A study released by Borrell Associates, Inc. reports that at any given time, about one percent of the adult population is actively seeking a home that they will purchase within the year. Contrast this to their findings that in April, nearly 20 percent of the population had visited a real estate site.
The biggest news to come out of their report, 2005 Update: Online Real Estate Advertising, is Borrell’s prediction that by 2009, advertising dollars spent on online media will surpass traditional outlets such as newspapers, home magazines, direct mail and directories.
In 2005, Borrell predicts that online ad sales will hit $1.8 billion out of $11.4 billion spent, for a 15.7 percent share of ad dollars. Online advertising per home sold has already reached $210, more than one-third of the newspaper ad spend.
Search engines are responding to this climate by cultivating relationships with listings aggregators as well as the major brokerage firms and agents, teaching them how to use sponsored listings to gain traffic and leads. The competition is fierce for paid listings on real estate pages. Competitors are paying from $1 a click up to $6 a click in some cities. Borrell points out that while $500 million will be spent on this form of advertising this year, it didn’t even exist three years ago.
Small businesses 'loud and clear' on RESPA reform
Second HUD meeting on improving home-buying process
Small business owners sounded off “loud and clear” about real estate settlement packages at a recent roundtable discussion on how to improve the home-buying process led by the Department of Housing and Urban Development, a department spokesman said.
“Spirited debate is not only useful, it's pivotal,” HUD spokesman Brian Sullivan said of the roundtable. The Los Angeles meeting was co-hosted by the Small Business Administration and sought business input on reform of the Real Estate Settlement Procedures Act, known as RESPA, which regulates the mortgage-closing process.
The meeting was the second of a series of six roundtables planned by HUD to collect input from consumers and industry professionals on how to simplify the home-buying process.
A number of small business owners, including appraisers, community bankers, mortgage brokers and escrow agencies, voiced their concerns about HUD's proposed Mortgage Package Offer at the meeting, Sullivan said.
Under HUD's new proposed Mortgage Package Offer, loan officers would give consumers an offer for a mortgage loan. The offer would include a guaranteed price for a loan package that includes most of the settlement services needed to get the loan, such as escrow services, as well as an interest rate and guaranteed points.
In the past, consumers have complained about being told they would pay a certain price at closing and then having a different, higher price presented to them when the actual closing took place. By including a guaranteed price in the Mortgage Package Offer, HUD aims to make sure this doesn't happen.
“There was near-universal apprehension about the prospect of any packaging that the smaller businesses, such as escrow agencies, feel would disadvantage them relative to larger business,” Sullivan said.
“Lots of escrow people were concerned that larger mortgage lenders and title companies would squeeze them to lower their price in the package without passing the saving along to the consumer,” Sullivan said.
“Their concern is that the consumer would see none of this and they would be pressed to do business almost below cost to get into a package,” the spokesman said.
HUD has said that the mortgage package offer and other forms are being tested by consumers and that the forms are not necessarily going to be included in the final HUD rule.
HUD's original 2002 proposal would have changed the disclosure requirements for mortgage broker fees, including the yield spread premiums, simplified the good faith estimate form and permitted the sale of guaranteed-price bundled packages of mortgages and mortgage-related services.
These original proposals netted an unprecedented 45,000 comments during the public comment portion in 2002. Many of those came from within the real estate industry in opposition to the changes.
The 2004 proposed rule, formulated in response to the firestorm of comments, has been a mystery ever since. Jackson withdrew the agency's proposal from the White House Office of Management and Budget in March 2004. Last week's and this week's meetings comprised a first look at the new proposed rules for the industry.
“These are small Mom-and-Pop businesses and RESPA reform to them is very much different than it would be for the larger corp- rate or trade association concerns. It was good for us to hear it and good for them to say it,” said Sullivan.
—Janis Mara, Inman News