Economist's Commentary: June 16, 2008

Asian/Pacific Islander Home Buyers: Part Two

Finding a home and working with a REALTOR® (Second article of the series on Asian/Pacific Islanders)

By Harika "Anna" Barlett, NAR Research

The previous article in this series about Asian/Pacific Islander home buyers provided an overview of their demographic characteristics and home choices based on the 2007 NAR Profile of Home Buyers and Sellers. The typical recent Asian/Pacific Islander home buyer was younger than the typical home buyer, had a much higher household income ($83,700 versus $74,000), and purchased a larger and more expensive home (a median of $357,000 versus $215,000). This second article provides information about their home search process, home buying methods, and expectations they held for real estate agents when buying and selling their home. This information can help REALTORS® develop customized services to better meet the needs of their Asian/Pacific Islander clients.

Asian/Pacific Islander buyers most frequently reported that the first step they took during their home search was looking online for properties for sale (30 percent) and looking online for information about the home buying process (16 percent). While they were somewhat more likely than all buyers to go online first, they were less likely to contact a real estate agent as their first step (12 percent, compared to 20 percent overall). The most frequently used information source among this group of buyers was the Internet (88 percent), followed by a real estate agent (82 percent). They also used open houses (74 percent), home builders (43 percent), home books or magazines (40 percent), and billboards (24 percent) more frequently in their search than other buyers.

When searching for homes online, compared to other home buyers, Asian/Pacific Islander buyers more often reported that they found neighborhood information (46 percent), detailed information about recently sold properties (42 percent), and real estate agent contact information (38 percent) very useful. This group of buyers also reported that they use social networking websites, such as MySpace, Facebook, and LinkedIn more frequently than home buyers in general (43 versus 32 percent).

The importance placed on factors affecting the choice of neighborhood among Asian/Pacific Islander home buyers was similar to that of all buyers. However, a higher percentage of Asian/Pacific Islanders, compared with all buyers considered convenience to job, schools, shopping, public transportation, health facilities, and quality of school districts as important factors in their choice.

Seventy percent of Asian/Pacific Islander buyers purchased their home through a real estate agent or broker. They had a slightly lower tendency than other buyers to use a real estate agent, and a higher tendency to buy directly from a builder or builder's agent. Half of home buyers in this group who used a real estate agent found their agent through referrals by a friend, neighbor or relative (compared with 43 percent among all buyers). The three most important considerations for Asian/Pacific Islander buyers when choosing an agent were honesty and trustworthiness (26 percent), reputation of the agent (23 percent), and agent's knowledge of the neighborhood (17 percent).

What they wanted most from their real estate agent before buying their home was help finding the right home to purchase (43 percent, compared to 49 percent overall). Additionally, Asian/Pacific Islander buyers were more likely than all buyers to expect their real estate agent to help with price negotiations (15 percent vs. 11 percent overall), determine what comparable homes were selling for (12 percent vs. 8 percent), and help determine how much they can afford to spend on a home (12 percent vs. 5 percent). Asian/Pacific Islanders also reported that they benefited from their agent's assistance in helping them understand the process (61 percent, compared to 57 percent overall), improving their knowledge of search areas (43 percent vs. 40 percent), and shortening their search (39 percent vs. 35 percent).

Asian/Pacific Islander home sellers typically sold a smaller home compared to all home sellers, but the median price of homes sold by this group of sellers was typically higher (the median size was 1,740 square feet, and the median price was $300,000). Asian/Pacific Islanders typically lived a shorter time than other buyers in the home they sold, a median of five years, compared to six among all. More than three-quarters of them (77 percent) used an agent or broker when selling their home and an additional 6 percent tried to sell it by themselves first, but then used an agent. The primary reason for selling their home was that it was too small (35 percent) and job relocation or moving closer to their jobs (23 percent).

Asian/Pacific Islander home sellers had a greater tendency than all sellers to expect their agent to help sell their home within a specific timeframe (35 versus 25 percent) and help them find ways to fix up the home to sell it at a higher price (12 versus 8 percent). They used the assistance of their agents to perform certain tasks to a lesser extent than all sellers. For example, while 80 percent of all sellers wanted their agent to review sales contracts or purchase offers, only 69 percent of Asian/Pacific Islander sellers received help from their agent for this task. Similarly, while 79 percent of all sellers were assisted by their agents when negotiating with buyers, the comparable figure was 70 percent among Asian/ Pacific Islanders. The chart below indicates several areas where Asian/Pacific Islander home sellers less frequently use the services of an agent and could possibly benefit from greater use of these services.

There are opportunities in several areas for REALTORS® to provide enhanced service to their Asian/Pacific Islander home buyer and seller clients. Understanding the needs and expectations of this group of consumers is an important first step in providing a superior experience when buying or selling homes.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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