Open houses, ha! Online home buying is on the rise.
In the ultra-competitive arena of home sales (remember American Beauty?), "business as usual" can be the kiss of death for realtors. At least that's what suburban Detroit realtor Shane Neely believes. So to give himself an edge with customers, the 27-year-old Neely set up a Web site six months ago to help his clients navigate the maze of his multiple listings, houses ranging from the low-end $20,000 fixer-uppers, to high six-figure suburban dream homes. From the comfort of their couches or offices, Neely's clients log on to his site and take virtual panoramic tours of homes for sale, narrowing their potential picks to just a few choice listings. And if they have questions about neighborhoods or schools, no problem; Neely is available 24-7 via e-mail. It's a no fuss, no muss approach to real estate sales that allows Neely to spend "quality time" with customers, rather than banking on "quantity" to make a sale. "The Internet makes my clients happy," says Neely. "And when my clients are happy, I'm happy."
Chalk up another industry that's bowed to the Internet. In 1999, 37 percent of all homebuyers shopped for their houses on the Net, according to a survey by the National Association of Realtors, rising from 17 percent in 1997 and 2 percent in 1995. By 2002, the Association expects that more than 50 percent of potential buyers will log on to the Net to find their dream home. "The Net is a great marketing tool for realtors. Those agents that aren't using the Net to attract customers, or as a way to help customers sell their homes, are really missing the boat," says senior economist Kevin Roth, lead author of the Association's "2000 Profile of Home Buyers and Sellers."
According to Roth, 3 in 10 real estate pros had a Web page last year, and 3 in 5 used e-mail in their practices. Nearly 60 percent of firms had a Web page in 1999, and 7 in 10 firms reported generating revenue from the Net. "It's all about marketing," says Roth. "If you can purchase plane tickets, buy a car, make stock transactions, and order dinner on the Net, why not buy a house, or at least use the Net for information-gathering about houses and neighborhoods."
Aside from streamlining and improving customer relations, there's another big plus for realtors on the Net: Tech-savvy clients aren't afraid of spending money. On average, Web home shoppers have an annual median income of $69,900 compared with $55,800 for the non-Internet home searchers. And that higher income translates to more expensive homes. In 1999, the median home price paid by a Net shopper was $138,000, compared with $120,000 for the non-Internet user.
Economics aside, the demographic differences are less glaring. In 1999, the average online home-searcher was 36-years-old; 68 percent were married, and 47 percent had children under the age of 18. The average non-wired potential homebuyer was 41-years-old; 64 percent were married, and 41 percent had children under 18. Both groups were just as likely to have two wage earners in the home.
These differences aren't that significant, says Roth, because even people who don't use the Net for home searching right now still may be using it for other purposes, like e-mail. And once they get more comfortable using the medium and recognize its greater potential, it won't be long before they start using the Internet to surf for home information or even make an offer for a new abode online, says Roth. In 1999, only 4 percent of Web surfers made such an offer via the Internet and the majority of them still used a real estate agent to close the deal. But Roth expects online transactions among buyers, realtors, and lenders to grow, as broadband and other technologies make the bottom-line pursuits of buying easier and perceptually safer.
But don't think that real estate agents, like Neely, are going on the endangered species list. While there have been predictions that the Internet would reduce the roles agents play in home sales, the Association found that Internet homebuyers are actually using agents for these transactions at a higher percentage than those buyers who take traditional routes. Today, 87 percent of Web home shoppers use a real estate agent or broker, while 76 percent of traditional buyers work with an agent. It seems that with big transactions like home purchases, we still like the human touch. Even if it's just to say "Congratulations. Sign here."