1. the numbers that drive real estate 2 the numbers that drive u.s. real estate 1.home sales 2.home...

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.

5.18

7.08

5.16 4.91

Source: National Association of REALTORS®

4.96

4

In Q3 2010, all 50 states experienced a decrease in sales …

TX

UT

MT

CA

AZ

ID

NV

OR

IA

COKS

WY

NM

MO

MN

NE

OK

SD

WA

AR

ND

LA

IL

FL

GAAL

WI

VAIN

MI

MS

KY

TN

PA

NC

SC

WV

NJ

ME

NY

VT

MD

NH

CT

DE

MARI

AK

HI

Below 10%

Below 20%

Home Sales Direction

(Year-Over-Year Change)

OH


Below 30%

Below 40%

5

In Q4 2010, all states except for Virginia experienced an increase in

sales …

TX

UT

MT

CA

AZ

ID

NV

OR

IA

COKS

WY

NM

MO

MN

NE

OK

SD

WA

AR

ND

LA

IL

FL

GAAL

WI

VAIN

MI

MS

KY

TN

PA

NC

SC

WV

NJ

ME

NY

VT

MD

NH

CT

DE

MARI

AK

HI

OH


Sales Increased

Sales Decreased

Home Sales Direction

(Year-Over-Year Change)

6

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.

7

2. Home Prices (In Thousands)

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


Historical appreciation rate = 4%$153K

$222K

$173K

$211K

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.

9

4. Mortgage Rates (30-Year Fixed)

Source: Freddie Mac

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%

4.7%

5.05%

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


15%14%

40-year average = 21.9%

Housing affordability was the most favorable on record in 2010.

12

The Numbers That Drive Canadian Real Estate

1. Home Sales

2. Home Prices

3. Inventory

4. Mortgage Rates

5. Affordability

13

1. Home Sales (In Thousands)

Sales activity has cooled, closing the year at 3.9% below 2009, but remained the sixth highest annual activity level on record.

521K465K

447K

Sources: Conference Board/The Canadian Real Estate Association

431K

14

2. Home Prices (In Thousands)

Historical appreciation rate = 4.1%


$189K

$305K

$320K

$339K

The national average home price was up 5.8% in 2010 to a new record $339,030.

15

2. Home Prices (Appreciation Rates by Decade)

1980s

1990s

2000sAverage: 9.12%

Average: 1.20%

Average: 7.73%

Sources: Conference Board/The Canadian Real Estate Association 16

Northwest Territories

Saskatchewan

Manitoba

Newfoundland & Labrador

Nova Scotia

New Brunswick

Prince Edward Island

Prices Increased

Prices Decreased

Home Price (Year-Over-Year Change)

Northwest

Territories

Yukon

British Columbia

Alberta

Ontario

Quebec

Nunavut


All 12 markets saw an increase in prices in 2010 …

17

2. Home Prices (Annual Appreciation)

Sources: Conference Board/The Canadian Real Estate Association 18

3. Inventory (Sales-to-New Listings Ratio)


52%

Seller’s Market

Buyer’s Market

Balanced Market

Canadian housing market remained balanced throughout 2010.

19

4. Mortgage Rates (5-Year Fixed)

Mortgage rates hit a new record low, remaining under 6% in 2010.

In December, rates stood at 5.19%.

Source: Bank of Canada

5.61%5.63%

8.4%6.9%

13.4%

5.44%

20

5. Housing Affordability (% of Income)Proportion of median pre-tax household income required to service the cost of mortgage payments (principal, interest, property taxes, and utilities)

Property Type

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Avg. Since

‘85

Q3/Q3 % Ch

Detached bungalow

40.1% 40.6% 41.1% 42.9% 40.4% 39.0% +0.3%

Standard two-story

46.0% 46.7% 46.8% 48.9% 46.3% 43.3% +0.3%

Standard condo

27.7% 28% 28.2% 29.3% 27.8% 26.8% +0.1%

Avg. Q3/Q3 Change: +0.23%

• Dropping mortgage rates and softer prices pushed housing affordability higher in the third quarter, bucking its rising trend since the middle of 2009.

• This reversed almost two-thirds of the cumulative deterioration in the preceding four quarters and returned the measures to their levels seen at the end of 2009. However, these measures continue to stand slightly above long-term averages.

• All provinces saw improvements in affordability, especially British Columbia.Source: The Royal Bank of Canada 21

Economic Snapshot

22

U.S. Economic Snapshot

1. Gross Domestic Product

2. Inflation

3. Unemployment

23

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

Source: Bureau of Economic Analysis

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

24

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

Source: Bureau of Economic Analysis 25

2. Inflation

Source: Bureau of Labor Statistics

1.6%

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

26

3. Unemployment

Source: Bureau of Labor Statistics

9.6%

Unemployment is making slow progress, dropping from 9.9% in 2009 to 9.4% in the final month of 2010.

Long-term average: 5.6%

27

Canadian Economic Snapshot

Canada’s economy continues to build momentum, thanks to:

1.Policy response2.Increased consumer confidence3.Improving lending conditions4.Exceptionally stimulative financial conditions

Indicators %1. Real GDP (2010 estimate)

3.5%

2. Inflation Rate (2010 average)

1.6%

3. Unemployment Rate (December)

7.6%

28

The Events That Drove The Numbers

29

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.

30

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.

31

National Association of Realtors Membership vs. Existing Home Sales

NAR Membership: 1.07 Million

Existing Home Sales: 4.91 Million


1977

1982

1990

19982008

20101414

777.97.9

13.813.8

8.28.29.29.2

Sides per AgentSides per Agent

32

Housing Economic Recovery Act of 2008 $7,500 temporary FTHB tax credit

Extended and Expanded $8,000 FTHB Tax Credit

Must sign contract by April 30Must close by June 30

Closing Deadline

Extended to

September 30

Gradual Recovery

without Tax Credit

American Recovery & Reinvestment Act of 2009$8,000 FTHB tax credit

2. Extended home buyer tax credit increased buyer traffic in the first six months of 2010


Jan ‘09

Jun ‘09

Oct ‘09

Nov ‘09

Apr ‘10 Jun

‘10Sep ‘10

Dec ‘10

33

Recession Began December 2007

Housing Economic Recovery Act of 2008

$7,500 temporary FTHB tax credit

American Recovery & Reinvestment Act of 2009

$8,000 FTHB tax credit



Closing Deadline

Extended to

September 30

Gradual Recovery

without Tax Credit


HOME SALESIn Millions

2. Extended home buyer tax credit boosted demand & stabilized home sales in the first half of 2010

34

Recession Began December 2007

Housing Economic Recovery Act of 2008

$7,500 temporary FTHB tax credit

American Recovery & Reinvestment Act of 2009

$8,000 FTHB tax credit



Closing Deadline

Extended to

September 30

Gradual Recovery

without Tax Credit


HOME PRICESIn Thousands

2. Extended home buyer tax credit boosted demand & stabilized home prices

35

3. Concerns about foreclosure procedure delayed the influx of distressed properties into the market

Source: RealtyTrac

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.

36

3. Concerns about foreclosure procedure limited foreclosure sales and steadied prices


Distressed Sales % of Total SalesIn 2010, distressed properties accounted

for 34% of all sales, down from 36% in 2009 and 37% in 2008.

37

Rising foreclosure rates (% of U.S. Homes)remain a trouble spot for the housing market

Source: RealtyTrac

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.

38

4. Monetary stimulus aidcontinued to lend support

Source: Mortgage Bankers Association

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

dollars.

39

5. Credit conditionsremain tight

Source: Federal Reserve Board

Credit GrowthBank Credit (In Billions of Dollars)

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

Residential Real Estate Loans

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.

40

Supply and Demand forResidential Mortgage Loans

Source: Federal Reserve Board – the Senior Loan Officer Opinion Survey

Net Percentage of Respondents Tightening Standards for Mortgage Loans

Net Percentage of Respondents Reporting Stronger Demand for Mortgage Loans

Lending conditions have eased somewhat with fewer and fewer banks reporting tightened standards for mortgage loans.

SUPPLY DEMAND

41

6. Uncertainty about economic outlookacted as restraint on business and consumer spending

Source: Bureau of Economic Analysis

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

42

The Five Events That Drove the Canadian Numbers

1. The available sides per agent slipped as home sales softened and number of agents rose.

2. Implementation of new, tighter mortgage rules in April and Harmonized Sales Tax in Ontario and British Columbia in July brought forward resale activity and fueled prices in first half of 2010.

3. Canada’s accommodative monetary policy continued to

drive the market.

4. Credit market saw some improvements.

5. Strong currency has hurt Canadian trade.

43

1. The available sides per agentslipped as home sales softened and number of agents rose


Softer home sales and a steady rise in CREA membership pushed the number of sides available per

agent down 7% from the previous year.

44

The Canadian Real Estate Association Membership vs. Existing Home Sales

CREA Membership: 101,606

Existing Home Sales: 447,010

1985

19902002

20072010


8.38.3

5.35.3 6.96.9

9.29.212.612.6

11.111.1 8.88.8

Sides per AgentSides per Agent

45

2. Tighter mortgage rules and Harmonized Sales Tax brought forward home sales in first half of 2010


Mortgage Rules Modifications

Effective April 19Ontario and BC HST

Effective July 1

2010 Avg Pace of Sales37,250

HOME SALESIn Thousands

46

2. Tighter mortgage rules and Harmonized Sales Tax fueled pickup in prices in the first half of 2010


Mortgage Rules Modifications

Effective April 19Ontario and BC HST

Effective July 1

2010 Avg Home Prices$338,336

HOME PRICESIn Thousands

47

3. Canada’s monetary stimuluscontinued to boon the market

Date Target Rate % Change

January 2011 1.00% --

December 2010 1.00% --

October 2010 1.00% --

September 2010 1.00% + 0.25

July 2010 0.75% + 0.25

June 2010 0.50% + 0.25

April 2010 0.25% --

March 2010 0.25% --

January 2010 0.25% --

Source: Bank of Canada

Canadians continue to benefit from record-low interest rates thanks to continuing supportive monetary policy.

However, some of the policy stimulus is expected to be trimmed back as the economy strengthens.

Long-term average = 9.93%

Changes in Bank of Canada’s Target Overnight Rate influence other interest

rates, including those for consumer loans and mortgages.

48

4. The credit marketsaw some improvements

• Overall, total credit growth in Canada was steady in 2010 and remained stronger than in the United States.

• Improved financial market conditions have enabled Canadian businesses to continue to tap capital markets.

• The government’s measures to support access to financing during the financial crisis helped lift market uncertainty and supported a significant reduction in interest rates.

Credit Growth

Household and Business Loans Outstanding (In Billions of Dollars)

2007 2008 2009 2010

Total Household Credit

1,193 1,306 1,402 1,498

Consumer Loans 379 409 446 468

Residential Mortgages

814 897 956 1,030

Total Business Credit

1,153 1,204 1,195 1,235

Source: Bank of Canada 49

5. Strong currency has hurt Canadian trade

• As commodity prices elevated, appetite for Canadian currency strengthened, leading to Canada’s rising exchange rate against its major counterparts.

• Exports were dampened by gains in the Canadian dollar. • Canada's economy slowed in mid-2010 when imports increased (subtracting from growth)

and exports decreased. • Bank of Canada noted that about two-thirds of the widening of Canada’s trade deficit in

recent years is due to a stronger Canadian dollar.

2009:

1 CAD 0.88 USD

2010:

1 CAD 0.97 USDSource: Bank of Canada 50

What the Governments Are Doing

51

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

What the U.S. Government Is Doing

52

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.

2. Extended conforming loan limits

54

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.

3. Started second round of monetary stimulus

55

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. 56

1.Competition Bureau and CREA reached agreement

2.Department of Finance Canada announced third round of tightening mortgage rules

What the Canadian Government Is Doing

57

What: • After more than three years of debate and negotiation, in October 2010, delegates from Canada’s 101 local

real estate boards cast their votes for the settlement to resolve anti-competition charges with the Competition Bureau.

• The ratification inaugurated a ten-year, legally binding agreement through which CREA has agreed that it will neither create nor enforce any rules that would penalize or discriminate against brokers who want to offer nontraditional services to consumers while using the MLS system. CREA must also monitor member behavior to ensure compliance with the agreement.

Implications: • Homeowners who wish to sell their homes using the MLS system will be able to choose from a variety of

services that brokers may offer at different prices. While sellers are still not permitted to list on the MLS by themselves, they will now be able to pay a licensed broker a fee to have their property listed on the MLS system and then sell the property themselves.

• While brokers are not obliged to accept mere postings, they are now permitted to do so, and may also offer a range of unbundled services and fee-for-service arrangements, all while using the MLS system.

• It is also possible, as happened in the United States after an anti-trust lawsuit against the American equivalent of CREA, that the settlement agreement may accelerate the creation of discount or internet based agents, or other alternatives to the full service brokerages we are familiar with, since the MLS system will be accessible to CREA members who want to operate under those new models.

1. CREA ratified deal with Competition Bureau

58

2. Third round of tightening mortgage rules was announced by Department of Finance Canada

59

Luxury Real Estate

60

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

End of YearAverage Net

Worth of Billionaires

Number of Billionaires

2007 $3.9 billion 1,125

2008 $3 billion 793

2009 $3.5 billion 1,011Source: Forbes

17% increas

e

27% increas

e61

Source: Spectrum Group

Percent Change in Number Affluent, by Net Worth

62

Seller’s Market

18

54% Decrease

40

63

180

120

60

64

100%95%

90%

85%

80%

66

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.

68

Commercial Real Estate

69

SectorUnited 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%

Sources: NAR, CBRE, CMHC 70

Source: US CMBS Delinquency Rates, Trepp LLC. Graph scaled based on actual data for trend purposes only.

71

Moody’s/REAL Commercial Property Price Index (CPPI) National - All Property Types

2.0

1.6

1.2

0.8

Inde

x, D

ecem

ber

2000

=1

Source: Moody’s/REAL Commercial Property Price Index 72

2009-2011“Extend and Pretend”

to2012 and forward

“Extend and Amend”

63% Extend

with

Modification

16% Foreclose

14% Sell

7% Extend

withoutModification

Maturing Loans: Preferred Strategy for Lenders by Mid-2011

All Commercial Property TypesSource: Emerging Trends in Real Estate 2011 Survey 73

Flat Market

1.No new development means demand has time to catch up with supply2.Economy needs time to improve which will strengthen demand

New Commercial Loans (in billions)

Source: Commercial Mortgage Alert 74

Slow Growth

1.New development tempered by sluggish U.S. economy. 2.Lack of overdevelopment will allow for faster growth with an improved outlook in the U.S.

New Commercial Building Permits (in

billions)

Source: Statistics Canada

20

15

10

5

0

75

1.Distressed Assets (U.S.)

2.Quality Yield Properties

3.Tenant Representation4.Owner Occupants

76

Worldwide Real Estate

77

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.

78

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.

79

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.

80

How Do We Recover?

81

The Four Keys to Housing Recovery

82

First-Time Home Buyers

84

Primary Reason for Purchasing a HomeAll Buyers

First-time Buyers

Repeat Buyers

20052009 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 family/friends/relatives

8 4 5 1 1 7 10

Desire for a home in a better area

*4 5 1 2 7 7

Desire to be closer to job/school/transit

* 3 3 1 2 5 5

Desire for smaller home 6 3 3 * * 5 5

Retirement 3 3 3 1 * 4 5

Establish household * 2 2 2 4 1 1

85

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

11 to 15 years 12 17

16 to 20 years 8 8

21 years or more

11 13

Median 7 8

21%

38%

55%

86

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

11 to 15 years 5 5

16 to 20 years 22 22

Don’t Know 39 42

Median 10 10

22%27%

40%

87

First Step in Home Buying Process

All Buyers First-time Buyers Repeat Buyers

2009 2010 2009 2010 2009 2010Looked 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 home buying process

11 11 16 15 7 8

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 home buying process

7 7 11 11 3 3

Visited open houses 4 4 2 3 5 5

Looked in newspapers, magazines, or home buying guides

3 2 2 2 3 2

Attended a home buying seminar 1 2 3 3 * *

Contacted builder/visited builder models

2 1 1 1 2 2

88

Number of Weeks in Home Search

2001

7

2003

8

2004

8

2005

8

2006

8

2007

8

2008

10

2009

12

2010

12

89

Info Sources Used in Home Search2009 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!90

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 * * * * * *

Where Buyers Found the Home They Purchased

91

Value of Website Features

Very Useful

Somewhat Useful

Not Useful

Did Not Use / 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

92

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!!!93

Method of Home Purchase

2001 2003 2004 2005 2006 2007 2008 2009 2010

Through a real estate agent or broker

69% 75% 77% 77% 77% 79% 81% 77% 83%

Directly from builder or builder’s agent

15 14 12 12 13 12 10 8 6

Directly from the previous owner

15 9 9 9 9 7 6 5 5

Through a foreclosure or trustee sale

1 1 1 * 1 1 3 10 4

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

95

What Buyers Want Most from Agents

Help with the price negotiations

14%

Help buyer negotiate the terms of sale

12%

Help with paperwork

10%

Determine what comparable homes

were selling for6%

Help determining how much home buyer can afford

3%

Help find and arrange

financing2%

Other3%

96

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 97

Number of Agents Interviewed by Buyers

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

-- 5 6 6

98

Reputation of agent20%

Agent is friend or family member

17%

Agent’s knowledge of the

neighborhood12%

Agent has caring personality/good

listener11%

Agent’s association with a particular firm

3%

Professional designations held by real estate agent

2%

Other5%

Most Important Factors When Choosing an Agent

99

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

Buyer’s View of Home as a Financial Investment

100

Only 9% did!!!

Would Buyer Use Agent Again or Recommend to Others?

101

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

102

2002 2010

One 76% 66%

Two 16 19

Three 8 10

Four -- 3

Five or more -- 3

Number of Agents Contacted Before Deciding Who to Sell Home With

103

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

104

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

Most Important Factors in Choosing an Agent to Sell Home

105

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 negotiate their commission or fee

25 25

Client brought up the topic and the real estate agent was not willing to negotiate their commission or fee

9 9

Client did know commissions and fees could be negotiated but did not bring up the topic

10 10

Client did not know commissions and fees could be negotiated

13 11

106

Only 24% of sellers use the same agent they used previously to buy or sell a home.

Would Seller Use Agent Again or Recommend to Others?

107

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!

108

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

109

Annual KW MLS StudyTop 5 Full Service vs. Top 5 Limited Service

110

22% Less

21% Less

34% Less

15% More

11% Less

27% Less

111

5% Slower

2% Faster

16% Slower

5% Faster

13% Faster

5% Faster

112

7% Increase 34%

Decrease

18% Decrease

4% Decrease

16% Increase

114

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.


Median Commission Rates – Buyer SideBuyer side commission rates decreased more than a

tenth of a point to 2.86% in 2010.


Median Commission Amount – Seller SideMedian commission amount on the seller side

increased by 26% due to a substantial 23% gain in the median price of homes in the sample.


Median Commission Amount – Buyer SideOn the buyer side, commission amounts increased by approximately 11% due to a 4% increase gain in

the median price of homes in the sample.


Marnie Bennett

1. Have a business plan/ know your goals and numbers2. Invest in yourself through education and training. Set aside

time and money specifically for that purpose3. Be willing to adapt and embrace change / Internet, Social

Media4. Recognize what’s working for you, and more importantly

what’s not working – What is your Unique Selling Proposition?

5. Be aware of your weaknesses and work to overcome them – or hire smartly to complement your skill set

Bennett Real Estate Professionals Ottawa, Ontario260 units $3.9M GCI$73M closed volume

122

Chris Heller

1. Create the habit of discipline to do your job every day2. Focus on the two E’s: efficiency and effectiveness3. Desire – “Be willing to do whatever it takes”4. Improve your versatility, the ability to deal with a

wide variety of people5. Absolute commitment to having a schedule and

following a schedule

The Heller Real Estate Group San Diego, CA149 units $2.2M GCI$86.5M closed volume

123

Ben Kinney

1. The market should dictate your activity2. Take listings and focus on pricing3. Market for cheap4. Leverage the Internet5. Focus on the activity not the result

Bellingham, WA278 units$1.6M GCI$64M closed volume

124

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

- Calvin Coolidge125

PRESS ON!126

1. the numbers that drive real estate 2 the numbers that drive u.s. real estate 1.home sales 2.home...

Documents

home sales direction

home prices appreciation

inventory sales

median home price

national average home

year fixed mortgage

year average

medianpriced home source