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When desire meets confusion:
What prospective sellers are thinking now.
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INTRODUCTION
Current market conditions are, in a word, tough.
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The era of dirt-cheap money ended abruptly, causing many buyers and sellers to call a time-out. Others are proceeding with anachronistic expectations, with, as one pundit put it, “sellers thinking it’s last year, and buyers thinking it’s next year”. The result is a sluggish and surly market.
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In this report, we seek to gain insights on the cadre of prospective sellers who are actively considering selling, but not yet acting. It is worth reporting the obvious here, because the obvious can often become occluded by the glut of noise. We asked our survey respondents who have a mortgage on their current home what the rate on that mortgage was. The answers explain nearly all you need to know about today’s market: Answer
Answer (%)
What is the approximate interest rate on your current mortgage?
Less than 3%
17.42%
3-4%
48.95%
4-5%
25.53%
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Q1.
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Greater than 5%
8.11%
“Need to sell” can easily become “would like to sell,” and “would like to sell” can easily become “I think I’ll wait” for the two thirds of respondents who have sub-4% mortgages. Of course, buyers face the opposite side of this: mortgage rates that have increased far faster than home prices have decreased. It is in times like this that knowing your prospective customer matters more than ever. Growth in these conditions is zero-sum: You’re either snatching opportunity from your competitors or they are doing the same to you. Being on the right side of this equation requires smarter positioning and marketing, which in turn requires doing your homework. You need an edge. This report, like our recent report on active buyers, is our effort to give you that edge.
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ABOUT OUR SURVEY AND SURVEY RESPONDENTS
On October 15, we fielded a survey of 600 adults across the United States. All of our survey respondents: Are homeowners
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Are not real estate agents Have considered selling their home in the last 90 days
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51% have talked to a real estate agent about selling their home recently. 56% have a mortgage on their current home.
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T O P L I N E F I N D I N G S A N D TA K E A W AY S
A discussion of our results follows below, and different people will find different things of interest in those results, but here are a few topline notes:
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75% of respondents indicated that they plan to use the agent that helped them buy their house to sell their house. This intention decays with tenure of ownership, which one would expect, but we still found this result striking: Most people, early in their process of considering a sale, operate on the assumption that they will use their last agent. Of course, we know that intention does not hold at that rate. The open-ended responses from those who indicated they may use someone else suggest a strong desire to “shop around” or “explore all options.”
“Change of lifestyle” was the #1 reason respondents cited for why they are thinking of selling. This suggests that while a change in jobs, death, and divorce will always be a strong predictors of transactions, less definite, more aspirational considerations are always present and active. Information about price declines accelerating next year make 53% of respondents more likely to sell now.
About half of respondents reported speaking with an agent about selling recently, and 64% of that group reported that this conversation made them more inclined to sell. This illuminates the most obvious of opportunities: Engagement with past clients produces significant positive results, even in a market characterized by widespread apprehension.
84% of respondents who have a mortgage on their home are either “very concerned” or “somewhat concerned” that high mortgage rates will impede their ability to sell. However, when presented with context that explained that refinancing to a lower rate in the future may be possible, 50% said this information made them more inclined to sell. 53% said that information about price declines accelerating next year made respondents more inclined to sell now.
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T O P L I N E F I N D I N G S A N D TA K E A W AY S
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66% of respondents reported reading marketing materials from agents at least occasionally. When asked to identify which types of agent marketing materials they found most interesting or useful, “those that list recent home sale prices” was respondents’ top pick at 39%. This tried-and-true tactic is likely more relevant to homeowners than ever, as a changing market has people looking around at the market activity in their own neighborhood as a strong signal of their own home’s value and the success of their own home sale.
91% of respondents report being “very clear” or having “a pretty good idea” of their home’s value, and indicate that an agent’s opinion, Zillow, and recent home sales contribute to that understanding. Notably, respondents who had yet to speak with a real estate agent relied much more on Zillow and recent sales to form their opinion of their home’s value. This suggests that if real estate agents leave an informational vacuum it will be filled by others. As you will see, we also explored some tangential questions aimed at reading this cohort’s understanding and attitudes on issues including “buy before you sell” or “power buyer” companies, how real estate portals make money, and the level of training agents must have.
Tenure of ownership among our respondents roughly tracked with our expectations. 39% have owned for 6-10 years. Q2.
Answer
How long have you owned your home?
Less than 2 years
Answer (%) 5.17%
2-5 years
28.83%
6-10 years
39.17%
11-20 years
18.50%
21+ years
8.33%
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A large majority plan on using the same agent that helped them buy their home. Research from the NAR and others has shown that eventual outcomes are more or less the inverse: 75% to 80% of people eventually use an agent other than the one they used for their last transaction. This starkly illustrates the loyalty problem 1000watt has inveighed against for years. People want to use their agent again, but are effectively “abandoned” by them. We suspect that now — when people likely have more real estate questions than ever — keeping in touch is even more critical. Answer (%)
Q3.
Answer
If you sell, do you plan on using the real estate agent you used to buy your home to sell your home?
Yes
75.00%
No
25.00%
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Among the 25% who do not plan to use their previous agent for their currently contemplated home sale, most cited a desire to explore alternatives: “I want to shop around and see what my selection and options are.” “I like comparisons.” “I may consult them [previous agent], but want to shop around.” “I may find a better one.”
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Respondents cited a range of reasons for considering a sale. Significantly, 13% are downsizing, and we suggest referring to our Original Research report on Baby Boomers for a deeper exploration of that cohort. As discussed above, change of lifestyle was the most-cited driver. Death, divorce, and jobs received fewer responses than we had expected, which suggests that “softer” considerations that can be influenced or aided by a broker or agent are most important. Q4.
Answer
Answer (%)
Why have you thought about selling your home recently?
Looking to downsize
13.00%
Want to move closer to family
19.33%
Divorce
2.17%
Death in family
3.00%
Change in lifestyle
25.17%
Job opportunities
13.67%
Want to realize gains in my current home’s value
19.83%
Other
3.83%
These would-be sellers seem to have internalized the market shift to a fair extent. Only 35% perceive the market as “hot, and favors sellers” (this is actually still the case in some markets) while a large majority have lower expectations. Q5.
Answer
Answer (%)
What is your general perception of the real estate market right now?
The market is hot, and favors sellers
35.33%
The market is cooling
30.83%
The market is slowed significantly
24.50%
The market has slowed dramatically, and now favors buyers
8.33%
Other
1.00%
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There are a number of considerations causing friction for respondents. Some have general worries about the economy, but most have rates and price top of mind. These are areas in which context provided through marketing, advertising, or one-on-one communication can have an impact. They need not be looked at as roadblocks; they are more constructively viewed as opportunities for engagement.
Q6.
Answer
Answer (%)
What is the top factor that has kept you from selling, even though you’ve thought about it?
I would have to buy another home and get a mortgage with a much higher interest rate
34.17%
The housing market has slowed down and I am not sure I can get the price I want
34.33%
I am considering renting my home instead of selling it
7.67%
I am worried about the economy generally
19.67%
Other
4.17%
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Just over half of respondents have spoken to an agent recently. We take this as an indication that a good number are serious about selling. Answer (%)
Q7.
Answer
Have you spoken to a real estate agent about selling your home recently?
Yes
50.67%
No
49.33%
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Remarkably (though perhaps not surprisingly) these conversations seem to lead people closer to transacting, with 64% reporting that talking with an agent made them more inclined to sell. This makes sense: people have a notion to sell, speak with an agent who can offer context, and, for most, that notion becomes stronger. Answer (%)
Q8.
Answer
Did speaking with a real estate agent make you more or less inclined to sell your home?
Less
35.53%
More
64.47%
When asked why these conversations had such an impact, responses such as this were prevalent: “Because she thoroughly explained the advantages of selling sooner rather than later.” “They gave me optimism and options for selling my house.” “He pointed out the true potential of a sale.” “They gave me a lot of details that made sense to me.” 51% of respondents said they were “very concerned” about rising rates, and 34% said they were “somewhat concerned”. This issue was even significant for respondents who had no current mortgage. This is not surprising given the pervasive discussion of this topic in the media.
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However, awareness does not necessarily mean understanding. When we presented respondents with some context around this issue to the effect of “date the rate, marry the house,” they responded positively, with just over 50% indicating that this consideration makes them more inclined to sell.
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This is an obvious messaging and marketing opportunity. Q9.
Answer
Answer (%)
Does the following statement make you more or less inclined to sell your home in the near future? “Interest rates have risen a lot in the past few months, but if you sell now and then have to get a higher rate for your next mortgage, you can always refinance into a lower rate when they come back down. A new home can be forever, but a new mortgage rate can almost always be changed over time.”
More inclined
50.17%
Less inclined
20.00%
It doesn’t impact my thinking either way
29.83%
We then presented respondents with high-level market context, pointing out that most economists are now predicting price declines in 2023. 53% of respondents said this made them more inclined to sell. It seems that deepening people’s understanding even slightly has significant impacts. Q10.
Answer
Answer (%)
Does the following statement make you more or less inclined to sell your home in the near future? “Most economists project housing prices to decline significantly in 2023, if you sell your home now, you can still command a good price, while likely getting more favorable terms on a new home even a couple months later.”
More inclined
52.67%
Less inclined
23.00%
It doesn’t impact my thinking either way
24.33%
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We briefly explored this cohort’s perception of real estate marketing materials. 82% receive marketing from agents. Surprisingly, 91% reported reading this marketing either often or sometimes/ occasionally. Answer
Answer (%)
Do you receive marketing materials from real estate agents via print mail, via email, or on social media?
No, I do not
17.83%
Yes, occasionally
55.67%
Yes, a fair amount
20.50%
Yes, a lot
6.00%
Q12.
Answer
Answer (%)
Do you ever read these marketing materials?
Yes, often
18.26%
Yes, occasionally
46.25%
Yes, sometimes
26.77%
No, rarely or never
8.72%
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Q11.
Respondents evidenced a clear preference for marketing that delivers insight into the market, with recent home sale prices being found to be the most interesting or useful. Certainly, many agents and teams send direct mail or email with recent sales, but we nonetheless think there is much untapped opportunity here, primarily in the way this information is delivered. Interestingly, marketing offering a free home valuation was favored by only 12% of respondents. We suspect this number could be increased if agents and brokers executed better on this kind of marketing.
Q13.
Answer
Answer (%)
Which kind of marketing materials do you find interesting or useful?
Those that offer statistics on the local market
22.31%
Those that list recent home sales price
39.35%
Those that highlight new listings
20.69%
Those that offer free home price evaluations
11.97%
Those that promote a specific real estate agent’s skills
4.87%
Other
0.81%
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These would-be sellers have (or think they have) a clear grasp on their home’s value.
Q14.
Answer
Answer (%)
Do you have a good sense for how your current home is worth?
Yes, I am very clear on how much my home is worth
34.67%
Yes, I have a pretty good idea
54.83%
No, I am not really sure
9.83%
No, I have no idea
0.67%
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This belief is shaped by a number of sources, but an agent’s opinion was the top response. Q15.
Answer
How did you form your opinion of your home’s value?
I got an opinion or valuation from a real estate agent
37.62%
From Zillow
27.37%
I know what homes have sold for in my neighborhood
29.61%
I bought my home recently and base my opinion on that
3.72%
Other
1.68%
Answer (%)
When we filter responses to show only those who had not yet talked to an agent about selling their home, however, we see significantly more reliance on Zillow and recent neighborhood sales. Once again, we see that agents and brokers can drive favorable outcomes — if they proactively engage. Finally, we tapped into respondents’ awareness of issues not directly related to selling their home. We include these results here because we suspect they will trigger ideas for you as they did for us. We also know that sharing information not commonly known by consumers can also be quite powerful in marketing. First, about half of respondents understand (or think they understand) how search portals make money. Answer (%)
Q16.
Answer
Do you know how home search websites/ apps like Zillow and Realtor.com make money?
Yes, I understand
50.67%
Maybe, thought not positive
31.83%
No, I don’t understand at all
17.50%
When we then explain the increasingly common referral fee model, people expressed reservations. Q17.
Answer
What does the following statement make you think? “Some real estate home search website/apps make money by sending you to a real estate agent when you click or tap “contact agent” or “schedule a tour” on a home for sale. If you actually buy a home with this agent, the website/app company will take 35% of the commission the agent receives from working with you. This could be as much as $5,000 on the purchase of a $500,000 home. The website/apps do not disclose this payment, which comes out of the money you use to buy the house.”
It sounds fair, and I have no problem with it
31.67%
I have no problem with it, but it bothers me that they do not disclose this
37.00%
I am not really comfortable with this
15.50%
This seems unfair, expensive, and sneaky
15.67%
Other
0.17%
Answer (%)
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We then asked about peoples’ sense of how much training is required to get a real estate license. As you can see, a large majority of people overestimated this (the number of hours of training required ranges from 40 hours to about 150 hours across states). Q17.
Answer
Answer (%)
How much training would you guess is required to get a license to help people buy and sell homes?
4 years
9.17%
2-3 years
40.67%
About a year
35.83%
Less than a month
14.33%
Lastly, we surveyed awareness of, and willingness to consider, power buying. A surprisingly high number of respondents were aware of this option, but perceptions were mixed, with 26% saying they would “definitely” try such a service and the same number saying they would either “probably not” or “absolutely not” consider this option. Answer (%)
Q18.
Answer
Have you heard of companies that offer “buy before you sell” services in which the company fronts the cash for a buyer to purchase a home, then offers them a mortgage after the buyer has sold their home?
Yes
57.17%
No
42.83%
Q19.
Answer
Is this kind of service something you would consider to smooth your home selling and buying process?
Yes, definitely
25.83%
Yes, maybe
48.83%
No, probably not
19.67%
No, absolutely not
5.67%
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CONCLUSION
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These results show clearly that people who are thinking of selling are hesitant, and concerned about the recent and dramatic changes in the real estate market. But these results show just as clearly that engagement can have positive effects, both for the prospective seller, and the agent, broker, or marketer who reaches out to them. There is a great deal that we in the industry cannot control about the market right now. But we believe that players with a capacity for well-executed marketing are far from powerless to shape outcomes.
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