A new study underscores the radical shift taking place in the real estate industry, showing both realty agents and consumers are more accepting of the changes than they were just two years ago.
The study, by Weston Edwards & Associates of Laguna Beach, Calif., reveals that consumers want one person at the center of the home sale process as a source not only for housing information, but also for loans, appraisals and insurance.
The study of the nation’s top 250 firms says that interest in the one-stop-shopping concept has skyrocketed in the last two years. It notes that almost all of the top firms offer mortgages and almost half provide other major services that have traditionally been provided by others.
HFS is pushing the one-stop concept at all of its franchises–Coldwell Banker, Century 21 and ERA–to increase profit margins, but competitors are hot on their trail. The HFS franchises handle almost 25 percent of all home sales, the report said.
Profits will look better for firms offering additional services, the report said. After years of watching profits slide because of higher commission splits, competitive pressures and investments in technology, the uptick will be a welcome change.
The study also found:
– One-stop-shopping has become commonplace for the home buyer. Some 93 percent of the top 50 residential brokerage firms provide mortgages, 44 percent provide title insurance or closing services and 42 percent provide homeowners insurance.
– Lenders’ efforts to bypass real estate agents haven’t worked. Although about 25 percent of home buyers have been to a lender before seeing a realty agent, 42 percent of the visits were just a discussion of interest rates; half of the buyers were prequalified for a loan. About half of all home buyers follow the agent’s recommendations on where to get a loan. The study found that first-time home buyers followed the recommendations the most, while those moving up generally already had financing.
– Realty agents have begun quickly adopting new technology as a key business tool, the report said. All of the top realty firms now have Web sites, along with 90 percent of the top 250 firms.
The number of firms that provided mortgage services and gave laptop computers to agents more than doubled in the last two years, from 31 percent to 69 percent. The number of agents who took their applications live almost tripled, from 15 percent to 43 percent. The number of firms using automated underwriting systems blossomed from only two firms to 47 percent of all firms studied.
– The study also found that slightly more than half of Realtor-based lending is a partnership, generally with mortgage bankers. Realtors are making money in lending, the study said, with 80 percent of Realtor-based lending at the top 250 firms described as profitable. The lending provides a greater profit per transaction than that from brokering the home, the study said.
The study is available from Weston Edwards and Associates, 714-376-0590.
