For most Americans, buying a home is one of the largest financial transactions they will ever undertake. Their motivation may be a desire to own their own home, to accommodate a job change, or to gain a smaller or larger living area.
In recent years, we have seen a dramatic change in the valuation of residential real estate. On average, my guess is that the typical home in metro Atlanta is down about 30 percent from its high point five years ago.
You might expect, as a result of this change, that home buying, in general, would have lost some of its luster. But according to a detailed research report, that hasn’t happened.
The National Association of Realtors invests a lot of time and money in its recently-released annual “Profile of Home Buyers and Sellers,” and I believe you will find some of the details interesting:
— First time buyers accounted for 39 percent of the total, only slightly below the historical norm of 40 percent.
I had assumed that tight credit, calls for larger down payments, and declining values would have discouraged first-timers to a greater extent. Apparently this is not the case.
— Among recent homebuyers, 30 percent stated that their primary reason for their purchase was their desire to own a home.
Apparently the American dream has not diminished much since George Bailey and Uncle Billy made ownership possible for so many in Bedford Falls.
Another surprise to me was that real estate agents continue to play a key role in the search for just the right house. When I entered the real estate business in 1978, each agent was issued large “listing books” every two weeks. Often, the information was obsolete by the time the books were printed and delivered, but no one ever talked about that.
Each book was clearly marked “Confidential” on the cover, and the information inside was like diamonds and jewels, unobtainable directly by the public. We were the gatekeepers of the sacred scrolls and were paid well to dispense the information as the need arose.
Today all that information and much, much more is freely available to anyone with a smartphone or a laptop, and this study shows that the role of the agent has changed accordingly.
* In 2012, use of the Internet in the home-search process rose to an all-time high of 90 percent, and for buyers under age 44 that figure was 96 percent.
You might come to the conclusion that a real estate agent is no longer considered a necessary part of the buying or selling process. But the opposite seems to be the case:
* A full 89 percent of homebuyers made their purchase through a real estate agent or broker, and that share has increased steadily since 2001.
I believe the reason is clear. Yes, finding and reading information about homes for sale is easier now that it has ever been. Buyers don’t need an agent to do that.
But understanding, interpreting, and applying that information is not so easy. And if you’ve never bought a home before, or even if the last home you bought was several years ago, you can easily drown in today’s mad dash between contract and closing.
* Last year, 87 percent of homebuyers financed their home purchase, and that’s where the expertise is most needed.
Today’s home-loan applicant faces multiple pitfalls on the road to a successful closing. Appraisals come in low, inspections come back nit-picky, lenders demand more down payment, and what used to be a very good credit score no longer measures up. This is where today’s agents demonstrate their ability to engineer a real estate transaction.
A real estate transaction lacking the assistance of an experienced agent is much, much more likely to fall by the wayside than one being shepherded by a real estate professional. I am always amazed by the number of deals that fall through due to technical problems along the way.
That’s why nine out of ten home sellers were assisted by a real estate agent or broker last year. And of the 9 percent who successfully sold “by owner,” a third knew the buyer prior to the transaction.
Most agree that our market is showing signs of stabilization, and an early recovery is no longer out of the question. When it arrives, it’s clear that real estate agents will have an important part to play in that recovery.
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