As a first home buyer, you can objectively possess a wealth of information on the real estate market at the touch of your fingertips. A quick Google search of your current property market will yield numerous search results on home median prices, suburb attraction metrics, general market trends, and other housing data that may or may not be useful. What may be harder to find is something you may not even be considering, and it has everything to do with buyer psychology.
Then again, why should you consider something like this? At the end of the day, you’re purchasing something tangible, not going in for an in-depth psychological evaluation! What I mean by buyer psychology is evaluating the mindset in which one purchases a home. There are of course numerous motivations behind such a purchase, but the frame of mind of a buyer invariably remains the same.
Now I am not a trained or experienced psychologist. However, I have experience dealing with over hundreds of buyers and potential buyers during my career. What I noticed is that there are commonalities in their approach to home buying. I’ve summarised below some of these commonalities, which I hope may resonate with you as you are going through this process:
Buyers require sales consultants, however buyer psychology believes otherwise
Unlike other asset classes, which can be purchased fairly easily without any third party intervention, there are too many variables placed in front of a potential buyer, making it a practical impossibility to navigate without the assistance of a sales consultant. This is speaking purely from the perspective of owning a home outright for personal liveability or investment. There are of course alternative avenues to real estate investment that do not require an intermediary, such as real estate investment trusts (REITS) or real estate crowdfunding. However, I personally analogise these assets to share ownership and will not go into them further as part of this post.
Relying on someone to aid with this process is not necessarily a bad thing. As I mentioned in earlier posts, purchasing a home may be the single largest financial decision made by most people during their lifetime. There are a lot of aspects that could go wrong even before signing the contract, so regardless of your own intelligence or resilience to finding solutions, it is prudent to defer to the assistance of trained professionals.
Buyers are averse to using sales consultants
Perhaps it is years of bad experiences, peppered with caricatured versions of sales consultants on popular media, that most people have a general level of distrust for salespeople. The irony of it all is that some buyers intentionally avoid the consultant’s sales efforts, which is the sole reason the buyers approached the consultant in the first place!
Part of this may be due to the initial dynamic of the relationship – the buyer comes from a disadvantageous position, lacking the knowledge and experience that is presumably possessed by the sales consultant. Buyer psychology involves the impression that the sales consultant will almost certainly leverage this asymmetry of information to his or her liking.
I encourage first home buyers reading this to approach sales consultants with a different mentality – see them as a knowledge resource. Similar to a doctor or other trained professional, you would most likely approach them knowing that they are there to serve your needs and help you to the best of their ability.
The same should be expected from residential sales consultants. To test this theory, I encourage you to frame your initial discussions with the sales consultants to address any questions you may have on their products, or other topics relating to the housing market. A good sales consultant would welcome these discussions and choose to use these touch-points to build a relationship with you, regardless if it results in a sale.
Alternatively, if you obtain a not-so-subtle impression that the consultant’s objectives are to secure a sale, then perhaps you need to do some additional research to find one where you can develop a more fruitful relationship.
Buyers are nervous
This is not a bad thing. It’s good to be nervous when making such a big decision – to me, it’s a natural byproduct of weighing up a decision that can significantly impact your life. However, what can be harmful is letting those nerves influence your decision making process. In an earlier post, I outlined the steps that you should take before signing the contract for your first home purchase. These steps will help you feel more assured in your position and make decisions with your sales consultant that much easier.
If you begin to feel a sense of uneasiness that goes beyond what you typically expect, you should question what is causing you to feel this way, and if there is a potential solution for it. For instance, I witnessed many buyers that were overtly nervous from the start – in almost all cases, the reason for this was that home ownership was just not the right pathway for them at that point in their lives.
Buyer psychology changes swiftly
I also encountered buyers that were resolute for the majority of the process, however experienced cold feet around the point of signing the contract. Most of the reasons for this change of heart are external in nature. As you will likely survey numerous people about your home buying decision, you are exposed to potentially biased, factually sensitive and emotional responses that are unique to the person providing feedback to you.
Alternatively, you may also be speaking to multiple sales consultants from different companies at the same time, who upon discovering that you are close to securing a deal with another company, will do anything to poison your view of the home building process (believe me, I’ve seen this many times).
Buyers demand conviction and integrity above all
If I were to reflect on my cumulative experience of selling homes, the one fact that stands out is the buyer’s expectation of honesty from the sales consultant. The overall process is unlike any other common experience. Take retail for example – there is an agreement entered into between the customer and the vendor for a discrete item, formalised by way of a physical sale, whereby the interaction terminates after this point. Real estate on the other hand, is an ongoing relationship that builds and matures as the home building process progresses. Given the significant time commitment that’s involved, it is not unreasonable for buyers to demand a base level of trust and openness from the sales consultant.
I strived to meet this demand with all of my client relationships. Most worked out better than I anticipated, and some even led to repeat business. For the relationships that didn’t work or sadly never started, I can take solace in the fact that I always sought to understand the client’s needs and provide them with an impartial assessment of their options. Even if they didn’t buy from me, I hope the knowledge and guidance I offered them during our initial discussions provided them pause and foresight as they sought to continue their home building journey elsewhere.
The home buying process is fraught with trepidation. However, provided you have done your homework and developed a relationship with your sales consultant, the nerves that you feel will likely be those of excitement as opposed to dread.
If you’re a sales consultant, here’s a friendly piece of advice. Spend more time learning buyer psychology and less time focusing on flashy sales techniques, and you will do just fine!
The content outlined above was written, edited and published by the Lost Realtor. The author has over 20 years or real estate sales and investing experience in the Australian property market. He has held senior positions in Australian building companies, including being the General Manager of the residential sales division of Collier Homes. His qualifications include a Bachelor of Commerce degree and a Graduate Diploma in Building and Construction Law.