Tag Archives: surveys

technology and the realtor

2020 Saw Highest Number of Home Sales Since 2006 Says REALTOR® Annual Survey

Realtors® cited a lack of inventory as the leading reason limiting potential clients from completing a transaction, according to the National Association of Realtors®’ (NAR) 2021 Member Profile, an annual report analyzing members’ business activity and demographics from the prior year. However, in spite of a global pandemic, its drastic impacts on how business was conducted, and a dwindling housing supply, 2020 saw the highest number of homes sold since 2006 (5.64 million) and NAR’s membership increased from the previous year (1.48 million at the end of 2020, up from 1.4 million at the end of 2019).

“Realtors® continued to serve clients’ needs despite the challenges 2020 brought to the real estate market,” said Jessica Lautz, NAR vice president of demographics and behavioral insights. “Economic lockdowns and historically-low inventory coupled with surging home buying demand only showed the resilience of our members and industry.”

Key Survey Takeaways

real estate business

(c) Can Stock Photo / ferli

Business Characteristics

The majority of Realtors® – 68% – hold sales agent licenses, which is up from 65% last year. Twenty percent hold broker licenses and 13% hold broker associate licenses. Seventy-three percent of members specialize in residential brokerage. Relocation, residential property management and commercial brokerage are members’ most common secondary specialty areas.

Members typically have eight years of real estate experience, down from nine years in 2019. Eighteen percent of those surveyed have one year or less experience – nearly identical to 17% last year – while 15% of Realtors® have more than 25 years of experience, down from 17% a year ago. Appraisers, broker-owners, and managers had the most experience, while sales agents were typically the newest to the field with five years of experience. Consistent with recent surveys, nearly four out of five members – 79% – were certain they’ll remain in the real estate industry for at least two more years.

Business Activity

The typical member had a slightly lower sales volume ($2.1 million vs. $2.3 million) and fewer transactions (10 vs. 12) in 2020 compared to 2019.

The typical Realtor® earned 15% of their business from previous clients and customers, unchanged from last year. The most experienced members – those with 16 or more years of experience – reported a greater share of repeat business from clients or referrals (a median of 37%), compared to no repeat business for those with two years of experience or less. Overall, Realtors® earned a median of 19% of their business from referrals, a slight drop from 20% in 2019. Referrals were also more common among members with more experience, with a median of 27% for those with 16 or more years of experience compared to no referrals for those with two years of experience or less.

Income and Expenses

The median gross income for Realtors® was $43,330 in 2020, down from $49,700 in 2019. Realtors® with 16 years or more experience had a median gross income of $75,000, a decrease from $86,500 last year, as income was typically commensurate with experience. One out of four Realtors® earned $100,000 or more. Total median business expenses for members were $5,330 in 2020, a decline from $6,290 in 2019.

Realtor demographics

(c) Can Stock Photo

Demographic Characteristics

Seventy-eight percent of Realtors® were White, down slightly from 80% last year. Hispanics/Latinos accounted for 9% of Realtors®, followed by Black/African Americans (7%) and Asian/Pacific Islanders (6%). New members tended to be more diverse than experienced members. Among those who had two years or less of experience, 34% were minorities.

Sixty-five percent of Realtors® were women, a minor increase from 64% last year. The median age of Realtors® was 54, down slightly from 55 last year. A third of members were over 60 years old and 5% were age 30 or younger.

More than nine in 10 members – 93% – had some post-secondary education, with a third completing a bachelor’s degree, 6% having some graduate school education, and 13% completing a graduate degree.

The marital status of Realtors® remained nearly unchanged from 2019. Sixty-nine percent of Realtors® were married, 15% were divorced, and 11% were single or never married. The typical Realtor® household had two adults and no children.

Two-thirds of members – 66% – reported volunteering in their community. Volunteering was most common among members aged 40 to 49 years.

“Realtors® come from all walks of life and serve as pillars in their respective communities,” said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty. “As champions for consumers, Realtors® combine hard work, dedication and trusted expertise to help individuals and families achieve the dream of property ownership.”

technology and the realtor

(c) Can Stock Photo

Technology and Realtors®

The coronavirus pandemic has forced businesses of all types to rely heavily on technology for communicating with consumers and remaining competitive in the marketplace. On a daily basis, the strong majority of Realtors® use a smartphone with wireless email and internet capability (96%) and a laptop or desktop computer (92%). The smartphone features that members use most frequently on a daily basis are email (95%) and social media apps (57%). Text messaging (93%) is the top method of communication for members with their clients, followed by phone calls (90%) and email (89%). Nearly seven in 10 members – 69% – have their own website.

“Realtors® used emerging technologies in 2020 to bridge the gap when pandemic precautions were in place,” Lautz said. “Members have now pivoted and embraced these tools to showcase listings and help buyers strategically find and secure the limited number of properties available.”

 

© Can Stock Photo / EyeMark

Office and Firm Affiliation

Despite an ever-changing housing market, Realtor® office and firm affiliation remained stable compared to a year ago. A slight majority of Realtors® – 53% – worked with an independent company and 88% were independent contractors at their firms. Forty-two percent of members worked at a firm with one office and 26% worked at a firm with two to four offices. The typical Realtor® had a median tenure of five years with their current firm, up from a median of four years in 2019. Eight percent of members reported working for a firm that was bought or merged. Errors and omissions insurance is the most common benefit provided by members’ firms.

Survey Methodology

In March 2021, NAR emailed a 93-question survey to a random sample of 161,155 Realtors®. Using this method, a total of 10,643 responses were received. The survey had an adjusted response rate of 6.6%. The confidence interval at a 95% level of confidence is +/- 0.95% based on a population of 1.4 million members. Survey responses were weighted to be representative of state level NAR membership. Information about compensation, earnings, sales volume and number of transactions are characteristics of calendar year 2020, while all other data are representative of member characteristics in early 2021.

For more information from NAR’s 2021 Member Profile, visit https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-nar-member-profile.

The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

[Source: NAR’s 2021 Member Profile, visit https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-nar-member-profile.]

 

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, please visit www.OnlineEd.com.

OnlineEd® is a Registered Trademark.

Home Purchase Sentiment Index Drops Again

Consumers Say Now is a Good Time to Buy or Sell a Home

(November 9, 2016) – WASHINGTON, DC – The Fannie Mae Home Purchase Sentiment Index® (HPSI) dipped 1.1 points to 81.7 in October, the third decrease in as many months. Four of the six components that comprise the HPSI fell during the month. The share of consumers reporting significantly higher income over the past year experienced the largest drop, decreasing eight percentage points on net. The net share of consumers expecting home prices to go up in the next year fell three percentage points, and those who expect mortgage rates to drop and those who are confident about not losing their job each dropped by one percentage point in October. However, more consumers said they believe now is a good time to buy and a good time to sell a home – increasing two and four points on net, respectively.

“The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March. Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate. Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index. However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future.”

Source: Fannie Mae news release.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

First-time Buyers, Single Women Gain Traction in NAR’s 2016 Buyer and Seller Survey

 For-sale-by-owner transactions remained at an all-time low for the second straight year

canstockphoto4568934woman-moving

(November 1, 2016) – WASHINGTON  — The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.

This is according to the National Association of Realtors®’ annual Profile of Home Buyers and Sellers, which also found that for-sale-by-owner transactions remained at an all-time low of 8 percent for the second straight year. Nearly 90 percent of all respondents worked with a real estate agent to buy or sell a home.

The 2016 edition of NAR’s Profile of Home Buyers and Sellers continues the longest-running series of national housing data evaluating the demographics, preferences, motivations, plans and experiences of recent home buyers and sellers; the survey dates back to 1981. Results are representative of owner-occupants and do not include investors or vacation homes.

After slipping for three straight years, the share of sales to first-time home buyers 1 in the 2016 survey ticked up to 35 percent, which is the highest since 2013 (38 percent) and a revival from the near 30-year low of 32 percent in 2015. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent.

Lawrence Yun, NAR chief economist, says more new homeowners were able to break through what continues to be a laborious market for many trying to enter. “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” he said. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise. These factors were why more first-time buyers (67 percent) said a desire to own a home of their own was the primary reason for their purchase (64 percent in 2015; 53 percent in 2014).”

Added Yun, “Even with the affordability challenges many buyers face, the allure of homeownership is not lost among the younger generation. Those under age 35 made up 61 percent of first-time buyer transactions.”

Although the increase in new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low 2.

“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” added Yun.

Single female buyers on the mend, age of first-time buyers on the rise

As in year’s past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent years (based on household composition). After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases (highest since 2011 at 18 percent).

“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” said Yun. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”

The median age of first-time buyers in this year’s survey was 32, matching the all-time high last set back in 2006, and up from 31 the past five years. The typical first-time buyer had a higher household income ($72,000) than last year ($69,400) and purchased a slightly larger home (1,650-square-feet; 1,620-square-feet in 2015) that was more expensive ($182,500; $170,000 in 2015).

The typical repeat buyer was 52 years old (53 in 2015), earned $98,000 ($98,700 in 2015) and purchased a 2,000-square-foot home (2,020 square-feet in 2015) costing $250,000 ($246,400 in 2015).

Financing the purchase: buyers carrying more student debt; difficulty obtaining a mortgage on the decline

Down payment sizes have roughly stayed the same in recent years. In this year’s survey it was 6 percent for first-time buyers (third straight year) and 14 percent for repeat buyers (third time in four years). Fifty-nine percent of buyers financed their purchase with a conventional mortgage, and 33 percent of first-time buyers took out a low-down payment Federal Housing Administration-backed mortgage, which is down from 54 percent in 2011.

“Fewer first-time buyers (40 percent) compared to a year ago (45 percent) indicated that the mortgage application and approval process was somewhat or much more difficult than they expected,” highlighted NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “Those with healthy credit scores and manageable or little debt should talk to a lender to see if they qualify. They’ll likely discover that obtaining a mortgage isn’t quite the confusing and tiring inquisition it was in the years immediately after the downturn.”

Personal savings ranked first for both first-time buyers and repeat buyers as the primary source of their down payment. The second most popular source for first-timers was a gift from a friend or relative (24 percent; 27 percent in 2015), and for repeat buyers it was the sales proceeds from their previous residence.

Respondents reported that debt (all types) delayed saving for a down payment for a median of three years. For first-time buyers, 40 percent indicated they’re carrying student debt, with a typical amount of $26,000 ($25,000 in 2015). Furthermore, of the 26 percent of first-time buyers who said saving for a down payment was the most difficult task in the buying process, 55 percent said student debt delayed saving.

As NAR survey findings discovered earlier this year, even those financially able to make on-time payments on their student loans are struggling to save for a down payment, and many expect to be delayed from buying a home by over five years,” said Yun. “Repaying student debt could slow the path to homeownership even more for those living in markets with steep rents and home prices.”

The home search: buyers rely heavily on the internet and real estate agents; single-family homes are a top choice

This year’s survey convincingly proved once again that the two most popular resources for home buyers remain the internet (95 percent) and real estate agents (92 percent). Despite a record-high 51 percent of buyers saying they found the home they purchased online, most buyers who used the internet still ended up purchasing their home through an agent (90 percent).

Not surprisingly, mobile devices and tablets are increasingly becoming a resource for home buyers. Their usage lifted to 72 percent in this year’s survey, which is up from 61 percent a year ago and 45 percent in 2013. Furthermore, 58 percent of buyers indicated they found the home they purchased on a mobile app.

“Regardless of the plethora of online resources readily available at the click of a mouse or the swipe of a thumb, consumers serious about buying a home continue to seek the expertise and market insights that only a Realtor® can provide,” said Salomone. “Given the numerous competitive markets with minimal supply, it’s no surprise that both first-time and repeat buyers sought an agent for assistance finding the right home and negotiating the terms of the sale.”

Similar to recent years, the most common housing type continues to be a detached single-family home (83 percent for second straight year) and one in a suburban area (54 percent; 52 percent in 2015). Meanwhile, purchases of townhouses or row houses remained at 7 percent for the third straight year; only four percent of buyers purchased a condo.

Overall, the typical home bought was built in 1991 and had three bedrooms and two bathrooms. The share of buyers who purchased new home was at an all-time survey low of 14 percent.

Selling a home: seller use of an agent remains at all-time high; wanting a bigger house primary reason for selling

For the second straight year, 89 percent of sellers sold their home with an agent. This in turn — also for the second year in a row — kept for-sale-by-owner sales to their lowest share (8 percent) since the survey’s 1981 inception and below 10 percent since 2012.

“Although the imbalance of supply in relation to demand in recent year’s continues to put many sellers in the driver’s seat, they’re still looking for a Realtor® now more than ever to price their home competitively, market their home to the widest number of eyes possible and ultimately help close the deal within a given timeframe,” added Salomone.

The typical seller over the past year was 54 years old (unchanged since 2014), had a household income of $100,700 ($104,100 in 2015), and was in the home for 10 years before selling — a year longer than 2015 and matching the all-time high in 2014. Fewer sellers indicated they wanted to sell earlier but were stalled because their home had been worth less than their mortgage (12 percent versus 14 percent a year ago); the figure was 17 percent in 2014.

Sellers realized a median equity gain of $43,100 ($40,000 in 2015) — a 24 percent increase (23 percent last year) over the original purchase price. Homes sold after 21 years of ownership had the largest equity gain (124 percent or $127,600); underlining the volatility during the downturn, equity gains fell to 3 percent for owners who bought between eight and 10 years ago.

Back in the 2012 survey, it typically took respondents 11 weeks to sell their home. With tight inventory conditions gripping most markets once again over the past year, sellers were considerably more successful finding a buyer in a shorter amount of time, with homes typically on the market for only a month.

A tad more sellers traded up (44 percent) compared to last year (42 percent) and slightly more, at 32 percent, traded down (31 percent in 2015). Sellers moved a median distance of 20 miles — 72 percent stayed in the same state — and the most popular reason given for selling their home was it being too small (18 percent).

Feedback from sellers underscored once again that referrals and repeat business remain a large source of new opportunities for real estate agents. Nearly two-thirds of responding sellers either found their real estate agent through a referral by a friend, neighbor or relative, or used their agent from a previous transaction. Additionally, 85 percent of sellers indicated that they would definitely or probably use their agent again or recommend him or her to others.

NAR mailed a 132-question survey in July 2016 using a random sample weighted to be representative of sales on a geographic basis to 93,171 recent home buyers. Respondents had the option to fill out the survey via hard copy or online; the online survey was available in English and Spanish. A total of 5,465 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 5.9 percent. The sample at the 95 percent confidence level has a confidence interval of plus-or-minus 1.32 percent.

The recent home buyers had to have purchased a home between July of 2015 and June of 2016. All information is characteristic of the 12-month period ending in June 2016 with the exception of income data, which are for 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Source: National Association of REALTORS® press release

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Housing Status Quo Not Working and Voters Blame Banks

“It’s too difficult for people like me to buy a home”

By Jeff Sorg, OnlineEd Blog

canstockphoto23094189reportgraph1(July 27, 2016) – According to a recent report by Schoen Consulting, voters believe that the housing status quo is not working, especially for people of color, and they blame banks and the federal government for not helping with policies to help with homeownership, affordable housing, and more lending. Additionally, a majority 53% of American voters believe that “It’s too difficult for people like me to buy a home,” and 41% of likely voters agree that “Banks don’t want to provide mortgages to people like me.” View or download the report here.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

How America Views Homeownership Survey

Highlights from 2016 Wells Fargo Survey

By Jeff Sorg, OnlineEd Blog

(June 9, 2016) – Homeownership is still part of the American dream, and people think now is a good time to buy, according to a recent Wells Frago Survey.

  • 93% agree: Homeownership is an achievement to be proud of.
  • 86% agree: Homeownership is a dream come true.
  • 74% agree: Right now is a good time to buy a home.

Proportion of respondents who are considering buying a home in the next two years (answered“Definitely will,” “Probably will,” or “Maybe”):

  • Millennials (Ages 18-34): 58%
  • African Americans:
  • 51%Hispanics:
  • 47%General population: 38%

“Definitely will” or “probably will” buy a home in the next two years:

  • Millennials (Ages 18-34): 40%
  • Hispanics: 33%
  • African Americans: 30%
  • General population: 22%

View and download the entire survey here.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered trademark of Harlow Spaan and Jeffrey Sorg

Renters Continue To Perceive Obtaining a Mortgage is Difficult

Renters strongly prefer to own instead of rent

By Jeff Sorg, OnlineEd Blog

canstockphoto22765888 rent or buy(June 7, 2016) – According to the results of the Federal Reserve Bank of New York’s  February 2016 SCE Housing Survey, renters continue to perceive obtaining a mortgage (if they wanted to buy a home) as difficult, with two-thirds stating that it would be somewhat or very difficult to get a mortgage. However, there are signs of improved perceived credit access relative to previous surveys. The share of renters reporting that obtaining a mortgage would be (somewhat or very) easy rose to 17.5 percent (from 12.8 percent in 2014, and 14.7 percent in 2015). This held across all demographic groups.

Renters continue to report a strong preference for owning. The share of renters who report preferring or strongly preferring to own instead of rent (if they had the financial resources to do so) rose to 74.1 percent from 68.5 percent in 2015.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered trademark of Harlow Spaan and Jeffrey Sorg

 

 

TRID Rule Reduces Mortgage Offerings, Causes Delays

Banks are still struggling to comply with the Consumer Financial Protection Bureau’s 2015 TILA-RESPA Integrated Disclosure rule

By Jeff Sorg, OnlineEd Blog

(March 3, 2016) – WASHINGTON — Banks are still struggling to comply with the Consumer Financial Protection Bureau’s 2015 TILA-RESPA Integrated Disclosure rule, or TRID, according to an American Bankers Association survey. The survey, conducted in February of this year, found that 25 percent of respondents have eliminated certain mortgage products because the rule does not provide enough clarity. Some of the offerings banks have eliminated include construction loans, adjustable rate mortgages, home equity loans or payment frequency options.

trid2.JPGMore than 75 percent of survey participants said loan closings are being delayed as a result of TRID. On average, those bankers reported a delay of 8 days with responses ranging from one to 20 days. More than 90 percent said front-boarding and loan processing times have increased.
“It’s clear from this survey and our discussions with bankers that TRID compliance remains a significant concern,” said Bob Davis, ABA executive vice president, mortgage markets, financial management and public policy. “Consumers are seeing the greatest impact due to increased loan costs, fewer choices and delayed closings – and that’s not what this rule was intended to do.”
Ninety-four percent of the 548 bankers who completed the survey believe the TRID “good faith” grace period should be extended.
“As we anticipated, our bankers are struggling to comply in part because the systems being provided by vendors are incomplete or inaccurate,” said Davis. “The causes of many of these systems problems are ambiguities in the TRID rule that require resolution.”
The survey found that 78 percent of respondents are still waiting for system updates from their vendors and 83 percent are forced to use manual workarounds.  About half of survey participants said their bank will have to or have already hired additional staff to comply with the new rule.
The bankers who participated in the survey represent a diverse group of banks in both geography and asset size.
Click here for the full survey report.
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The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Mortgage Customer Satisfaction Increases as Lenders Adopt New Technology

Overall satisfaction with mortgage application-related activities is higher among customers who used digital communication

By Jeff Sorg, OnlineEd Blog

customer satisfaction survey(Nov. 16, 2015) /PRNewswire/ — Overall mortgage customer satisfaction has increased this year as lenders have focused on developing functional digital channels and improving operational efficiency, according to the J.D. Power 2015 U.S. Primary Mortgage Origination Satisfaction Study(sm) released today.

Satisfaction is calculated on a 1,000-point scale, with the study measuring customer satisfaction with the mortgage origination experience in six factors:

  1. application/approval process;
  2. interaction;
  3. loan closing;
  4. loan offerings;
  5. onboarding; and
  6. problem resolution. .

Overall customer satisfaction with mortgage origination is up 7 points from 2014. The increase in satisfaction is driven by gains in the application and approval processes, influenced by improved perceptions of the speed of the loan process. When loans close earlier than promised, satisfaction is significantly higher, compared to when loans close as expected or when it takes longer than expected.

The study also finds that overall satisfaction with several mortgage application-related activities is markedly higher among customers who used digital communication channels versus those who communicated using mail and fax.

The links between the perception of mortgage processing speed and efficiency and overall customer satisfaction are particularly noteworthy in light of new TRID , a.k.a. “know before you owe” regulation, which went into effect in October 2015, which has the potential to increase the mortgage timeline and poses a significant challenge for lenders when serving home buyers across all generations, but could be particularly challenging when dealing with Millennials (ages 18-34) who are technically savvy, always connected to the Internet and noted as being capricious consumers.

“While a lot of effort has been placed on ensuring compliance with new regulations, it is imperative that lenders improve their education and communication about the impact of these changes or risk losing customers,” said Craig Martin, director of the mortgage practice at J.D. Power. “Effective communication remains one of the most important aspects of a satisfying mortgage experience, especially if the process is taking longer than it has historically. As the number of Millennial home buyers continues to rise, lenders must be ready to meet their expectations. This generation is highly digitally connected, so ongoing communication and transparency via the channels they prefer, particularly mobile, are vital.”

Following are some of the key findings in this year’s study:

  • Communication Impacts Satisfaction: Communication throughout the loan process mitigates dissatisfaction with a longer timeline. When the loan process takes more than two months, satisfaction is 686. However, when an accurate time frame estimate and proactive updates are provided in that same scenario, satisfaction is 859.
  • Millennials Seek Guidance: With Millennials now accounting for the largest share of loan originations over the last two years2, it is notable that nearly 4 in 10 (37%) millennial customers indicate that the origination process was not completely explained to them, and 58 percent indicate their options, terms and fees were not completely explained.
    Effective Loan Representatives are Vital: Those loan reps who engage customers, build trust and ensure that borrowers understand each step of the process can mitigate the negative impact on satisfaction due to missing closing dates (764 missed date/effective representative vs. 511 missed date/ineffective representative).
  • Loans are Closing Sooner: The percentage of applications and approvals that close earlier than promised has increased to 35 percent in 2015 from 31 percent in 2014.
  • Satisfying Experience Leads to Recommendations and Loyalty: Providing an outstanding mortgage origination experience can generate high levels of advocacy and retention. The study finds that 71 percent of highly satisfied customers (overall satisfaction scores of 900 or higher) say they “definitely will” recommend their lender, and 76 percent say they “definitely will” consider reusing the same lender for their next home purchase. In comparison, only 5 percent of dissatisfied customers (scores of 699 or less) say they “definitely will” recommend and 8 percent say they “definitely will” consider reusing the lender.
  • 2015 U.S. Primary Mortgage Origination Satisfaction Rankings
    Quicken Loans ranks highest in primary mortgage origination satisfaction for a sixth consecutive year, with a score of 850, an increase of 15 points from 2014. Quicken Loans performs particularly well in all six factors. Fifth Third Mortgage ranks second with a score of 812, followed by Bank of America and BB&T (Branch Banking & Trust Co.) in a tie at 811 each.

The 2015 U.S. Primary Mortgage Origination Satisfaction Study is based on responses from 4,666 customers who originated a new mortgage or refinanced within the past 12 months. The study was fielded in two waves: February – March and July – August 2015.

For more information about the 2015 U.S. Primary Mortgage Origination Satisfaction Study, visithttp://www.jdpower.com/resource/us-primary-mortgage-origination-satisfaction-study

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Millennials Willing to Sacrifice Starbucks Visits To Finance Home Purchase

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Millennials are ready to give up some conveniences in order to finance a home purchase

(Washington DC, July 14, 2015) — A majority of millennials (ages 24-34) are willing to sacrifice modern day conveniences like cell phones, internet, cable and Starbucks in order to save for a down payment on a home. A new survey from the Collingwood Group shows 65% of millennials polled are somewhat to very likely to give up on at least one of the above to finance a home purchase. But when it comes to financing their first homes millennials (also known as “generation Y”) think more like their parents. The Collingwood Group survey finds close to 75% of millennials would be more comfortable applying for a mortgage with a traditional bank over an alternative lender:

And despite the millennial generation’s internet focus, they are not willing to pay more for a streamlined, online mortgage process. Interestingly, if millennials had already gone through the mortgage application process, they were slightly more inclined to pay more for a more streamlined process (23% vs 21%). Instead, just like previous generations it’s the cost that matters most to them.

The survey further questions perceptions that millennials prefer city life with close to 70% of those surveyed saying they prefer buying their first home in the suburbs. The Colllingwood Group Chairman Tim Rood says, “It’s fascinating that millennials want to live in the city while they’re single but want the American Dream of white picket fences and yards when they are ready to buy, according to our exclusive poll. That is so critical given the ambiguity and fear that millennials will get hooked on urban conveniences and abandon the suburbs, leaving baby boomers and other downsizing households in the lurch.”

He adds, “The data on millennials that own their home (23%) who would pay more for a better process is also notable. On the most expensive purchase of their lives they are willing to pay more because the current process is so God awful.” Rood notes, “Price matters to millennials who have lower incomes and more debt and the mortgage industry MUST figure out ways to become more efficient and streamline operations to reduce costs. The whole process is clearly ripe for disruption.”

The poll was conducted July 5-8, 2015 among a random group of 650 people.

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  This article was published on July 1, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.