Housing Bubble

Homebuyers' confusion demands education and guidance

February 24, 2003

Despite a record breaking home- buying year in 2002, consumers remain perplexed by the mountain of forms, processes and legal jargon involved in buying a home. In fact, a recent survey conducted for LandAmerica Financial Group finds that 86 percent of homebuyers report difficulty and confusion in the process and more than one- third of them experienced delays in closing on their house purchase.

"Clearly, though they are buying homes in record numbers, homebuyers are in need of education and guidance from their real estate advisors," asserts Jan Alpert, president of LandAmerica Financial Group. "The onus then falls on those real estate professionals to answer questions and provide clarity to make the home-buying process go as smoothly as possible."

Consumers think the hardest part of buying a home involves managing the sheer number of separate steps or processes necessary to close the purchase without a delay. The survey, conducted by the Ketchum Global Research Network, found that respondents voiced most concern with the process of establishing an escrow account (49 percent) followed by negotiating a contract (46 percent), ensuring that appraisals are conducted properly (42 percent) and buying title insurance (42 percent).

"As title insurance and real estate services professionals, we have the experience and knowledge to walk the parties through the transaction ahead of time, helping them understand all the pieces and to anticipate potential delays," explains Alpert. "When a couple gets married, the officiating clergy walks them through the ceremony ahead of time so they can better understand how it will flow and anticipate any confusion. The home-buying process shouldn't be any different, since it's the largest and most important purchase an individual or family makes."

The level of confusion that exists as a result of a lack of understanding about the home-buying process differed little depending upon age, income or home-buying experience, the survey found. In fact:

Nearly eight of 10 previous homebuyers (those who had been through the process at least once before) found the experience confusing despite their experience, but first-time homebuyers were most likely to experience difficulty or confusion.
The percentage that found managing the processes difficult or concerning remained high across all age groups. Ninety-five percent of 18-29 year olds found it difficult, compared with 84 percent of 30- 49 year-olds and 79% of those aged 50 and older.
Similarly, the process remained difficult across income brackets, with the following percentages of respondents citing confusion or difficulty:

85 percent with incomes under $30,000.
90 percent of those in the $30,000-50,000 range.
84 percent of the $50,000-70,000 bracket.
84 percent of those with incomes of $70,000-90,000.
80 percent of $90,000-plus incomes.

Forty-three percent of respondents look to their real estate agent to ensure a smooth home-buying experience, and another 42 percent rely on the advice of lenders and attorneys. While only 10 percent of consumers polled said they were working with a title insurer in this capacity, many of these real estate professionals turn to their title insurance and closing partners of choice for assistance.

"As a whole, our industry largely has been a silent giant in the real estate services arena," acknowledges Alpert. "We are committed to being a partner of choice to real estate agents, brokers, lenders and escrow officers in educating the consumer and making this process smoother and easier for them."

Source: LandAmerica Financial Group, Inc.