Our New House, Found in the Middle of the Web

Looking for a house? Try clicking a mouse.

An increasing number of people are using the Internet to research home purchases, eliminating aggravation from a stressful, time-consuming process. With home values rising, mortgage rates low and buyers aplenty, the Internet gives buyers an edge in a tight market, making them better informed and less likely to waste time looking at homes that don't interest them.

About half of all homebuyers used the Web to aid in purchasing a home in 2001, according to Kevin Roth, senior economist for the National Association of Realtors (NAR). By 2005, that figure will rise to 80%, according to Jupiter Media Metrix. But the Internet is mainly used as a research tool, rather than as a way to close a deal. "Only 4% of all homebuyers found the home they ultimately purchased through the Internet," Roth says.

Nationally, homebuyers using the Web looked at half the number of homes as offline-only homebuyers, according to a February 2002 study from the California Association of Realtors (CAR). "Before the Internet, we showed 30 houses in a 16-week period. Now, our average Internet customer looks at four to five in a two-week period," says Dale Mattison, associate broker with Long & Foster Realtors, with 180 offices in the mid-Atlantic area.

But the time homebuyers using the Internet save by not hitting the pavement, they spend researching. Internet users spend 4.5 weeks gathering information before seeing a real estate agent, more than double the 1.8 weeks spent by offline-only buyers, according to the CAR. As a result, buyers know what they want and are more serious about purchasing, Mattison says. "We really use their 'on the pavement' time to look for the specific house," he says.

Internet Homebuyers Are Younger and More Affluent
	Online Homebuyers	Offline-Only Homebuyers
Average number of homes visited during search	7.5	15.2
Average time spent researching before seeing a NAR-approved Realtor	5.8 weeks	2.1 weeks
Average time spent researching before seeing a real estate agent	4.5 weeks	1.8 weeks
Median age	37	43
Median home price	$452,000	$310,000
Percent with annual salary above $150,000	66%	39%
Source: CAR

The additional time spent on research means that buyers call brokers later in the process, avoiding the hard sell. "It lets you get halfway there without someone trying to sell you something," says Neil Binder, principal of Bellmarc, the largest privately owned real estate brokerage in New York City.

No longer having to rely on an agent's expertise, online shoppers now surf for information about local schools and crime rates. They also can compare markets and take virtual tours of homes online. Because of this preparation, Binder says real estate agents become translators, not salespeople, helping customers understand the information they've gathered and guiding them through the negotiation process.

The online process especially benefits those making cross-country moves, eliminating costly trips and price sticker shocks. "A home was three to four times more between the West and Midwest," warns Kathleen Sindell, author of The Unofficial Guide to Buying a Home Online.

Retirees looking to downsize and new families looking to upsize their homes can spend months watching property values, fishing for the best price -- a distinct advantage in tight urban markets or popular suburban areas, Long & Foster's Mattison says. And in the event of a sudden emergency or job transfer, it's entirely possible, although highly discouraged, to purchase a home sight unseen.

People in search of a particular kind of housing such as summer retreats, condominiums or retirement homes can narrow options while finding a specialist in the area, Roth says. Special buyers like the disabled and first-timers may discover they're eligible for discounts and unique programs, Sindell says, mentioning a Department of Housing and Urban Development first-home fund for newlyweds used instead of a gift registry.

The More Things Change...

But while the Internet is a great tool, it doesn't replace the old-fashioned approach to buying a home. Brokers and legwork are still necessary parts of the process.

Ultimately, homes must be viewed in person. A neighborhood that looks calm around lunchtime may be flooded with traffic in the early morning. "You're going to want to see what the backyard looks like," Roth says. "You can't get that on the Web."

Moreover, Web listings are often inaccurate, outdated or in the process of being sold. Buyers aren't always seeing the best of what's available because most Internet sites don't allow access to the same home listings that real estate agents use: the multiple listing service, or MLS. While local real estate agents constantly refresh the MLS, many Web listings grow stale. "A lot of the time, listings stay on until they're closed," Bellmarc's Binder says.

While there has been a small but growing push to allow real-time access to MLS listings on a handful of sites, the effort is not comprehensive. HomeGain.com, eRealty.com and zipRealty.com allow free real-time access to MLS listings in some areas. But national listings remain a dream because not every area, such as New York City, has an MLS.

Meanwhile, a sizable disconnect exists between buyers and sellers online. During January 2002, there was an $87,000 gap between what online sellers working without a broker wanted and online buyers hoped to pay, according to a study from HomeGain.com. As a result, prices can be inaccurate and often reflect a negotiating opportunity rather than a firm price tag, says Brad Inman, CEO of HomeGain.com.

Internet Disconnect January 2002 figures show a wide spread between online sellers' and buyers' preferred prices
The online buyer hoped to spend...	...while online sellers wanted...	...creating a difference of...
$142,000	$229,000	$87,000
Source: HomeGain.com

As the negotiation process begins, homebuyers should work with real estate brokers to get the best price available and make sure the details are hammered out correctly. "You'll need to deal with a professional who can interpret the information, negotiate and then quarterback it from the acceptance letter through closing the deal," says John Peckham, executive director of the Real Estate Cyberspace Society.

Agents can also help focus rookie homebuyers overwhelmed by the feast of information. "Someone could go cuckoo if they went out there and looked at a million and a half listings," says Peckham.

While you can still buy a home without ever going online, doing so makes the process less burdensome. "[Homebuyers] can get 100 times more information than before the Internet was invented," he says.