The California Association of REALTORS has just released a ground-breaking report comparing Internet and traditional homebuyers.
The report, called Internet Versus Traditional Buyers, studies the very thing all Realtors want to know. Is the Internet a viable place to find customers? At last, a real estate organization has quantifiable proof that Internet buyers go about the homebuying process differently from traditional homebuyers. More importantly, the report shows that Internet buyers are indeed buyers, and not tire-kickers.
The facts of the report seem to point to some clear implications that should not go unheeded by Realtors.
First, traditional homebuyers spend a nominal amount of time investigating the housing market before contacting a Realtor, while Internet homebuyers invest significant time investigating the housing market and financing options before contacting a Realtor.
This raises marketing and information delivery opportunities significantly for wired Realtors who can be instrumental in saving buyers time by helping them eliminate unsuitable homes as well as select homes to choose from. According to CAR, 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.
Second, Internet-savvy Realtors have first-mover advantage over traditional Realtors to capture buyers. Internet buyers may not be as motivated to act quickly because they want to perform their own research. According to CAR, Internet buyers also spend nearly three times as much time investigating real estate markets before contacting a Realtor than traditional home buyers do, 6.3 weeks for Internet buyers compared to 2.2 weeks for traditional homebuyers.
The good news is that by the time the Internet buyer contacts an agent, he or she has a "good understanding of what they want, where they want to live, and what they can afford," said C.A.R. president Gary Thomas. "They've often chosen the neighborhoods they want to evaluate, narrowed their choice of homes, come up with a list of homes they want to see and understood what they can afford and what their mortgage options are."
Once they have made a choice Internet homebuyers act quickly. also purchase a home in less time than do traditional buyers, the survey reported.
Third, most Internet homebuyers find their Realtor on the Internet. The C.A.R. study also found that most Internet homebuyers find their Realtor on the Internet, while most traditional buyers find their Realtor as a result of sign calls, farming, previous transactions, or referrals.
The lesson here is that the Internet is a communication tool. When Realtors market themselves on the Internet and use Internet technologies to be found and to engage with buyers, they are speaking the language of the buyer. Other key findings of C.A.R.'s report include the following:
- Internet buyers spend 4.6 weeks investigating homes and neighborhoods before contacting a Realtor as opposed to 1.9 weeks for traditional homebuyers.
- Most Internet homebuyers, 89 percent, started using the Internet in the homebuying process "before they started looking for a specific home."
- Seventy-eight percent of Internet homebuyers found their Realtor on the Internet, not as a result of farming, referrals, advertising, or sign calls.
The Internet significantly changed the expectations of Internet homebuyers.
- Most (92 percent) used the Internet much like a screening process to narrow their choices and options.
- A third or more of Internet homebuyers think the Internet helped them better understand housing options (34 percent) and what they could afford (33 percent)
- Nearly a quarter of Internet homebuyers found the type of house they wanted on the Internet (23 percent). Most Internet homebuyers found their REALTOR* on the Internet (78 percent) at a Web site that listed a home they were interested in (88 percent of the 78 percent).
- Most Internet homebuyers (97 percent) agree that "using the Internet helped them better understand the home-buying process."
- All Internet homebuyers (100 percent) agree that "using the Internet helped me understand home values better."
- Seventy-one percent of Internet homebuyers were first shown the home they purchased by a Realtor.
- The average Internet homebuyer visited 4.6 different Web sites (excluding mortgage Web sites) as part of the homebuying process.
- Nearly all Internet homebuyers (96 percent) are very likely to use the Internet the next time they purchase a home.
- The average Internet homebuyer visited 2.6 different Web sites to get mortgage information.
- Over half of Internet homebuyers (54 percent) got their mortgages online.
- Internet homebuyers tend to have achieved a higher level of education than traditional homebuyers, are on average younger (37.3 years) than traditional homebuyers (42.9 years), and are somewhat more likely to be married (84 percent) than traditional homebuyers (78 percent).
- Internet homebuyers on average purchased a more expensive home than traditional homebuyers ($403,752 versus $321,950).
The upshot is that if Realtors aren't using the Internet already, they are missing some terrific opportunities to engage buyers, but that doesn't mean that they should approach buyers in traditional ways.
Michael Russer, aka Mr. Internet understood this so well that he trademarked a name for the Internet buyer, the Internet Empowered Consumer (tm), and has used this everyman consumer as the basis for his seminars, books, and online writings.
"The interpersonal dynamics on line are so different from traditional real estate. Management and agents need to realize this," said Russer in an Agent News interview.
"Many of the things we are taught about interacting with consumers and how to take control of the transaction will actually work against licensees online. Any attempt to take that power or control away from the Internet-empowered consumer will backfire."