Consumers are knowledgeable about some aspects of the real estate process, but gaps in their housing knowledge persist, particularly when it comes to understanding the mortgage process as it relates to appraisals, credit scores, and federal loan programs, according to ERA Real Estate, which has a 13-question “Real Estate IQ” quiz available at its site.
Home owners and people over 30 scored higher than non-home owners and people under age 30. Overall, the average score on the test was 73 percent.
Home owners who purchased a home within the past year scored an average of five points lower than those who had bought a home more than two years ago, according to the results. Charlie Young, president and CEO of ERA Real Estate, speculates that is a reflection of last year’s fast-paced market, which was marked by price increases, bidding wars, and rising mortgage rates that increased urgency when completing a deal. The rush may have caused some home buyers to lack the time to fully understand the process, even though they were going through it.
Most of the respondents were familiar with foreclosures, short sales, and homeowner’s insurance, according to the results. More than 90 percent of respondents, for example, knew the difference between homeowner’s insurance and a home warranty. They also knew that homeowner’s insurance was different than PMI.
However, only 67 percent of non-home owners knew what an appraisal was, compared with 81 percent of home owners. Also, overall, respondents showed a lack in knowledge of real estate market indicators – an opportunity for real estate professionals to use when educating their clients about local market conditions, according to ERA.
“The business of buying and selling a home has become increasingly complex and multifaceted as we contend with the checks and balances put in place following the Great Recession,” says Young.
“Our findings suggest that real estate professionals can provide an invaluable service to their clients by not only educating them on many of the processes involved in buying or selling a home but also by connecting them with experts in related industry services.”