With home prices dropping 1.2 percent nationwide in the third quarter, the timing couldn't be better for the release of the National Association of Realtors' 2006 Profile of Home Buyers and Sellers. Buyers and sellers are scrutinizing brokerage services in hopes that they will pay less, get rebates and hire the right Realtor to help them buy low and sell high.

According to the survey, technology is dominating many aspects of the real estate transaction process, but the most important factors are still high touch.

David Lereah, NAR's chief economist, said that for the first time the association is able to quantify the popularity of different kinds of brokerage services. "What we find is that competition is alive and well, fueled by the growth in technology, and that consumers largely prefer more traditional methods of buying and selling homes," he said. "In finding a home, most home buyers begin the search process online, but most often learn about the home they buy from a real estate agent. Even though many other buyers are first learning about the home they buy online, they're still purchasing though an agent -- they value the skills professionals bring to the table."

Whew! That's good news for agents. Most sellers still prefer full-service brokerage, where professionals handle all aspects of the transaction process from listing to closing, including preparation of the home for sale, pricing, marketing, showing the home, contract negotiations and closing. Even so, limited services which may include so-called "discount" brokerage and minimal services such as MLS-only listings are included as important market segments provided by NAR members. In those transactions, sellers take a more active role in the process such as showing their homes themselves or preparing the contract themselves.

The survey of over 7,500 respondents found 83 percent of sellers use full-service brokerage, 9 percent limited services and 8 percent use minimal service, such as simply listing a property on a MLS.

Since brokerage comparison data is new to the annual survey, historic comparisons aren't available, but NAR 2006 President Thomas M. Stevens from Vienna, Va., said, "Anecdotally, there's been a modest rise in recent years, and in all probability a somewhat higher level of sellers used full-service brokerage through the early part of this decade," said Stevens, senior vice president of NRT Inc. "Our sense is that professionals will continue to experiment with business models and that the lion's share of consumers will continue to opt for full-service brokerage, but there's room for all ethical business practices in this industry," he said.

Additional findings, to be further developed in a future report, show consumer satisfaction with the level of brokerage service varies, with 71 percent of sellers being very satisfied with their full-service experience and another 24 percent somewhat satisfied. Limited services also received high marks with 76 percent being generally satisfied; however, 50 percent of sellers using minimal service were dissatisfied with their experience.

There appears to be a relationship between a modest rise in limited and minimal services and a decline in unassisted sellers. "Limited and minimal brokerage services cater largely to owners who would prefer to sell on their own but recognize they need some level of professional help," Stevens said. "These services generally are a good match for certain consumers, and help to explain a decline in owners selling purely on their own."

A downtrend in the number of for-sale-by-owner transactions continues, currently at a record-low market share of 12 percent; it was 13 percent in 2005, down from an all-time high of 18 percent in 1997. In addition, a higher share of FSBO properties are not placed on the open market -- 40 percent of those transactions were "closely held" between parties who knew each other in advance (family or acquaintances), up from 39 percent in 2005 and 32 percent in 2004.

"When you factor out the properties that were not placed on the open market, the actual number of FSBOs is only 7 percent -- the rest are simply unrepresented sellers in private transactions," Stevens said. NAR began tracking the FSBO market in 1981; the record high was 20 percent in 1987.

The median home price for sellers who use an agent is 31.9 percent higher than a home sold directly by an owner; $247,000 vs. $187,200. However, unassisted sellers in this survey, unlike agent-assisted sellers, were more likely to be in a small town or rural area, and their income was 7.2 percent lower than sellers using agents -- suggesting their homes may be worth less than the typical home sold by an agent, said the NAR.

In the 2005 survey, the price difference was 16.0 percent, but the differences in location, housing type and seller income between homes sold by an agent and those sold directly by an owner were insignificant. This implies the price difference reported in the previous survey is more representative for fairly comparable properties.

The most difficult tasks reported by FSBOs are preparing the home for sale, understanding and performing the paperwork, and selling within the desired time frame.

To find a real estate agent, the survey shows the most important factor for both buyers and sellers is word-of-mouth recommendation. The most important criteria in choosing an agent are reputation and trustworthiness. "These personal qualities underscore the fact that real estate is very much a face-to-face people business -- it appears that an individual agent's reputation, trustworthiness and knowledge of the market are more important factors than the company they work for or business model. What people want is competence and trust," Stevens said.