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Gary Keller's Vision Speech_Toolkit v1

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					1
The Numbers that Drive Real Estate



                                     2
The Numbers That Drive
    U.S. Real Estate
     1.   Home Sales
     2.   Home Prices
     3.   Inventory
     4.   Mortgage Rates
     5.   Affordability



                           3
       1. Home Sales                        (In Millions)

       Sales decreased 4.8% in 2010, mainly due to softer demand in the
                             second half of the year.

                                                            7.08

                                                   5.18            5.16
                                            4.96                          4.91




Source: National Association of REALTORS®                                        4
              In Q3 2010, all 50 states experienced
                     a decrease in sales …
                        WA
                                        MT    ND                                               VT ME
                     OR                                  MN
                             ID                                                                     NH
                                              SD                   WI                         NY     MA
                                        WY                                MI                     CT
                                                                                                    RI
                                                          IA                             PA
                        NV                    NE                                                NJ
                                                                               OH               DE
                                   UT                               IL   IN
                                         CO                                         WV          MD
                   CA                                                                    VA
                                                   KS      MO                 KY
                                                                                                       Home Sales Direction
                                                                                         NC
                                                                         TN
                               AZ                   OK                                               (Year-Over-Year Change)
                                         NM                   AR                        SC
                                                                    MS                                     Below 10%
                                                                         AL        GA
                                               TX              LA                                          Below 20%
         AK                                                                             FL                 Below 30%
                              HI                                                                           Below 40%

                                                                                                                       5
Source: National Association of REALTORS®
          In Q4 2010, all states except for
    Virginia experienced an increase in sales …
                        WA
                                        MT    ND                                               VT ME
                     OR                                  MN
                             ID                                                                     NH
                                              SD                   WI                         NY     MA
                                        WY                                MI                     CT
                                                                                                    RI
                                                          IA                             PA
                        NV                    NE                                                NJ
                                                                               OH               DE
                                   UT                               IL   IN
                                         CO                                         WV          MD
                   CA                                                                    VA
                                                   KS      MO                 KY
                                                                                                       Home Sales Direction
                                                                                         NC
                                                                         TN
                               AZ
                                         NM         OK        AR
                                                                                                     (Year-Over-Year Change)
                                                                                        SC
                                                                    MS
                                                                         AL        GA
                                                                                                           Sales Increased

                                               TX              LA                                          Sales Decreased
         AK                                                                             FL
                              HI

                                                                                                                             6
Source: National Association of REALTORS®
       2. Home Prices                       (Annual Appreciation)

          If home prices actually grew by 4% every year from 1989, the median
        home price would be $211,082, which is approximately 18% above where
                                      we are today.




Source: National Association of REALTORS®                                       7
       2. Home Prices                       (In Thousands)

          The median home price increased slightly by 0.3% in 2010, the
                       first annual price gain since 2006.
                                                                     $211K
                                                             $222K


                                                  $153K              $173K




Source: National Association of REALTORS®                                    8
       3. Inventory                         (Months Supply)
              Number of months it would take to sell all the homes on the market at the current rate of sales


       Softer demand in the second half of the year kept
       inventory of existing homes at a relatively high level
       of 9.4 months at the end of 2010. However, months
       of inventory has declined substantially from its peak
       of 12.5 months reached in July.




Source: National Association of REALTORS®                                                                  9
      4. Mortgage Rates                      (30-Year Fixed)

                      Mortgage rates averaged 4.69% in 2010, an all-time low
                      since Freddie Mac started tracking in 1971.

                      Mortgage rates ranged from 4.23% to 5.1% in 2010. At the
                      end of December, rates stood at 4.71%.
              10.3%



                                                                        6.0%
                                                                            5.0%
                                                                                     5.05%
                                                                                   4.7%




Source: Freddie Mac                                                                       10
Let’s put this in perspective …
                           1989             2010            2011
 Bread                     $0.67           $2.49           $2.49
 Gas (gal.)                $0.97           $2.73           $2.73
 New Car                  $15,350         $28,400         $28,400
 Existing Home            $94,000        $173,000        $173,000
 Mortgage Rate             10%             4.69%           5.05%
 Monthly Payment           $825             $896            $934
  And you still wouldn’t get a mortgage as cheap as you could in 2010.

                                                                         11
       5. Housing Affordability                                   (% of Income)
              % of mean family’s income required to make mortgage payments on a median-priced home



                         Housing affordability was the most favorable on
                                         record in 2010.


                                                          40-year average = 21.9%
                                                                                            15%
                                                                                                  14%




Source: National Association of REALTORS®                                                            12
Economic Snapshot



                    13
U.S. Economic Snapshot

    1. Gross Domestic Product
    2. Inflation
    3. Unemployment




                                14
       1. Gross Domestic Product
              (Year-Over-Year Growth)


                      Consumer spending and strong exports contributed
                          the most to economic expansion in 2010.




Source: Bureau of Economic Analysis                                      15
       1. Gross Domestic Product
               (Year-Over-Year Growth)




Source: Bureau of Economic Analysis      16
       2. Inflation
                      In 2010, inflation averaged around 1.6%.
                      In the near term, inflation pressures are expected to remain subdued,
                      allowing the Fed to stay the course of its loose monetary policies.
                   Unofficial
                   Rate Target



                                                                                      1.6%




Source: Bureau of Labor Statistics                                                        17
       3. Unemployment
                    Unemployment is making slow progress, dropping from
                       9.9% in 2009 to 9.4% in the final month of 2010.

                                                                     9.6%

                                     Long-term average: 5.6%




Source: Bureau of Labor Statistics                                          18
The Events That Drove The Numbers



                                    19
           The Six Events That Drove
               the U.S. Numbers
1. The available sides per agent remained on par with 2009.
2. The extended home buyer tax credit boosted demand and
   stabilized home prices in the first half of 2010.
3. Concerns about proper foreclosure procedure delayed the
   influx of distressed properties into the market.
4. Monetary stimulus aid continued to lend support.
5. Credit conditions remain tight.
6. Uncertainty about economic outlook acted as restraint on
   business and consumer spending.
                                                              20
       1. The available sides per agent
              remained on par with 2009


                                       In 2010, another 45,987 Realtors left the industry,
                                       leaving those remaining in the market with a steady
                                       share of business despite softer sales.




Source: National Association of REALTORS®                                                    21
       National Association of Realtors
       Membership vs. Existing Home Sales
                          NAR Membership:                   Existing Home Sales:
                            1.07 Million                         4.91 Million


                                                            13.8             2008
                                                             1998
                           14                                                       2010
                                                                                           9.2
                         1977                     1990
                                      1982                                 8.2
                                                  7.9
                                            7   Sides per Agent


Source: National Association of REALTORS®                                                    22
       2. Extended home buyer tax credit
              increased buyer traffic in the first six months of 2010

                  Housing Economic Recovery Act of 2008                            Extended and Expanded                  Closing     Gradual
                     $7,500 temporary FTHB tax credit                              $8,000 FTHB Tax Credit                 Deadline    Recovery
                                                                                  Must sign contract by April 30         Extended    without Tax
                                                                                    Must close by June 30                    to         Credit
                                                                                                                         September
                                   American Recovery & Reinvestment Act of 2009
                                                                                                                            30
                                              $8,000 FTHB tax credit



                                                                      Oct Nov                          Apr
                                                    Jun               ‘09 ‘09                                      Jun
                                                                                                       ‘10
                             Jan                    ‘09                                                            ‘10
                             ‘09                                                                                               Sep         Dec
                                                                                                                               ‘10         ‘10




Source: National Association of REALTORS®                                                                                                    23
       2. Extended home buyer tax credit
              boosted demand & stabilized home sales in the
              first half of 2010
                    Recession        Housing Economic Recovery Act of 2008              Extended and Expanded            Closing     Gradual
               Began December 2007      $7,500 temporary FTHB tax credit                $8,000 FTHB Tax Credit           Deadline    Recovery
                                                                                       Must sign contract by April 30   Extended    without Tax
                                                                                         Must close by June 30              to         Credit
                                                                                                                        September
                                                         American Recovery & Reinvestment
                                                                                                                           30
                                                                    Act of 2009
                         HOME SALES                            $8,000 FTHB tax credit

                             In Millions




Source: National Association of REALTORS®                                                                                                 24
       2. Extended home buyer tax credit
              boosted demand & stabilized home prices
                    Recession        Housing Economic Recovery Act of 2008               Extended and Expanded            Closing     Gradual
               Began December 2007      $7,500 temporary FTHB tax credit                 $8,000 FTHB Tax Credit           Deadline    Recovery
                                                                                        Must sign contract by April 30   Extended    without Tax
                                                                                          Must close by June 30              to         Credit
                                                                                                                         September
                                                          American Recovery & Reinvestment
                                                                                                                            30
                                                                     Act of 2009
                                                                $8,000 FTHB tax credit
                        HOME PRICES
                           In Thousands




Source: National Association of REALTORS®                                                                                                    25
       3. Concerns about foreclosure procedure
              delayed the influx of distressed properties into the market
                        The number of foreclosure notices and bank repossessions plunged in
                     November and December, as banks halted tens of thousands of foreclosures in
                                        the face of the robo-signing scandal.




Source: RealtyTrac                                                                                 26
       3. Concerns about foreclosure procedure
              limited foreclosure sales and steadied prices
                                                              Distressed Sales
                   In 2010, distressed properties accounted    % of Total Sales
                    for 34% of all sales, down from 36% in
                            2009 and 37% in 2008.




Source: National Association of REALTORS®                                         27
       Rising foreclosure rates                (% of U.S. Homes)
       remain a trouble spot for the housing market

                 In 2010, foreclosure filings were reported on a record 2.9
                 million (2,871,891) U.S. properties despite a thirty-month
                   low reached in December due to foreclosure freezes.




Source: RealtyTrac                                                            28
      4. Monetary stimulus aid
              continued to lend support

                Historically low rates fueled a surge in refinancing activity earlier in 2010,
                               helping homeowners save billions of dollars.




Source: Mortgage Bankers Association                                                             29
       5. Credit conditions
              remain tight
                      Bank lending is still down. However, the freeze in bank credit is
                   beginning to thaw after two years, signaling more support for the U.S.
                         recovery in general, and the housing market in particular.

              Residential Real Estate Loans
                                                                                 Bank Credit (In Billions of Dollars)
                                                 Credit Growth
                                                                              2006         2007          2008          2009         2010
                                                All Bank Credit               8,113        8,915         9,316        8,992         9,174
                                                    Commercial &
                                                    Industrial Loans
                                                                             1,190         1,436         1,565        1,284         1,224
                                                    Real Estate
                                                    Loans*
                                                                             3.394         3,608         3,805        3,776         3,606
                                                    Consumer
                                                    Loans
                                                                               730          791           857           825         1,111
                                                *Includes revolving home equity loans, closed-end residential loans, commercial real estate loans

Source: Federal Reserve Board                                                                                                          30
       Supply and Demand for
       Residential Mortgage Loans
                    Lending conditions have eased somewhat with fewer and fewer
                       banks reporting tightened standards for mortgage loans.
                                   SUPPLY                                               DEMAND
               Net Percentage of Respondents Tightening                  Net Percentage of Respondents Reporting
                     Standards for Mortgage Loans                          Stronger Demand for Mortgage Loans




Source: Federal Reserve Board – the Senior Loan Officer Opinion Survey                                       31
       6. Uncertainty about economic outlook
              acted as restraint on business and consumer spending

Heightened level of unemployment persists and remains the biggest risk to the recovery.
 Any meaningful improvement in consumer confidence and their purchase decisions is
                    contingent on a significant pickup in job growth.
                                      Consumer Spending and Unemployment




Source: Bureau of Economic Analysis                                              32
What the Governments Are Doing



                                 33
What the U.S. Government Is Doing

1. Extended Bush-era income tax cuts
2. Extended conforming loan limits
3. Started second round of Fed’s monetary stimulus
4. Halted new mortgage disclosure rules under the Truth in
   Lending Act


                                                             34
1. Extended Bush-era income tax cuts
What:          President Obama signed an $858 billion tax bill into law on December 17, keeping income tax rates
               from increasing before the new year.

Why:           To put more money in the pockets of families most likely to spend it, help businesses to grow and
               as a result, spark demand, spur job creation, and strengthen the economy in 2011.
How:
               1. Extends the Bush-era income tax cuts on income, capital gains, and dividends for two years
               2. Reduces Social Security payroll tax rates by 2% for one year on income up to $106,800
               3. Extends jobless benefits for 13 months beyond the current 99 weeks
               4. Allows businesses to write off 100% of capital investments between September 9, 2010 and December 31,
                  2011
               5. Extends dozens of expired and expiring tax breaks, including a research and development tax credit and a
                  college tuition tax credit that was created in last year’s economic stimulus law
               6. Sets the estate tax rate at 35% for two years and would apply it only to estates worth more than $5 million.
                  Under current law, the estate tax has lapsed for 2010 and is set to jump next year to 55%

Implications: Many economists predict the tax package could increase the economic expansion rate by a
              substantial 1% next year.
                                                                                                                           35
2. Extended conforming loan limits
What:   In July 2008, the housing recovery bill raised the limit
        on conforming loans in high-cost areas to a maximum
        of 125% of local median home price, up to an overall
        cap of $729,750 from $417,000 everywhere.

Why:    To increase credit available in higher-priced markets.

When:   These limits were set to expire in December 2010 and
        have now been extended through September of 2011.

                                                                   36
3. Started second round of monetary
   stimulus
What:   Fed announced the second round of quantitative easing program, known as
        QE2, in early November 2010 to jump-start the slowing recovery.

Why:    The program aims at spurring business and consumer spending by keeping
        interest rates low.

How:    Fed plans to purchase $600 billion in long-term treasuries over the next
        eight months. The Fed also announced it will reinvest an additional $250
        billion to $300 billion in treasuries with the proceeds of its earlier
        investment.

When:   The bond purchases aimed at stimulating the economy will total up to $900
        billion and will be completed by the end of the third quarter of 2011.

                                                                                    37
4. Halted new mortgage disclosure rules
   under the Truth in Lending Act
•   Fed held off on finalizing pending rule changes under Regulation Z of the Truth in Lending Act that were
    proposed in August 2009 and September 2010 that would have mandated new consumer disclosure
    requirements for:
        • Closed-end mortgage loans (2009)
        • Home equity lines of credit or HELOCs (2009)
        • Reverse mortgages (2010)

•   The proposed new rules were initiated in response to claims that homeowners were signing up for
    unsustainable and unsuitable mortgages without understanding the terms of the loans during the boom
    years, which fueled unsound lending practices and led to the mortgage market meltdown in 2007.

•   The newly created Consumer Financial Protection Bureau (CFPB) will assume general rulemaking authority
    for TILA, RESPA (which were previously overseen and enforced by Fed and HUD, respectively) and federal
    jurisdiction over consumer protections in July. The agency is required by the Dodd-Frank Reform Act to
    combine the mortgage disclosures required by both TILA and RESPA in a single form within eighteen months
    after the designated transfer date.

•   The delayed implementation of any new disclosures adopted by the Fed will mitigate compliance difficulties
    which may arise with the issuance of multiple rules with different implementation periods.            38
Luxury Real Estate



                     39
  The strong rebound in the wealthy is a positive signal for
                   the luxury market.

                         Average Net Worth   Number of
           End of Year
                           of Billionaires   Billionaires
    2007                     $3.9 billion        1,125
    2008                      $3 billion          793
    2009                     $3.5 billion        1,011
                                17%              27%
Source: Forbes                increase         increase     40
       Percent Change in Number Affluent, by Net Worth




Source: Spectrum Group                                   41
42 40
                       Luxury    Move Up      Starter
                                                                      42
36                                                                    36
30                                                                    30
24                                                                    24
                                                                 18
18                                                                    18
12                                                                    12
6                                                                      6
     Seller’s Market                                                   0
0
 Dec '08 Mar '09 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10
                                                                       42
                         Luxury    Move Up     Starter

                                       181
180
                                                                          180
                                                                   143

120                                                                       120
                                       117                         112
                                       90                            92
 60                                                                      60
   Dec '08 Mar '09 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10

                                                                                43
100%

95%

90%

85%

80%


  44
        Greater Supply + Longer DOM
     + Greater Discount = Opportunity for:

1. Investors in luxury market for both
      flippers and holders of undervalued
      properties.
2.    Move-Up buyers who were previously
      priced out of luxury market.
                                             45
Commercial Real Estate



                         46
            Sector
                           United States     Canada
                           2009    2010    2009   2010
     Office                15.7%   17.4%   9.9%   9.4%
     Industrial            13.2%   14.5%   8.1%   7.4%
     Retail                12.0%   12.7%   5.5%   4.2%

     Multifamily           7.4%    6.1%    2.8%   2.6%
                                                         47
Sources: NAR, CBRE, CMHC
                                                                                                           48
Source: US CMBS Delinquency Rates, Trepp LLC. Graph scaled based on actual data for trend purposes only.
    Moody’s/REAL Commercial Property Price Index (CPPI) National - All Property Types

                                                                                        2.0
     Index, December 2000 =1




                                                                                        1.6


                                                                                        1.2


                                                                                        0.8


                                                                                              49
Source: Moody’s/REAL Commercial Property Price Index
                                                                       16%
                      2009-2011                                     Foreclose

      “Extend and Pretend”                                    14%                      63%
                                                                Sell
                      to                                                              Extend
               2012 and forward                          7%                            with
                                                       Extend                     Modification
       “Extend and Amend”                             without
                                                     Modification
                                                                Maturing Loans: Preferred Strategy for
                                                                        Lenders by Mid-2011
                                                                   All Commercial Property Types
                                                                                                  50
Source: Emerging Trends in Real Estate 2011 Survey
              Flat Market           New Commercial Loans (in billions)

 1. No new development
    means demand has time
    to catch up with supply
 2. Economy needs time
    to improve which will
    strengthen demand


                                                                   51
Source: Commercial Mortgage Alert
1.   Distressed Assets (U.S.)
2.   Quality Yield Properties
3.   Tenant Representation
4.   Owner Occupants


                                52
Worldwide Real Estate



                        53
1.   Mission:
     • To connect the real estate world into one successful community, and
     • To expand our Profit Share opportunities for real estate agents
       worldwide

2.   Goal: To add 75,000 agents outside of North America in the next 10
     years.

3.   The Global Opportunity: This is as challenging as it is
     exciting.
                                                                      54
4.   Strategy: To expand by following our core philosophy that
     everything rises and falls on leadership.

     Where and when we go will be dictated by finding the right partners.
     We will use the Master Franchise Model for opening
     countries/regions. The right partners will help us create the
     right models for their country.




                                                                        55
5.   What the World Wants: The overwhelming feedback is that
     agents around the globe want what we do best ... training and
     education. Our opportunity will be to deliver our training and
     education around the world. This will require an International
     Faculty that can share our courses and culture. The other U.S.
     franchises have not succeeded because they have not been able to
     deliver anything other than a brand and some weak models.




                                                                    56
How Do We Recover?



                     57
The Four Keys to Housing Recovery




                                    58
What Can NAR Tell Us About 2010?



                                   59
First-Time Home Buyers




                         60
Primary Reason for Purchasing a Home
                                            All Buyers          First-time Buyers   Repeat Buyers
                                     2005
                                               2009      2010    2009     2010      2009    2010
    Desire to own a home             39%        35%      31%      62%      53%       11%     10%
    Desire for larger home            20         9        9        2        2        16      15
    Change in family situation        *          9        8        8        7        10      10
    Home buyer tax credit             *          3        8        6        13        1       3
    Job-related relocation or move    11         9        7        2        2        16      12
    Affordability of homes            *          8        6       10        8         6       4
    Desire to be closer to
                                      8          4        5        1        1         7      10
    family/friends/relatives
    Desire for a home in a better     *
                                                 4        5        1        2         7       7
    area
    Desire to be closer to
                                      *          3        3        1        2         5       5
    job/school/transit
    Desire for smaller home           6          3        3        *        *         5       5
    Retirement                        3          3        3        1        *         4       5
    Establish household               *          2        2        2        4         1       1



                                                                                                    61
Tenure in Previous Home

                           2009   2010
        1 year or less     4%     3%
        2 to 3 years       18      8
        4 to 5 years        21     16
        6 to 7 years        12     18
        8 to 10 years       15     17                55%
        11 to 15 years      12     17          38%
        16 to 20 years      8      8     21%
        21 years or more    11     13
        Median              7      8



                                                      62
Buyer’s Expected Length of Tenure

                           2009   2010
          1 year or less   1%     1%
          2 to 3 years      3      3
          4 to 5 years      12     12
          6 to 7 years       3      3
          8 to 10 years     14     13                40%
          11 to 15 years     5      5          27%
          16 to 20 years    22     22    22%
          Don’t Know        39     42
          Median            10     10



                                                     63
First Step in Home Buying Process

                                                 All Buyers         First-time Buyers     Repeat Buyers
                                           2009           2010      2009         2010   2009        2010
Looked online for properties for sale      36%                36%   31%           32%   40%          41%
Contacted a real estate agent               18                19     14           16     21           22
Looked online for information about the
                                            11                11     16           15     7            8
home buying process
Contacted a bank or mortgage lender         8                  8     11           10     6            6
Drove by homes/neighborhoods                8                  7     6             6     10           9
Talked with a friend or relative about
                                            7                  7     11           11     3            3
home buying process
Visited open houses                         4                  4     2             3     5            5
Looked in newspapers, magazines, or home
                                            3                  2     2             2     3            2
buying guides
Attended a home buying seminar              1                  2     3             3     *            *

Contacted builder/visited builder models    2                  1     1             1     2            2



                                                                                                           64
Number of Weeks in Home Search

            2001   7
            2003   8
            2004   8
            2005   8
            2006   8
            2007   8
            2008   10
            2009   12
            2010   12

                                 65
Info Sources Used in Home Search
                                           2009   2010
           Internet                        90%    89%
           Real estate agent                87     88
           Yard sign                        59     57
           Open house                       46     45
           Print newspaper advertisement    40     36
           Home book or magazine            26     23
           Home builder                     18     16
           Relocation company               4      3
           Television                       8      7
           Billboard                        6      5



Every source was used less except one – YOU!
                                                         66
Where Buyers Found the Home They
Purchased
                                         2001   2003   2004   2005   2006   2007   2008   2009   2010
Real estate agent                        48%    41%    38%    36%    36%    34%    34%    36%    38%
Internet                                  8      11     15     24     24     29     32     36     37
Yard sign/open house sign                 15     16     16     15     15     14     15     12     11
Friend, relative or neighbor              8      7      7      7      8      8      7      6      6
Home builder or their agent               3      7      7      7      8      8      7      5      4
Directly from sellers/knew the sellers    4      4      5      3      3      3      2      2      2
Print newspaper advertisement             7      7      5      5      5      3      3      2      2
Home book or magazine                     2      1      2      1      1      1      1      *      *
Other                                     3      6      4      *      *      *      *      *      *




                                                                                                  67
Value of Website Features

                                                                      Somewhat                Did Not Use /
                                                        Very Useful              Not Useful
                                                                        Useful                  Not Avail
  Photos                                                   85%          14%         1%             1%
  Detailed information about properties for sale            83           16          1             1
  Virtual tours                                             61           27          5             6
  Real estate agent contact information                     45           35          10            10
  Interactive maps                                          43           35          10            12
  Neighborhood information                                  40           43          9             8
  Pending sales/contract status                             33           35          16            16
  Detailed information about recently sold properties       30           39          16            15
  Information about upcoming open houses                    21           34          22            23




                                                                                                              68
Websites Used in Home Search
                                                            2005   2009   2010
Multiple Listing Service (MLS) website                      50%    60%    59%
REALTOR.com                                                  54     46     45
Real estate company website                                  38     46     43
Real estate agent website                                    31     45     42
Other website with real estate listings                      11     30     41
For-sale-by-owner website                                     *     17     15
Newspaper website                                            15      9      8
Real estate magazine website                                 6      4      4
Social networking websites (e.g. Facebook, Myspace, etc.)    *      1      2
Video hosting websites (e.g. YouTube, etc.)                  *      *      1



       Warning: Get Better or Get Left Behind!!!
                                                                                 69
Method of Home Purchase

                                     2001   2003   2004   2005   2006   2007   2008   2009   2010
Through a real estate agent or
                                     69%    75%    77%    77%    77%    79%    81%    77%    83%
broker
Directly from builder or builder’s
                                      15     14     12     12     13     12     10     8      6
agent
Directly from the previous owner      15     9      9      9      9      7      6      5      5
Through a foreclosure or trustee
                                      1      1      1      *      1      1      3      10     4
sale




                                                                                                  Page 70
Buyer Rep. Arrangement with Agent

                                     2009   2010
        Yes, a written arrangement   43%    40%
        Yes, an oral arrangement      19     17
        No                            28     29
        Don’t Know                    11     13




                                                   71
What Buyers Want Most from Agents
                         Help determining        Help find and
                          how much home        arrange financing Other
                          buyer can afford            2%          3%
       Determine what           3%
    comparable homes were
          selling for
              6%
  Help with paperwork
          10%           Help buyer negotiate
                         the terms of sale
                                12%
                                    Help with the price
                                       negotiations
                                           14%




                                                                         72
How Buyers Found Their Agent

                                                       2005   2009   2010
 Referred by (or is) a friend, neighbor or relative    44%    44%    48%
 Internet website                                       7      10     10
 Used agent previously to buy or sell a home            11     10     9
 Visited an open house and met agent                    7      6      7
 Saw contact information on For Sale/Open House sign    6      7      6
 Walked into or called office and agent was on duty     4      4      5
 Referred through employer or relocation company        4      4      3
 Personal contact by agent (telephone, email, etc.)     3      3      3
 Newspaper,Yellow Pages or home book ad                 2      1      1
 Direct mail (newsletter, flyer, postcard, etc.)        1      *      *
 Other                                                  6      6      7



                                                                            73
Number of Agents Interviewed by Buyers


                     2002   2005   2009   2010
      One            59%    64%    66%    64%
      Two             22     20     19     21
      Three           19     10     10     10
      Four or more    --     5      6      6



                                                 74
Most Important Factors When Choosing
an Agent
                                                    Professional
                            Agent’s association designations held by
                                                                        Other
                           with a particular firm real estate agent
                                                         2%              5%
                                    3%
         Agent has caring
     personality/good listener
               11%


  Agent’s knowledge of
   the neighborhood
           12%
                                      Agent is friend or
                                                                Reputation of agent
                                       family member
                                                                       20%
                                             17%




                                                                                      75
Buyer’s View of Home as a Financial
Investment
                                    2005   2009   2010
  Good financial investment         94%    87%    85%
    Better than stocks               *      54     47

    About as good as stocks          *      26     30

    Not as good as stocks            *      7      9

  Not a good financial investment    1      3      4
  Don’t know                         5      10     11

                                                         76
Would Buyer Use Agent Again or
Recommend to Others?




             Only 9% did!!!
                                 77
Method Sellers Used to Find Agent
                                                       2005   2009   2010
 Referred by (or is) a friend, neighbor or relative    43%    40%    41%
 Used agent previously to buy or sell a home            28     24     23
 Personal contact by agent (telephone, email, etc.)     5      5      4
 Visited an open house and met agent                    4      5      4
 Referred by another real estate agent or broker        3      4      4
 Internet website                                       2      3      4
 Saw contact information on For Sale/Open House sign    4      3      3
 Referred through employer or relocation company        3      5      3
 Walked into or called office and agent was on duty     2      3      2
 Direct mail (newsletter, flyer, postcard, etc.)        3      3      2
 Newspaper,Yellow Pages, or home book ad                2      2      2
 Advertising specialty (calendar, magnet, etc.)         *      1      1
 Other                                                  *      5      6


                                                                            78
Number of Agents Contacted Before
Deciding Who to Sell Home With

                    2002   2010
     One            76%    66%
     Two             16     19
     Three           8      10
     Four            --     3
     Five or more    --     3

                                    79
What Sellers Most Want from Agents

                                                           2005   2009   2010
Help price home competitively                              17%    22%    23%
Help find a buyer for home                                  28     21     21
Help seller market home to potential buyers                  *     19     20
Help sell the home within specific time frame               27     19     19
Help seller find ways to fix up home to sell it for more    12     10      7
Help with negotiations and dealing with buyers               5      5      5
Help with paperwork/inspections/preparing for settlement     7      3      4
Help seller see homes available to purchase                  3      1      1




                                                                                80
Most Important Factors in Choosing an
Agent to Sell Home
                                                   2005   2009   2010
      Reputation of agent                          57%    36%    35%
      Agent is honest and trustworthy                *     21     23
      Agent is friend or family member               *     16     16
      Agent’s knowledge of the neighborhood         17     13     12
      Agent has caring personality/good listener     *      6      4
      Agent’s association with a particular firm     6      4      4
      Professional designations held by agent        3      1      1
      Other                                         17      3      4



                                                                        81
Negotiating Commission Rate or Fee

                                                                              2009   2010
   Real estate agent initiated discussion of compensation                     44%    44%
   Client brought up the topic and the real estate agent was willing to
                                                                               25     25
   negotiate their commission or fee
   Client brought up the topic and the real estate agent was not willing to
                                                                               9      9
   negotiate their commission or fee
   Client did know commissions and fees could be negotiated but did not
                                                                               10     10
   bring up the topic
   Client did not know commissions and fees could be negotiated                13     11




                                                                                            82
Would Seller Use Agent Again or
Recommend to Others?




        Only 24% of sellers use the same agent they
          used previously to buy or sell a home.      83
Method Used to Sell Home


                                     2001   2003   2004   2005   2006   2007   2008   2009   2010
Sold home using an agent or broker   79%    83%    82%    85%    84%    85%    84%    85%    88%*
For-sale-by-owner (FSBO)              13     14     14     13     12     12     13     11     9**
Sold to home buying company           1      1      1      1      1      1      1      1      1
Other                                 7      3      3      2      3      2      2      3      3



                                 * Highest Level in 9 Years!
                                 ** Lowest Level in 9 Years!
                                                                                              84
Incentives Offered to Attract Buyers

                                                          2009   2010
  None                                                    58%    56%
  Home warranty policies                                   21     25
  Assistance with closing costs                            18     20
  Credit toward remodeling or repairs                       6      5
  Other incentives, such as a car, flat screen TV, etc.     3      4
  Assistance with condo association fees                    1      1
  Other                                                     5      4



                                                                        85
  Annual KW MLS Study
Top 5 Full Service vs.Top 5 Limited Service




                                              86
       21%
       Less

22%           34%
Less          Less   27%
                     Less   11%    15%
                            Less   More




                                          87
                        5% Faster    13%     5% Faster    16%
            2% Faster
                                    Faster               Slower
5% Slower




                                                                  88
89
   7%
Increase
             34%
           Decrease

                        18%
                                               16% Increase
                      Decrease
                                 4% Decrease




                                                              90
91
   Median Commission Rates
                     Overall commission rates softened slightly in 2010,
                                     averaging 5.42%.




Source: KWRI Internal Commission Studies
   Median Commission Rates – Seller Side
            Seller side commission rates decreased slightly by less
                           than a tenth of a point.




Source: KWRI Internal Commission Studies
   Median Commission Rates – Buyer Side
              Buyer side commission rates decreased more than a
                       tenth of a point to 2.86% in 2010.




Source: KWRI Internal Commission Studies
   Median Commission Amount – Seller Side
                              Median commission amount on the seller side
                           increased by 26% due to a substantial 23% gain in
                                the median price of homes in the sample.




Source: KWRI Internal Commission Studies
   Median Commission Amount – Buyer Side
                           On the buyer side, commission amounts increased
                           by approximately 11% due to a 4% increase gain in
                                the median price of homes in the sample.




Source: KWRI Internal Commission Studies
So, What Do We Do?



                     97
“Persistence and determination alone
 are omnipotent. The slogan „Press On‟
 has solved and always will solve the
 problems of the human race.”

                         - Calvin Coolidge
                                             98
PRESS ON!
            99

				
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