There's a significant difference in the real estate services that homebuyers choose to use, according to the 2003 "Survey of Real Estate Services" report, just issued by the National Association of Realtors. Homebuyer behavior varies with the type of home purchased, the age of the home, frequency of Internet use, and whether they are first-time or repeat buyers.

What services they choose also depends largely on what their real estate agents suggest, which should be of considerable interest to brokers, franchisors, and service providers interested in strategic alliances.

Although the report won't be ready for sale until October 29th, it should be highly anticipated as it takes a close look at the ancillary services associated with real estate brokerage -- mortgage financing, appraisals, home inspections, warranties and more.

To whet report buyers' appetites, the NAR has released a few enticing tidbits, namely that buyers tend to listen to their real estate agents about which service providers to use -- especially first-time buyers. There's also a treasure trove of suppositions that can go along with the report's findings.

"A little more than one-third (36 percent) of all homebuyers said that the main reason they chose a particular lender was on the recommendation of their real estate agent. Homebuyers relied heavily on their agent's recommendation for home warranty (54 percent), environmental inspections (51 percent), home inspector (51 percent) and pest inspector (50 percent)," stated the NAR's release.

Except for the categories of "home improvement retailer" and "utility hook-ups," first-time buyers were given recommendations to use a particular service by a real estate agent more often than repeat buyers. For example, 73 percent of first-time buyers were recommended a mortgage broker by their real estate agent as were over 66 percent of repeat buyers.

Since most home purchases are financed through a mortgage loan, said the report, mortgage lenders were among the most frequently used real estate service providers. Nine out of ten homebuyers used a mortgage lender, but here's where it gets interesting -- a little more than one-third (36 percent) of all homebuyers said that the main reason they chose a particular lender was on the recommendation of their real estate agent.

That's a heckuva closing rate.

This report is significant because it helps to quantify the effectiveness of real estate agents as conduits to in-house and third-party service providers.

It also should suggest to brokers who want to promote in-house ancillary services such as mortgage financing that they train their buyer's agents to concentrate on both first-time and repeat homebuyers, and not to assume that a seasoned buyer isn't interested in learning about services.

Brokers also need to make their services competitive enough so that they don't lose business to outside service providers. Consider that three-fourths of first-time homebuyers were recommended a lender by their real estate agent and only one-third used them. What happened to the other two-thirds? Can that "closing rate" be improved? All a broker would have to do is find out why the others didn't close and make appropriate adjustments.

While the report's focus isn't whether brokers should or should not provide ancillary services, nor does it delve into how much more or less frequently buyers use in-house ancillary services over third-party services, it is not much of a leap to assume that if a broker were to include some ancillary services such as mortgage financing or home warranties, that the brokerage's agents just might suggest them to clients, hopefully at least as often as they recommend out-of-the-house third-party services.

If that is the case, this report is a huge justification for franchise organizations such as the Cendant brands (Century 21, Coldwell Banker and ERA,) Prudential and GMAC, each of whom would like to see their broker affiliates increase their profitability by adding network ancillary services to their real estate sales services.

The report is also a justification for independent brokerages to add ancillary services. Dallas' Ebby Halliday Realtors already makes it a company policy to parcel out its prolific relocation business only to agents who routinely suggest the brokerage's mortgage financing services to clients, which they can tell is "routine" by the agent's comparative "closing rate."

In a world where broker profitability increasingly depends on promoting "full service" brokerage and ancillary services, the one-stop-shop business model makes more and more sense and is indirectly validated by this report. With clients taking their agents' advice one-third to one-half of the time to choose their ancillary services providers, it simply makes good business sense that those service providers are subsidiaries and/or affiliates of the brokerage as much as possible.

Published: October 17, 2003

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.