 79%). This is significant since today 71 percent of Bay State home buyers report that they use the Internet frequently to search for homes, compared to fewer than half (44%) of all buyers who said they searched the Internet regularly as part of the home purchase process in 2003.
Nationally, as well as in Massachusetts, buyers stated that the most significant factors influencing their decision on where to buy a home were: (1) the quality of the neighborhood, (2) the home/neighborhood’s convenience to work, (3) neighborhood’s convenience to friends/family, and (4) the quality of the local school district. Additionally, data indicates that over the past year, the typical Massachusetts home buyer looked at nine homes over a period of 12 weeks before purchasing, and that their new home was located just nine miles from their previous residence.
Finally, despite its reputation as a state with high housing costs, the study found that Massachusetts has attracted a higher rate of first-time home buyers into the market during the past year than the U.S. as a whole, with 45 percent of all buyers in the Bay State being first-time home purchasers compared to just 36 percent of all U.S. home buyers.
To view an Executive Summary of the 2006 Massachusetts Profile of Home Buyers & Sellers report or to access the entire study, visit the Housing & Research Data section of marealtor.com.
