Consumer Real Estate: Service Model Assessment (2006)

Consumer Real Estate: Service Model Assessment July 2006

Murray Consulting

www.harrisinteractive.com

Table of Contents Background & Objectives Methodology Service Model Glossary of Terms Key Findings Detailed Findings Questions for Both Buyers and Sellers Questions for Sellers Questions for Buyers Demographics

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3 4 5 6 12 20 38 55

Background & Objectives The purpose of this study is to understand emerging trends in the real estate industry. The overall objectives of the study are: – –

to understand the key issues that are important to people as they engage in a real estate transaction, either a purchase or sale To understand the service model used (traditional with agent, FSBO, or something in between) and people’s perception of it.

This study will attempt to understand the thoughts and behaviors throughout the buying and selling process. Specifically, the following questions are addressed in this research: – –

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How sellers/buyers gathered and used information in preparation of selling or their home.

What method was used when buying or selling a home, their perceptions and the outcome of using this model.

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Methodology ■

■

■

An Internet survey methodology was utilized for data collection. Harris Interactive sent email invitations to targeted members of our HPOL panel (people who we had previously identified as being involved in a real estate transaction). We also sent some invitations to “general” HPOL (non-identified) for weighting purposes.

Respondents qualified to participate in the research if they were over the age of 18, and a U.S. citizen who either bought or sold a home since January 2005.

The interviews were conducted from June 8 – June 29, 2006.

Completed surveys with 1097 qualified Sellers and 1180 qualified Buyers were obtained.

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Service Model Glossary of Terms ■

■

■

■

■

■

■

Traditional Model: where you negotiate with an agent for the amount that you will pay, usually expressed in a percentage of the home price, for helping you sell the home.

Traditional Model with a reduced commission rate: where you negotiate a discount from the perceived standard commission rate in your area, usually expressed as a percentage of the home price, for helping you sell the home; you still receive all standard services.

Flat Fee Model: where you pay a fixed price for the services that you want to use. These sometimes require that you perform some of the services that would normally be provided by an agent, such as showing your home.

Limited Service/Discount Model: where you pay a lower percentage of the home price than is customary in your area; you usually receive a limited number of standard services and typically have to perform some task(s) of selling the home on your own.

Fee-For-Service Model: where you have a menu of options that you can choose from, depending on how much of the work of selling and closing the home you prefer to do yourself.

MLS Listing Only Model: where you pay a low flat fee to the company for placing your home on the MLS system. No other services are provided for free, although some companies will have a Fee for Service system where you can buy other services.

For Sale By Owner: where you do all of the activities that are required to sell your home, and you may use a lawyer to help you complete the legal aspects of the transaction.

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Key Findings Insight: Awareness of alternative models is high...

■

■

Overview of transaction – 57% of sellers and 23% of buyers both bought and sold a home – A little over 40% of respondents indicated that this was their first home transaction – Over half of the homes purchased (67%) or sold (62%) were $250,000 or below.

Almost all buyers and sellers were aware of different selling models when selling a home.

– Sellers (80% aware) were more aware of different models for selling homes than buyers (66% aware).

– 46% of sellers and 41% of buyers ranked maximizing the net amount when selling a home as most important when selling a home. Next was getting the best sales price (with Sellers 27% and Buyers at 34%). Protecting my security was the lowest at 5% each.

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Key Findings Insight: …but Traditional service models are still in favor.

■

■

Various models appeared to be used when selling homes, with the traditional real estate agent and brokerage company indicated the most at 45%. Next was the traditional estate agent and company with a reduced commission (25%) and for sale by owner (20%).

– Homeowners with homes prices under $250k were much more likely to use the FSBO (for sale by owner) method (58%) than those with more expensive homes.

– After selling their home, 49% of Sellers were Very to Extremely Likely to use the same model next time.

– Of the Sellers likely to switch models, 51% would use a traditional service model, suggesting some dissatisfaction among those who had tried an alternative model. Most of these would choose the “reduced commission” model, suggesting that this group wants to save money but still get the services of a traditional sales model.

Respondents used a variety of models when purchasing a home with the most popular being the traditional model using a “Buyer’s Agent” that only represents the buyer (32%).

– 70% of respondents that purchased a home indicated a high satisfaction level with their agent or service provider.

– Only 1% of buyers used a model where the company rebates part of the commission to them.

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Key Findings Insight: Both buyers and sellers want and need to be able to trust their agent.

■

Importance of a realtor.

– More than one-half of Buyers (56%) and Sellers (59%) feel it is Extremely or Very Important to have agent representation in the sale of a home. Buyers (69%) and Sellers (65%) both believe that it is Important to Extremely Important that the realtor selling the house should be associated with a firm with a well-known brand in the area.

– Sellers indicated that the most important activities that an agent or company can do during the selling transaction include being completely trustworthy (88%), representing the Seller’s interests fully and fairly (87%), having great communication in the manner and timing preferred (83%), and getting the best price and terms for their home (83%) – Likewise Buyers also indicate that the most important activities of an agent or company are being completely trustworthy (83%), representing my interests fully and fairly (83%), and managing all the details to assure a smooth closing (79%).

– Sellers (69%) and buyers (61%) think of their agent as a trusted advisor and both (67%/61%) also prefer to use an agent or company because they are professionals.

– About six in 10 Sellers (58%) were aware of certifications that some agents and brokers have earned that reflect significant additional training and standards of performance, and 30% of Sellers indicated that an agent having these certifications would cause them to select that agent over an agent without these certifications.

– 66% of sellers and 70% of buyers were highly satisfied with their agent of service provider. Also, 75% of sellers and 81% of buyers would refer a friend or family member to this agent, brokerage company or service provider.

– 73% of sellers and 75% of buyers are in agreement that selling or buying a home is a stressful process.

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Key Findings Insight: Agents/realtors are seen as a valuable part of setting the price of a home.

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■

Talking to an agent/realtor was the most popular way to establish a potential price for a home (69%).

– Two-thirds of sellers indicated that they either received their listed price (31%) or that their final home sale was 1-5% below the original listing price (33%).

Three-fifths of both buyers and sellers were also in agreement that their agent or service provider received a fair compensation.

– 29% of sellers and 26% of buyers indicate that the total cost estimate for the house transaction was less than $5,000 – Likewise, 20% of sellers indicate that the costs were 5% or less of their selling price and 25% of buyers indicated that the costs were 5% or less of the purchasing cost.

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Key Findings Insight: The internet is a key source of information and a key “awareness” tool for sellers.

■

Homeowners and future homeowners utilize many different resources when educating themselves about selling or purchasing a home.

– Sellers indicated that the internet (53%) was the most popular source of information. Next was friends, relatives and associates (39%), yard signs (38%) and driving around neighborhoods (38%). Less than 10% mentioned direct mail from developers or outdoor billboards.

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–

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Sellers with homes valued between $401-600k homes tended to utilize the most resources when selling their homes.

The most popular way sellers learned about websites was through search engines (46%), recommendations from friends/associates/family (32%) and links from other websites (32%).

■ Some of the most popular websites visited were MLS sites by city or area of the country (45%), Realtor.com (43%), agent websites (40%) and local real-estate company websites (38%).

Supporting the internet’s effectiveness as a tool for sellers, listing on the MLS was also ranked the most important means of marketing a home (67%).

– Other important ways to market a home were more traditional: using a well-known and respected agent in the community (49%), yard signs (37%), and open houses (31%).

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Key Findings Insight: Financing rates/terms are important, but so is service from lenders.

■

83% of buyers got a mortgage to purchase their home.

– –

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■

The most popular sources of mortgages that were considered were a local bank or credit union (35%) and a mortgage lender referred by an agent/service provider (35%).

These two sources were also the most common final mortgage choice: 24% of buyers chose to use the mortgage lender referred by an agent/service provider and 22% used a local bank or credit union.

The most common reason that a lender was chosen was because they offered the best rates, terms and fees (35%).

The majority (57%) of buyers were highly satisfied with their mortgage lending process and only 7% were not satisfied.

–

The most popular reasons why a buyer was not satisfied revolved around poor communication from the lender and too much time, effort, and paperwork.

Insight: Consumers have limited knowledge of issues surrounding Title Insurance.

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54% of buyers had to get a Title Policy, 23% did not and 23% were not sure if they were required to get one or not.

The most common ways to locate a company to get the Title Policy were that their mortgage broker selected the company (32%) or their agent recommended their preferred title company (25%).

54% of buyers did not think or were not sure it was important to investigate different title services. And 39% of buyers were not even sure of the company that provided them with their title policy.

Insight: Buyers have a positive outlook toward bundles or packaged services.

■

Buyers were in a relatively high level of agreement for all forms of bundles or packaged services.

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Questions for Both Buyers and Sellers

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The vast majority of buyers (77%) did not sell a house in conjunction with their purchase. Sellers are more evenly split, with slightly under one-half (43%) not buying a home at the time they sold their home.

Bought or Sold A Home?

77%

Among those who have bought a home, those aged 61+ are significantly more likely than others to both buy and sell a home.

Age: 18-25 26-40 41-60 61+

4% 19% 24% 41%

57%

43%

23%

Buyers that only bought a home

Buyers that also sold a home

Sellers that only sold a home

Sellers that also bought a home

Q410: Have you bought or sold a home since January of 2005? Base: Qualified Respondents Sellers (n=1097) Buyers (n=1180)

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The purchase/sale of their home was a repeat transaction for more than one-half of buyers (60%) and sellers (56%). About four in ten of both buyers and sellers indicated that it was the first time they had purchased/sold a home.

First Purchase/Sale?

60% 56%

44% 40%

Buyer Seller

First time

Not the first time

Q1505: Which of the following best describes the purchase/sale of your home? Base: Qualified Respondents Sellers (n=1097) Buyers (n=1180)

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Awareness of different available service models to sell a home is higher among sellers, with 80% indicating awareness. About one-third (34%) of buyers indicate they were not aware of the various available service models.

Awareness of Different Models for Selling a Home

20% No 34% Sellers Buyers

80% Yes 66%

Q900: Were you aware that there are many different service models for selling your home, other than the common ways of listing with an agent in a traditional brokerage firm? Base: All Respondents (Buyers n= 1180 Sellers n=1097) Page 15

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Both buyers and sellers agreed that the most important factors when selling a home are maximizing the net amount and getting the best sales price.

Factors Considered Most Important When Selling Home Hispanic Buyers are significantly more concerned about getting the best sales price for their home.

Hispanic White

59% 32%

46% 41%

34%

Buyers

Sellers

27%

8%

9%

9%

10% 5%

Getting the best sales price

Selling my home quickly

Having painless transaction

Maximizing the net amount

5%

Protecting my security

3%

2%

None of these

Q905: Regardless of when or if you have sold a home, what do you think would be most important to you at the time that you might be selling a home? Please select the factor that you would consider the most important. Base: All Respondents (Buyers n= 1180 Sellers n=1097) Page 16

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More than one-half of buyers (56%) and sellers (59%) feel it is Extremely or Very Important to have agent representation in the sale of a home.

Importance of Agent Representation Buyer:

56%

Seller:

59%

Buyers Sellers 30% 28%

31% 26% 23% 17%

16%

15%

8%

Extremely important

Very important

Important

Somewhat important

6%

Not at all important

Q910: How important do you believe it is to have an agent representing your interests in the sale of a home? Base: All Respondents (Buyers n= 1180 Sellers n=1097) Page 17

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About two-thirds of both buyers and sellers think it is Important to Extremely Important to be represented by a well-known brand in their area when they sell their home.

Importance of Brand-Name Representation Buyer:

69%

Seller:

65%

Buyers Sellers

31% 29% 23%

24%

21% 15%

20%

15% 12%

Extremely important

Very important

Important

Somewhat important

11%

Not at all important

Q915: How important do you believe it is when selling your home to be represented by a firm with a well-known brand in your area? Base: All Respondents (Buyers n= 1180 Sellers n=1097) Page 18

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Similarly, the vast majority of both buyers and sellers find it Important to Extremely Important that the person who represents them be a RealtorÂŽ.

Importance of REALTOR Buyer:

77%

Seller:

71% Buyers Sellers

30%

29% 27%

17%

27%

19%

18%

14% 10%

Extremely important

Very important

Important

Somewhat important

Q920: How important to you is it that the person who represents you be a REALTOR? Base: All Respondents (n= 2277)

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9%

Not at all important

Questions for Sellers

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The vast majority of sellers (70%) used some form of traditional representation to sell their homes. About one in five (20%) sold their home themselves without representation (FSBO).

Approach to Sell Home Sellers with homes sold for$250k and less were much more likely to sell their homes themselves.

70%

For Sale by Owner: <$150k $151-250k $251-400k $401-600k $601-900k $901-1.5m >$1.5m

45%

29% 29% 15% 15% 5% 4% 4%

25% 20%

4%

Traditional real estate agent and brokerage company

Traditional real For Sale By Ow ner estate agent and company w ith a reduced commission

Flat Fee company

2%

1%

1%

2%

MLS listing only

Limited Service/Discount company

Fee-for-service company

Not sure

Q500: What type of approach did you use to sell your home? Base: Qualified Sellers (n=1097)

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About one in three (29%) sellers indicate total selling costs of less than $5,000. Alternatively, 13% indicate that the costs were less than 5% of their selling price.

Cost of Selling Home Total Cost Estimate

Percentage Estimate

Over $100,000

2%

Not sure

$50,000 to $100,000

2%

Above 6% of selling price

$25,000 to $49,999 $10,000 to $24,999

$1,000 to $2,999

Less than $1,000

4%

6% of selling price

4%

13%

5% of selling price

10%

7%

4% of selling price

12%

$5,000 to $9,999

$3,000 to $4,999

5%

6%

8%

3% of selling price

8%

2% of selling price

1%

1% of selling price

1%

29% 13%

5%

13%

Q505: What do you estimate the total costs were for selling your home? You may use a percentage estimate or a total cost estimate. Base: Qualified Sellers (n= 1097 ) Page 22

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About 2/3 of homes purchased and sold in the last 18 months had a final sale prices of $250,000 and below.

Final Purchasing/Selling Price 40%

<$150,000

35% 27%

$151,000 - $250,000

27% 14% 15%

$251,000 - $400,000 7%

$401,000 - $600,000

10% 5% 4%

$601,000 - $900,000 $901,000 - $1.5 million >$1.5 million Decline to answer

Purchasing Price Selling Price

1% 2% 0% 1% 7% 6%

Q1510: What is the final price that you purchased/sold your home for? Please do include costs such as the attorneyâ&#x20AC;&#x2122;s fee, closing costs, etc. Base: All Qualified Respondents (sellers n=1097 buyers n=1180) Page 23

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While the Internet was most often cited (53%) as being a good source of information for home sales, other more traditional sources also received positive feedback: “friends, associates, family members” (39%), “yard signs” (38%) and “driving around neighborhoods” (38%).

Evaluation of Sources of Info The Internet

53%

5%

35% 39%

Friends, associates, family members Driving around neighborhoods

10%

37% 38%

9%

42%

Yard signs

38%

13%

34% 33%

10%

Newspapers

Top 2 Bottom 2 Did not use

43% 25%

Visiting real estate offices

11%

Signs directing me to housing developments

12% 11%

Home magazines

Outdoor billboards

61% 15% 63%

14% 15%

Direct mail from agents or brokerages Direct mail from developers

54% 20%

9% 8%

60%

14% 15%

Q520: How good were the following sources of information during your home search or sale? Please select “Did not use” if you did not use that source. Base: All Qualified Seller Respondents (n=1097) Page 24

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71% 69%

For sellers that used the Internet, the most popular sites were MLS sites by city or area of the country, Realtor.com, agent websites and local real estate company websites.

Internet Sites Visited Internet sites visited MLS sites by city or area of the country Realtor.com Agent websites Local real-estate company websites National or regional brokerage websites (Coldwell Banker, Prudential, RE/MAX, etc.)

RealEstate.com For Sale By Owner websites Builder or developer websites Local newspaper websites Craigslist.org HouseValues.com Other HomeGain.com Large lender wensites (Chase, Countrywide, Wells Fargo, etc.)

LendingTree.com eLoan ABN/Amro Owners.com ZipRealty.com

Percentage 45% 43% 40% 38% 26% 22% 21% 18% 17% 11% 10% 8% 7% 6% 6% 5% 4% 3% 2%

Q525: Which of the following Internet sites did you visit during your search for information? Please select all that apply. Base: Used The Internet For Source Of Info (n= 712) Page 25

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Search engines were the most common way sellers learned about websites to use in their information searches. Sellers also learn about websites through recommendations from friends, associates and family, as well as links from other websites.

How Did You Learn about This/These Site(s) 46%

Search engine Recommendation from friend, associate, family

32%

Links from other websites

32%

Home magazines

10%

Yard signs

10%

18-25 26-40 41-60 60+-

Home Price: <$150k $151-250k $251-400k $401-600k $601-900k $901-1.5m

5%

Direct mail

29% 37% 25% 42%

Sellers selling homes between $401-600k were much more likely to learn about specific websites through newspaper advertising than sellers with homes outside these price ranges:

7%

Development sales offices

Other

Age:

11%

Open houses

Billboards

Sellers ages 60+ are much more likely to learn about websites through recommendations from friends, associates and family.

13%

Newspaper advertising

1%

11% 11% 7% 27% 5% 3%

20%

Q530: How did you primarily learn about this/these site(s)? Please select up to 3 resources that you used the most. Base: Used The Internet For Source Of Info (n= 712) Page 26

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About six in ten sellers (58%) are aware of certifications that some agents have that reflect significant additional training and standards of performance. These certifications appear to cause a slight increase in these agents being selected over those without these certifications.

Awareness of Certification

No, 42%

Yes, 58%

Choice Based on Awareness of Certification

First time sellers are much less likely to be aware of additional certifications that some agents and brokers have earned.

First time unaware seller Repeat unaware seller

51% 34%

Yes, 30%

Not sure, 33%

No, 36%

Q535: Are you aware of certifications that some agents and brokers have earned that reflect significant additional training and standards of performance, like Certified Buyerâ&#x20AC;&#x2122;s Representative, Certified Residential Specialist, Certified Luxury Home Marketing Specialist, etc. Base: Qualified Sellers (n= 1,097) Q540: Would knowing that an agent had any of these certifications cause you to select him/her over other agents or brokers? Base: Qualified Sellers (n= 1,097) Page 27

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Sellers generally will spend about six months working on selling their home â&#x20AC;&#x201C; most activities had low percentages in the 7-12 months prior to sale. Typically the last months leading up to listing the home involve information gathering and transactions â&#x20AC;&#x201C; selecting the model, the agent and actually listing the home.

Activities Prior to Sale Eight in ten sellers indicate that they did not read books on how to sell homes or selected an alternative model.

Did not do 10 - 12 this

Months Prior to Sale

Activities

1-3

4-6

7-9

Used Internet to gain comparable prices for homes in my neighborhoods

43%

16%

7%

11%

40%

Used Internet to estimate w hat my home might sell for

42%

14%

7%

9%

43%

Obtained/developed market analysis/broker price assessment

34%

11%

5%

7%

48%

Decided w hich model and company/agent to use to sell home

31%

11%

6%

6%

48%

Used new spaper to find home prices for my neighborhood

30%

11%

6%

7%

54%

Called friends&family for recommendations on agents/brokers

23%

9%

6%

6%

58%

Called a previous agent to help me sell my home

23%

8%

4%

7%

61%

Used internet to get info on different companies/brokers/agents

21%

8%

3%

5%

67%

Used Internet to find out alternative w ays to sell my home

20%

10%

3%

6%

66%

Interview ed agents/companies to determine w hich model to use

20%

8%

3%

4%

67%

Selected an alternative model for selling my home

12%

5%

2%

2%

81%

Read books on how to sell a home

9%

6%

3%

3%

81%

Used the internet to list my home for sale

21%

6%

3%

5%

67%

Q600: When selling a home, you may have done some activities in more than one month. In that case, please select time frames that apply.

Base: Qualified Sellers (n= 1,097) Page 28

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While sellers feel that all the activities that their agents do (or might do) are important during the selling transaction, they place the most importance on elements of trustworthiness and getting them the best price for their home.

Selling Process Evaluation Activities Being completely trustworthy Representing my interests fully and fairly Getting the best price and terms for my home Having great communication in the manner and timing preferred Being educated on the process and decisions that will need to be made Getting a detailed comparative price analysis Having an effective and well-executed marketing plan to sell my home Selling my home quickly Being with me at closing or contacting me after the close of escrow Managing the showing process the least disruptive and assuring all people seeing the home are pre-qualified Providing assistance in preparing the home for sale Following up after closing to see how things are going

Top 2 88% 87% 83% 83% 73% 73% 73% 71% 68%

Bottom 2 3% 4% 4% 5% 7% 7% 8% 9% 15%

67%

10%

60% 51%

16% 24%

Q605: How important are various things below that a company or agent does or might do for you during the selling transaction. Base: Qualified Sellers (n= 1,097) Page 29

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Although Sellers have indicated that they use the Internet to gather information during the process of selling their home, they do not see the Internet as a replacement for an agent. Sellers believe that selling their home is a stressful process and see their agent as a trusted advisor through this process.

Selling Process Evaluation Top 2

Neither agree nor disagree

Bottom 2

N/A

Selling a home is a stressful process

73%

13%

10%

4%

I think of my agent or service provider as a trusted advisor

69%

15%

7%

9%

I prefer to use an agent or a company because they are professionals

67%

16%

11%

6%

My agent or service provider received fair compensation

64%

13%

10%

13%

I wanted people who saw my home to be pre-qualified

55%

25%

14%

6%

I had plenty of time to handle the home-selling process

50%

20%

25%

4%

The seller is in control during the transaction

45%

35%

17%

2%

The process of selling a home is easy to understand

39%

25%

35%

1%

I can get all the info I need to sell a home from the Internet

29%

28%

37%

6%

The sevices provided by agents are less valuable now that the internet has all of the info on homes for sale

26%

24%

47%

4%

I prefer to do most of the work in selling a home

23%

22%

52%

3%

Statements

Q615: Please indicate your agreement with the following statements. Base: Qualified Sellers (n= 1,097)

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Sellers feel that the most important marketing tool for selling their home is a listing in the MLS (67%), followed by using a well-known and respected agent in the community (49%). While they use the Internet to gather useful information, only one-third of sellers feel it is an important marketing tool for their home.

Important Means of Marketing Home Listing in the MLS

67%

A well-known and respected agent in the community

49% 37%

Yard signs

33%

The Internet, on as many sites as I can list it Open Houses

31%

Newspaper advertising

25%

Brochures for my home

13%

Home books and magazines (Harmon Homes, for example)

7%

Direct mail to potential buyers

5%

Other

Sellers ages 60+ are the least likely to view listing in the MLS as important.

Age: 18-25 26-40 41-60 60+

87% 70% 70% 56%

3%

Q620: Which are the most important means of marketing your home? Please select up to three things that you feel are the most important vehicles in marketing your home. Base: Qualified Sellers (n=1097) Page 31

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Sellers use different means to establish the potential selling price of their home, with the most common method being talking with agents or other service providers (69%), followed by looking at ads in the newspaper or MLS listing (47%) and just having a good understanding of their homeâ&#x20AC;&#x2122;s value (46%).

Means of Establishing Potential Selling Price Talked with agents or other service providers

69%

Looked at ads in the newspaper or MLS listings

47%

Just had a good understanding of the value of my home

46%

Went to websites that offer comparable sales in my neighborhood Talked with neighbors about prices of their homes offered or sold at

37%

21%

Q625: How did you establish a potential price for your home? Please select all that apply. Base: Qualified Sellers (n=1097)

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Most important to sellers is making the sale as profitable as possible (28%) and getting the best price (26%). Very few sellers are concerned about being deeply involved, saving money, handling the transaction themselves or having the most number of potential buyers seeing their home â&#x20AC;&#x201C; they seek a professional.

Most Important Thing in Selling Home

28%

â&#x20AC;&#x153;Lack of Involvementâ&#x20AC;?

26%

17% 13% 6% 3% To get the Get the best best net price amount out of the sale of the home

2%

2%

Use a Have Assure that Handle the Save money Personally professional someone the greatest transaction be deeply who knew else handle number of myself involved how to sell the majority potential homes of the details buyers would be able to see my home Q630: What one thing was most important to you in the sale of your home? Base: Qualified Sellers (n=1097)

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Sell the home quickly

2%

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1% Other

The final selling price for a home generally stays near the original list price, with 31% of sellers reporting they received the list price and 33% reporting receiving between 1% and 5% below the list price.

Final Selling Price The listing price

31%

1% - 5% below the original listing price

33%

6% - 10% below the original listing price

14%

11% or more below the original listing price

6%

1% - 5% above the original listing price 6% - 10% above the original listing price 11% or more above the original listing price

9%

3%

4%

Q635: When you completed the sale of your home, which of the following did you receive? If you changed the original listing price on your home, please answer based on the original price at which you listed the home. Base: Qualified Sellers (n=1097) Page 34

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About two-thirds (66%) of sellers are highly satisfied with their agent or service provider. The vast majority (75%) would recommend their agent or service provider to others. This indicates that even some of those that are not highly satisfied would recommend their agent or service provider.

Satisfaction with Agent or Service Provider 66%

Recommend?

No, 15%

26%

Not Sure, 9%

Yes, 75%

8%

Top 3

Middle 4

Bottom 3

Q640: How satisfied would you say you were with your agent or service provider? You may use any number from 1 to 10. Base: Non-FSBO Seller or Buyer (n=885) Q645: Would you refer your friends and family to this agent, brokerage company or service provider? Base: Non-FSBO Seller or Buyer (n=885) Page 35

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Given their recent experience, about one-half of sellers have a high likelihood to use the same model when selling another home in the future.

Likelihood to Use the Same Model

49% 28% 25%

24%

15% 9%

Extremely likely

Very likely

Likely

Somewhat likely

Not at all likely

Q650: Given your recent experience, how likely are you to use the same type of service model that you used in the future? Base: Qualified Sellers (n=1097) Page 36

Harris Interactive Inc.

Of the sellers that are likely to switch selling models for future home sales, about one-half (51%) would use a traditional service model, and one in ten would sell their home themselves.

Models To Be Considered Next Time 51% 35%

23%

16% 11% 5%

Traditional real Traditional real estate agent estate agent and company and brokerage with a reduced company commission

For Sale By Owner

MLS listing only

4%

Flat Fee company

4% 2%

Fee-for-service Limited Service company Company

Not sure

Q655: Which of the following service models might you consider the next time you sell a home? Please select the one model you would be most likely to use the next time you sell a home. Base: Not Likely to Use the Same Service Model (n=255 ) Page 37

Harris Interactive Inc.

Questions for Buyers

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Harris Interactive Inc.

About one in three buyers (32%) used a â&#x20AC;&#x153;buyerâ&#x20AC;&#x2122;s agentâ&#x20AC;? that only represents the buyer, while 18% used an agent that represents both the buyer and seller.

Roughly one-fifth (19%) bought a home without representation and made an offer directly to the seller.

Approach to Buy Home

32%

19%

19%

18% 10% 1%

"Buyer's Agent" that only represents the buyer

An offer directly to the seller (FSBO)

Agent that The same agent that represents both the had listed the house buyer and seller with their name on a yard sign or listing

Company that rebates part of the commission to me

Q510: What type of approach did you use to buy your home? Base: Qualified Buyers (n=1180) Page 39

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Other

One-fourth of buyers indicated the compensation of the agent/service provider was less than $5,000 (or 1% to 5% of the selling price).

Estimate: Agent/Service Provider Compensation Total Cost Estimate Over $100,000 $50,000 to $100,000 $25,000 to $49,999

1%

Percentage Estimate

2%

Above 6% of selling price

3% 10%

5% of selling price

$5,000 to $9,999

10%

4% of selling price

Less than $1,000

9%

11%

3% 4% 13%

3% of selling price

13%

$1,000 to $2,999

2%

6% of selling price

$10,000 to $24,999

$3,000 to $4,999

12%

Not sure

26%

4%

2% of selling price

1% of selling price

2%

25%

1%

Q515: What do you estimate your agent or service provider was compensated for helping you purchase your home? You may use a percentage estimate or a total cost estimate. Base: Qualified Buyers not FSBO (n= 645 ) Page 40

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Buyers indicated that the best sources of information during their home search were the Internet (56%) and driving around neighborhoods (54%). At least one-half of buyers indicated that they did not use the following sources in their home search: home magazines, signs directing to home developments, direct mail from developers or outdoor billboards.

Buyers 40 years old and younger were more likely than older buyers to feel that the various sources of information were good in their search for a The Internet home.

Evaluation of Sources of Info 56%

6%

31% 54%

Driving around neighborhoods Friends, associates, family members

Yard signs

6%

Top 2

27% 42%

9%

Bottom 2

32%

Did not use

33%

11%

40% 30%

13%

New spapers

42% 28%

Visiting real estate offices

11%

Signs directing me to housing developments

54% 17% 16%

15% 16%

Direct mail from agents or brokerages

Outdoor billboards

22%

13%

Home magazines

Direct mail from developers

49%

9% 9%

56%

59%

16% 18%

68%

64%

Q520: How good were the following sources of information during your home search or sale? Please select â&#x20AC;&#x153;Did not useâ&#x20AC;? if you did not use that source. Base: All Qualified Buyer Respondents (n=1180) Page 41

Harris Interactive Inc.

Similar to sellers, buyers who use the Internet as a source of information during their home search are most likely to use MLS sites by city or area of the country, Realtor.com, local real-estate company websites, national or regional brokerage sites, or agent websites.

Internet Sites Visited Internet sites visited MLS sites by city or area of the country Realtor.com Local real-estate company websites Agent websites National or regional brokerage websites (Coldwell Banker, Prudential, RE/MAX, etc.)

For Sale By Owner websites RealEstate.com Local newspaper websites Builder or developer websites Other LendingTree.com HomeGain.com Large lender wensites (Chase, Countrywide, Wells Fargo, etc.) eLoan HouseValues.com Craigslist.org Owners.com ZipRealty.com ABN/Amro

Percentage 43% 42% 39% 35% 33% 25% 25% 22% 18% 16% 12% 7% 7% 6% 6% 5% 4% 4% 2%

Q525: Which of the following Internet sites did you visit during your search for information? Please select all that apply. Base: Used The Internet For Source Of Info (n= 861) Page 42

Harris Interactive Inc.

Buyers indicate that they are most likely to learn about the home websites they use primarily through search engines or recommendations from friends, associates or family members.

How Did You Learn about This/These Site(s) 52%

Search engine Recommendation from friend, associate, family

34% 25%

Links from Other Websites

19%

Newspaper advertising Yard signs

14%

Home magazines

14% 9%

Open houses

6%

Development sales offices Billboards Direct mail Other

4% 3% 16%

Q530: How did you primarily learn about this/these site(s)? Please select up to 3 resources that you used the most. Base: Used The Internet For Source Of Info (n= 861) Page 43

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Up until a year prior to purchasing a home, buyers indicate that they will use the Internet to look at different neighborhoods, home styles and prices in addition to driving around neighborhoods and developments. It appears as though buyers wait until a few months prior to purchasing a home to attend Open Houses, talk with lenders for pre-approval, or select an agent.

Activities Prior to Purchase The vast majority of buyers indicate that they did not use the Internet or newspapers to find an agent, nor did they interview agents or companies.

Activities Drove around looking at neighborhoods/new developments Used Internet to look at home styles and prices Used Internet to look at different neighborhoods Talked w ith a lender to get pre-approved for a loan Talked w ith a lender to get prequalified Selected agent Used new spapers to find homes for sale Stopped in at Open Houses Used Internet/talked to a local lender to get lending rates&fees Looked at yard signs to get names of agents/brokers Talked w ith friends to get recommendations for brokers/agents Used Internet/other sources to understand process for buying Interview ed agents or companies Used Internet to check credit scores Used Internet to find a broker or agent Used Internet to understand alternative w ays of buying home Used new spapers to find an agent or broker

Months Prior 1-3 4-6 59% 23% 55% 25% 48% 23% 48% 14% 45% 15% 45% 12% 41% 19% 40% 13% 38% 11% 27% 7% 25% 11% 23% 10% 22% 5% 21% 8% 17% 7% 17% 7% 13% 4%

to Purchase Did 7 - 9 10 - 12 not do 15% 15% 28% 15% 17% 31% 11% 16% 38% 5% 11% 32% 7% 9% 35% 6% 11% 31% 11% 12% 47% 8% 9% 52% 8% 5% 49% 4% 8% 65% 6% 8% 59% 5% 7% 67% 3% 4% 71% 6% 8% 64% 4% 3% 71% 4% 5% 73% 3% 3% 80%

Q600: When you were purchasing a home, you may have done some activities in more than one month. In that case, please select time frames that apply. Base: Qualified Buyers (n= 1,180) Page 44

Harris Interactive Inc.

Buyers place great importance on all of the activities that a company or agent might perform during the buying transaction. Similar to Sellers, key issues for Buyers are that the company/agent is completely trustworthy, their interests are represented fairly, and communication and implementation go smoothly.

Buying Process Evaluation Activities Being completely trustworthy Representing my interests fully and fairly Managing all the details to assure a smooth closing Negotiating the best price and terms for the potential home Having great communication in the manner and frequency preferred Providing a Good Faith Estimate that doesn't change at closing Being educated on the process and decisions that will need to be made Being with me at closing or just after the close of escrow Providing assistance in finding all other services needed like home inspectors Getting a list of specific listings I should see Having important info like school, crime, etc to help me descide on locations Discussing the pros and cons of homes interested Referring me to a good title or escrow company

Top 2

Bottom 2

83% 83% 79% 78% 77% 77% 70% 67% 64% 63% 62% 62% 55%

4% 5% 5% 7% 6% 5% 9% 13% 12% 13% 14% 11% 18%

Following up after closing to see how things are going in my new home Referring me to a great lender

51%

19%

49%

26%

Q605: How important are various things below that a company or agent does or might do for you during the buying transaction. Base: Qualified Buyers (n= 1180)

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Overall, buyers prefer to use agents: they are professionals, buying a home is a stressful process, and they view their agent/service provider as a trusted advisor. And, they are more likely to disagree that the process of buying a home is easy to understand, and that the internet has diminished the value of having an agent.

Process Evaluation for Buyers Statements

Top 2

Neither agree nor disagree

Buying a home is a stressful process

75%

16%

7%

3%

I prefer to use an agent/company because they are professionals

61%

23%

11%

5%

I think of my agent or service provider as a trusted advisor

61%

23%

5%

11%

My agent or service provider received fair compensation

61%

22%

6%

11%

My agent/service provider educated me on what to expect and what decisions to make

59%

18%

11%

11%

I had plenty of time to handle the home-buying process

56%

20%

20%

4%

50%

22%

23%

5%

47%

29%

21%

3%

38%

39%

20%

3%

The process of buying a home is easy to understand

36%

21%

42%

1%

I prefer to do most of the work in buying a home

33%

30%

35%

3%

I can get all the info I need to close my transaction from the Internet The sevices provided by agents are less valuable now that the internet has all of the info on homes for sale

25%

30%

40%

5%

23%

29%

43%

5%

I have a good knowledge of how the commissions are split between agents, brokerage companies or service providers It is more efficient for buyers to figure out where they want to live and select properties to see than to have an agent do the basic The buyer is in control during the transaction

Q610: Please indicate your agreement with the following statements. Base: Qualified Buyers (n= 1,180) Page 46

Harris Interactive Inc.

Bottom 2

N/A

Seven in ten buyers indicate high satisfaction with their agent or service provider and 81% indicate that they would refer their agent or service provider to others.

Satisfaction with Agent or Service Provider 70%

First time buyers are significantly less likely to refer a friend or family member to their agent, brokerage company or service provider.

Buyers that will not refer: First time Repeat

Recommend?

15% 7%

No, 10%

Not Sure, 8%

26% Yes, 81%

5%

Top 3

Middle 4

Bottom 3

Q640: How satisfied would you say you were with your agent or service provider? You may use any number from 1 to 10. Base: Non-FSBO Seller or Buyer (n=645) Q645: Would you refer your friends and family to this agent, brokerage company or service provider? Base: Non-FSBO Seller or Buyer (n=645) Page 47

Harris Interactive Inc.

About eight in ten buyers indicate that they took out a mortgage for the home they purchased. Buyers considered many different sources when obtaining the mortgage, with the highest consideration being the local bank or credit union and a mortgage lender referred by the agent/service provider. These sources are also most often the buyerâ&#x20AC;&#x2122;s final mortgage source.

Lenders Initially Considered vs. Finally Used Buyers age 61+ are significantly less likely to have gotten a mortgage to purchase their home.

Got a Mortgage?

No, 17%

Buyers purchasing through a traditional service model were much more likely to use a mortgage lender associated with the real estate brokerage company.

Did not take out a mortgage: 18-25 17% 26-40 7% 41-60 19% 61+ 39%

Yes, 83%

Service Model:

Lenders initially considered Lenders finally used

35%

Traditional Alternative FSBO

35%

28% 24% 22% 16%

18%

24%

21%

14% 14% 6%

Local mortgage broker found myself

Local mortgage broker recommended

Local bank or credit union

Mortgage lender associated w ith brokerage company

Mortgage lender referred by agent/service provider

Mortgage lender found through the Internet

Q700: Did you get a mortgage for this home purchase. Base: Qualified Buyers (n=1180 ) Q702: Which sources for a mortgage did you consider? Please select that apply. Base: Got a Mortgage (n= 978) Q705: Which type of lender did you finally use? Base: Got a Mortgage (n= 978) Page 48

Harris Interactive Inc.

17% 2% 3%

The primary reason that buyers committed to their lender of choice was due to being offered the best rate, terms and fees, with a personal recommendation a distant second.

Reason for Using this Lender Offered the best rates, terms, and fees

35%

Lender was recommended by someone I knew

18%

Knew the lender from other banking experience

13% 10%

Same lender I had used before Could meet my needs for non-traditional credit scoring Assured me that they would service the loan and not sell it Could offer me sub-prime mortgage products Other

9% 4% 2% 9%

Q710: What was your primary reason for using this lender? Base: Got a mortgage (n=978)

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Harris Interactive Inc.

The majority of buyers are highly satisfied with the lending process. In fact, less than one in ten were not satisfied with the process.

Satisfaction with the Lending Process Repeat purchasers are significantly more likely than first-time buyers to have high satisfaction with the lending process (Top3: 64% vs. 48%).

57%

36%

7%

Top 3

Middle 4

Bottom 3

Q715: How satisfied were you with the mortgage lending process? You may use any number from 1 to 10. Base: Got A Mortgage (n= 978)

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Harris Interactive Inc.

Many reasons are cited for why buyers are dissatisfied with the lending process, many of which revolve around poor communication from the lender.

Reasons for Not Being Satisfied with the Lending Process The lender was hard to reach to get answers

34%

The process took too much time and effort

27%

The paperwork requirements were overwhelming

26%

I didn't understand the process and felt somewhat out of control

23%

There was little follow-up by the lender

21%

The fees were unreasonable

16%

The fees were not easy to understand The rates were confusing and hard to compare

12% 4%

I did not receive the size loan I wanted I just don't give anything a top rating

4% 0%

Other

16%

Q720: Which of the following were the primary reasons for not being completely satisfied with the mortgage lending process? Please select the top 2 reasons. Base: Not Satisfied with Lending process (n= 100)

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Roughly one-half of buyersâ&#x20AC;&#x2122; (54%) were required to get a title policy and about one-fourth (23%) werenâ&#x20AC;&#x2122;t sure if this was a requirement. The two primary ways of selecting the title company were by the mortgage broker selecting the company (32%) or through their agentâ&#x20AC;&#x2122;s recommendation (25%).

Required to Get a Title Policy?

How to Choose the Company to Acquire Title Policy

Not Sure, 23%

Buyers that used an alternative model were significantly more likely to be required to get a title policy:

Yes, 54% No, 23%

Service Model: Traditional Alternative FSBO

32% 25%

11%

59% 77% 39%

10%

11% 6%

My mortgage broker selected the company

5%

My agent My agent I used a company My broker or I searched on the recommended recommended that I had used agent provided me Internet and their preferred title their in-house title before and was with 2 or more through other company company happy with companies to means choose from

Other

Q725: Were you required to get a title policy in order to purchase your home?. Base: Qualified Buyers (n=1180 ) Q730: How did you choose the company that you would use to acquire this title policy? Please select the answers that most closely matches how you went about selecting a company to provide the title policy. Base: Required to Get A Title Policy (n= 629) Page 52

Harris Interactive Inc.

Although one-half of buyers indicate that they feel it is important to investigate different title service offerings. However, four in ten (39%) buyers are not even sure which company provided their title policy.

Companies that Provided Title Policy Important to Investigate Different Title Service Offerings?

Not Sure, 28%

Significantly more repeat buyers do not believe it is important to go through a comparison selection process to choose a title service offer.

Purchase: Repeat Buyer: First Time Buyer:

Yes, 47%

32% 15%

39%

No, 26%

24%

10% 6%

10%

8% 4%

Chicago Title

Fidelity National

First American Land America

Stewart Title

Other

Not sure

Q735: Do you believe it is important to investigate the title service offerings of various title companies before making your selection; that is, do you think the offerings are different enough to warrant going through a selection process like you do for mortgage lenders?. Base: Required To Get A Title Policy (n=629 ) Q740: What was the name of the company that provided you with the title policy? Base: Required To Get A Title Policy (n= 629) Page 53

Harris Interactive Inc.

Buyers appear to be quite amenable to the idea of being able to buy all of the products needed for a home purchase (mortgage, escrow, title services, etc.) from one place.

Evaluation of Packaged Services Neither Top 2 agree nor Bottom 2 disagree

Statements

N/A

I would like the Good Faith Estimate to be guaranteed so that the costs don't change at closing

72%

19%

3%

5%

It should be easier to compare mortgage rates, fees and closing costs across vendors

71%

21%

3%

6%

It would make it easier to have all the services and products available from one source

70%

22%

4%

4%

68%

23%

4%

5%

67%

21%

6%

6%

I trusted my agent/service provider to provide all the services and products I needed

66%

19%

6%

8%

It is appropriate for a brokerage company to offer as many of the services as they can

66%

25%

4%

5%

58%

30%

6%

6%

55% 50%

26% 29%

11% 16%

8% 5%

16%

29%

44%

11%

It is appropriate for a brokerage company to offer as many of the services as they can, as long as the costs are no higher than comparable offers A mortgage provider should have a one-fee closing service that includes alll the other services needed

I would happily use the packaged services if the Good Faith Estimate were guaranteed The Good Faith Estimate of closing costs rarely varied I would prefer that all the services be packaged with one fee that doesn't change I felt like I was getting a "bum's rush" when my agent/service provider tried to direct me to every service I needed

Q800: Please indicate your agreement with the following statements regarding these types of bundles or packaged services. Base: Qualified Buyers (n=1180) Page 54

Harris Interactive Inc.

Demographics

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Demographics - Sellers The following table presents the profile of the 1,097 qualified Sellers who participated in this survey.

Gender Male Female

Education 51% 49%

Age

High school or less Attended College or Degree Graduate School or Degree

Employment 24% 58% 19%

Full Time Part Time Self Employed Not Employed,looking Not Employed,not looking

41% 7% 13% 3% 4%

43% 57%

Retired Student Homemaker

27% 2% 13%

Home Sale

18-19 20-24 25-29 30-34 35-39 40-44

* 1% 6% 10% 12% 11%

Sold in past 18 months Bought and Sold

White

87%

Geographic Region

45-49 50-54 55-59 60-64

11% 10% 10% 12%

Hispanics African American

3% 2%

West Midwest East South

65 and over

16%

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Race

Harris Interactive Inc.

26% 17% 16% 40%

Demographics - Sellers

2006 Household Income Less than 15,000 15,000-24,999 25,000-34,999 35,000-49,999 50,000-74,999 75,000-99,999 100,000-124,999 125,000-149,999 150,000-199,999 200,000-249,999 250,000 or more Decline to answer

Page 57

Total 3% 4% 6% 10% 19% 14% 16% 7% 5% 1% 4% 11%

Harris Interactive Inc.

Traditional

Alternative

FSBO

1% 4% 7% 8% 19% 14% 17% 7% 5% 2% 5% 12%

1% 5% 3% 13% 19% 19% 17% 5% 2% * 5% 11%

11% 5% 6% 14% 22% 11% 11% 6% 5% * 1% 8%

Demographics - Buyers The following table presents the profile of the 1,180 qualified Buyers who participated in this survey.

Gender Male Female

Education 49% 51%

Age

High school or less Attended College or Degree Graduate School or Degree

Employment 30% 56% 14%

Full Time Part Time Self Employed Not Employed,looking Not Employed,not looking

51% 7% 12% 4% 3%

77% 23%

Retired Student Homemaker

17% 3% 16%

Home Sale

18-19 20-24 25-29 30-34 35-39 40-44

* 3% 16% 12% 13% 9%

Bought in past 18 months Bought and sold

White

84%

Geographic Region

45-49 50-54 55-59 60-64

13% 7% 10% 6%

Hispanics African American

9% 1%

West Midwest East South

65 and over

9%

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Race

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25% 21% 18% 36%

Demographics - Buyers

2006 Household Income Less than 15,000 15,000-24,999 25,000-34,999 35,000-49,999 50,000-74,999 75,000-99,999 100,000-124,999 125,000-149,999 150,000-199,999 200,000-249,999 250,000 or more Decline to answer

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Total 3% 5% 8% 13% 20% 15% 11% 7% 4% 1% 2% 11%

Harris Interactive Inc.

Traditional

Alternative

FSBO

3% 4% 7% 13% 21% 17% 10% 9% 5% 1% 2% 9%

0% 6% 9% 8% 25% 11% 29% 3% 2% 0% 1% 5%

5% 10% 13% 10% 18% 7% 12% 7% 3% * 1% 14%