According to Deputy Chief Economist Robert Kleinhenz of the California Association of Realtors, much of the data in the just-released "2005 Internet Versus Traditional Buyer Study" shows a continuation of previously documented trends, but there are some new wrinkles that Realtors should note, namely differences in the behavior and expectations of online and traditional buyers.
Nearly two-thirds of all first-time homebuyers used the Internet as a significant part of the homebuying process, while less than half of repeat homebuyers did so, according to the study. Internet buyers are more likely to be first-time buyers, and are younger, wealthier, better educated and more likely to be married than traditional buyers. Traditional buyers are more likely to be repeat buyers.
"First-timers had more of a comprehensive approach to looking at homebuying and financing online," says Kleinhenz, "while repeat buyers already had some of that knowledge, so they were more inclined to look at specific locations. The Internet buyer does more research."
Internet buyers, defined as those who used the Internet as a significant part of the homebuying process, spend 4.7 weeks looking for homes and neighborhoods before contacting an agent. Traditional buyers spend 1.6 weeks at that task, but once the Internet buyer engages a Realtor, they take only two weeks on average, to find a home compared to seven weeks for the traditional buyer.
In 2001, the year the annual study was first introduced, traditional homebuyers looked at 15.1 homes with a Realtor prior to making a purchase, nearly twice as many as Internet buyers, who looked at 7.9 homes.
"That's a stunning contrast," says Kleinhenz. "The Internet buyer views 6.2 homes in person with a Realtor before making a selection, while the traditional buyer views 14 homes. This has been consistent over the years, that the Internet buyer spends more time upfront and less time shopping in person. They also say there is some payoff to upfront research -- they don't feel they are shortchanged; they feel more in control, and better understand the process and are more satisfied with the transaction and services provided by their agent."
What's the lesson for Realtors that Internet buyers spend less time with their agents but are more satisfied overall?
Kleinhenz offers, "It has to do with the research process. The Internet buyer has a better understanding of the level of involvement, duties and services the real estate agent provides. Buying a home is like buying other durable goods and services -- you have a variety of consumers who use different tools. Traditional buyers rely more heavily on Realtors to provide information about neighborhoods and guide them through the process. The Internet buyer also relies on a Realtor, but they have done more educating themselves, so they have a better understanding of how Realtors help them."
"The opportunity for Realtors is realizing that many traditionals are a stone's throw from being Internet buyers," suggests Kleinhenz. "There is an opportunity to encourage homebuyers to take advantage of online resources, and the other thing is, a Realtor needs to be prepared to understand there are different expectations among buyers and how you are going to meet them."
He advises, "Get a good sense of what the expectations of your buyer are so you are sure to meet them. The one-size-service model doesn't suit all. We as consumers are accustomed to getting more tailor-made services than in the past. Yes, we still get bargains, but when it comes to buying durable and high-value goods, you have a range of consumers who go for high-touch service and some, who prefer to do some things on their own."
According to the survey, homebuyers who used the Internet as an integral part of the homebuying process increased to 62 percent in 2005, compared with 56 percent the previous year. Homebuyers using the Internet surpassed the 50 percent mark for the first time in the six-year history of C.A.R.'s survey in 2004.
With well over half of homebuyers using the Internet, and both Internet and traditional homebuyers viewing fewer homes with their Realtors before choosing a home, it's clear that the Internet is becoming the primary source of information which should be utilized to advantage by Realtor marketers.
C.A.R.'s "2005 Internet Versus Traditional Buyer Survey" will be available in May 2005 for purchase in electronic format for $19.95 for C.A.R. members and $39.95 for non-members, a hard copy version is also available for $24.95 for C.A.R. members and $49.95 for non-members by calling (213) 739-8227 or logging on to www.rebsreports.com .