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April 14, 2016November 23, 2021

Subtext in buying or selling a home

Profile of home buyers and sellers from nar.realtor

It’s all in the subtext. “Buyers are liars” is a saying that many real estate agents seem to verbalize when things don’t work out with a home buyer. It’s an insulting false aphorism that is proclaimed as an attempt to shift all responsibility by saying that the buyer was deceptive and did not cooperate. And when things fall apart with home sellers, the same agents won’t take responsibility and start hurling insults such as wacko, ignorant, or greedy. Of course, if the relationship becomes contentious, then you can imagine that the name calling becomes increasingly harsh.

And it goes both ways, of course. Real estate agents, as a profession, have a bad rap; and conditioned consumers bring those expectations into their relationships with their agents. Many buyers and sellers have a low opinion of real estate agents while often having high expectations for the outcome of their experience.

You may begin to see that, unless the settlement is flawless, these mindset combinations don’t bode well for the agent-consumer relationship. The home sale transaction is full of pitfalls. And if there is an underlying distrust between you and your agent, then the outcome can become an ordeal for you both.

Writing for RealtorMag, Jason Forrest laid out why such buyer (and seller) repudiation by agents is wrong (Agents: Stop Saying Buyers Are Liars: realtormag.realtor.org; September 2015). He pointed out that agents often blame the buyer (or seller) when the relationship and transaction is unsuccessful. But in reality, Forrest stated, the agent is the one who fails by not taking the time to understand and coach their client.

Research of real estate outcomes suggest that your experience during a real estate transaction may depend on both the agent’s and your ability to communicate. Clear communication between you and your agent should leave no doubt about your intentions, as well as your agent’s ability to convey and interpret motivations from your transaction counterpart.

The evolution of the real estate industry has not really improved the quality of communication between agent and consumer. Agents focusing on high volume sales along with the public’s reliance of the internet for home information reduce face-to-face interactions; which may allow for the creation of false expectations while decreasing overall consumer satisfaction.

In his book Re-examining The Art of Sales: Broadway Style (AuthorHouse, 2006), real estate broker Nilton De Macedo asserted that the key to communication and understanding lies in the subtext of the dialogue. Having stated that subtext is “what you really mean under what you say,” he provided an example: saying “I’m going to bed” may sometimes imply “I don’t want to talk to you now.”

De Macedo explains that as a sales professional, it is essential to discover the subtext of the conversation. The real estate agent should not only attempt to decipher the client’s subtext to reveal their “unspoken intentions” – but they should also work to discover the subtext of their own communication. He proclaims that this approach deeply influences how we relate to each other and will greatly improve communication.

Although De Macedo places the responsibility of communication square on the shoulders of the real estate agent, it really goes both ways. Your agent may also be communicating something else through subtext, implied by what or how it is said. You can improve your outcome by becoming aware of the subtext in the communication between you and your agent.

Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

September 30, 2015November 23, 2021

Herding behavior and real estate decisions

Have you ever wondered why real estate trends develop? When we’re buying and selling a home, we like to think we act rationally and with intention. However, our decision making is influenced externally. We are affected by the attitudes of the experts, family and friends, from whom we solicit advice. We are also consciously and unconsciously influenced by information we get from TV, the internet, social media, news papers, and even from eavesdropping conversations. Your decision making may be based on others’ behaviors that signaled it was the correct thing to do, and in turn magnifies and strengthens the signal to others – which is described as herding behavior.

Herding behavior plays a large role in our daily lives, as well as in our real estate choices and conclusions. Decisions about home buying and selling, which agent to hire, sales prices, and even whether or not we should default on our mortgage can be influenced by herding behaviors.

A 2013 study of herding behavior in strategic default revealed significant findings about our vulnerability to information (Luchtenberg & Seiler (2013).The effect of exogenous information signal strength on herding. Review of Behavioral Finance, 5(2),153-174). To refresh your memory, strategic default (allowing a home to go to foreclosure when financially able to pay the mortgage) became a significant trend that was widely covered in the media during 2010-2012. Luchtenberg & Seiler’s research into decision making and herding behavior suggested that those who are susceptible to information can be easily swayed. Their findings among professionals revealed that low consensus information (“weak information signals”) caused herding when asked to make a personal choice; while high consensus information (“strong information signals”) caused herding when providing advice to a friend.

The notion that the housing and financial crises were caused by herding behavior is not new. However, economist Christian Hott researched if housing bubbles are caused by herding behavior (Hott, C. (2012). The influence of herding behaviour on house prices. Journal of European Real Estate Research, 5(3),177-198). Citing others, Hott explains that herding behaviors are formed by those who are “imperfectly informed” and “learn from the decisions” of others; and that people tend to “overestimate the likelihood of an event” to occur to them when they hear it happened to someone else (expecting the same experience that someone else had). Although Hott concluded that herding was not the only contributor to the housing market collapse, and suggested that mortgage banking was also likely responsible; the findings indicated that herding behavior does play a role in home price fluctuations and housing bubbles.

Cognitive dissonance may also be at work to reinforce your herding behaviors. You may act on information that is not widely acknowledged just because the source is significant to you (such as a relative, close friend or co-worker). And the stronger your belief in the information, the more likely you will in turn confidently give the same advice to others, even though it may be inaccurate and/or irrational.

Breaking away from the herd is difficult; buying and selling a home may not seem to be a rational process – even when confronted with facts. People don’t always base decision of logical choices, but rather base decisions on psycho-emotional needs and/or fears (such as status, acceptance, and avoidance of failure). However, seeking balanced information and becoming aware of your motivations may improve your decision making.

Original published at https://dankrell.com/blog/2015/09/30/herding-behavior-can-interfere-with-real-estate-decisions/

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July 9, 2015November 23, 2021

Are you feeling lucky? Belief in luck may boost home sale

Luck is not an attribute that real estate agents will talk about during their listing interview. It’s true. Agents are apt to discuss many things, such as their success, their view of the market, and hopefully what they will do for your listing; but they won’t acknowledge that luck, or serendipity, may have had something to do with the success of some of their transactions. Recent research indicates that luck is actually an important characteristic in sales; and some are “luckier” than others.

Joël Le Bon, Professor of Marketing at the University of Houston’s Bauer College of Business, has been studying the relationship between sales and luck for some time. He recently discussed his research for the Harvard Business Review (Why the Best Salespeople Get So Lucky; hbr.org; April 13, 2015) saying, “…downplaying the power of luck, you stand to fall behind competitors who have learned how to manage it.”

That’s right – managing (or provoking) luck. Even though many “de-emphasize luck” and focus on tangible and measurable actions, Le Bon’s studies show that the combination of the belief in luck and specific sales behaviors have a mutual positive relationship. More precisely: believing in luck has a positive effect on sales behaviors; and exhibiting a specific set of behaviors increases the person’s luck in sales.

Le Bon gives an example how managed or “provoked” luck effects sales. A study of students selling golf tournament sponsorships revealed that those who believed in luck increased their sales 41% over those who relied on “standard sales practices.” And that “76% to 88% of the luck circumstances were incidences of provoked luck.”

Among the luck boosting behaviors that Le Bon listed, includes: competitive intelligence, mindfulness, and change circumstances are relevant to home sales. Those who are luckier tend to be: knowledgeable about the market, competitors, customers and prospects; mindful about their customers’ objectives and open to unexpected opportunities; and thinking outside the box by going outside their comfort zone and seeking new opportunities outside their sphere of influence.

Many successful listing agents also have these traits. Although not attributed to luck, their success could be viewed as “provoked” serendipity. However, they are often able to convert Le Bon’s list of actionable behaviors into successful sales and satisfied clients. Pricing homes accurately requires knowledge of local neighborhood sales trends, not to mention the overall market. Successfully negotiating transactions requires an understanding of buyers and their agents, as well as communication skills. Servicing a listing and being attentive to their clients requires being aware and addressing their needs. And of course, going outside their sphere of influence allows contacting and connecting with more prospective home buyers to sell their listing.

Even though luck, as such, is not recognized as an asset for your listing agent to possess; belief in luck seems to be part of a repertoire of beliefs typically described as a positive attitude – which has been demonstrated time and again as having positive effects on sales outcomes.

However, it’s not just your agent’s beliefs and actions that can affect your home sale. Your attitudes and beliefs can also facilitate or interfere with the sale. If you have a strong emotional attachment to your home, or have unrealistic expectations; your home may not sell, or you may be unsatisfied if it does –regardless of your agent’s skills. But then again, maybe all you need is a little luck.

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November 6, 2014July 5, 2019

Real estate changed by internet

The National Association of Realtors® annual Profile of Home Buyers and Sellers is characterized as being a survey of home buyers and sellers that reveals “demographics, housing characteristics and the experience of consumers in the housing market, including the role that real estate professionals play in home sales transactions (nar.realtor). The release of the Highlights of the 2014 Profile of Home buyers and Sellers on November 3^rd by NAR provides insight into home buyer and seller behavior. I compare a small sample of data from three Profiles that demonstrates how real estate changed. Some things have changed, and some things have stayed the same.

The recent lack of first time home buyer participation is one of the issues that experts point to as holding back a full housing recovery, and has been highlighted by the 2014 Profile of Home buyers and Sellers. Only thirty-three percent of home buyers surveyed in 2014 were first time buyers, which the NAR points out as being below the “historical norm of forty percent among primary residence buyers.” Compared to 2003, NAR reported that forty percent of home buyers were first time home buyers. However, fifty percent of home buyers reported being first time buyers during 2010, which is most likely due to the first time home buyer tax credit that was offered at the time to stimulate home sales.

The 2014 survey revealed that home buyers searched on average for 10 weeks and viewed 10 homes; which is reduced from the 12 week average search indicated the year prior. The 2010 report also indicated a 12 week average search, looking at an average of 12 homes. But these home search stats are a far cry from the 8 week average search time viewing 10 homes reported in 2003.

As you might have expected, home buyer use of the internet has grown. In the 2014 survey, ninety-two percent of buyers reported using the internet in some way in the process. The first step for forty-three percent of home buyers was to look at properties online; while only twelve percent of home buyers initially used the internet for information about the home buying process. The use of mobile applications has significantly increased as technology allowed; fifty percent of buyers reported using mobile websites or applications. Compare this to 2010, when about ninety percent of home buyers reported using the internet; and in 2003 when only forty-two percent of home buyers reported searching for homes online.

Rather than eliminating real estate agents, the internet has changed the relationship between agents, buyers and sellers. Ninety-eight percent of buyers in 2014, who used an agent, viewed them as being a useful source of information. Eighty eight percent of surveyed buyers indicated they used an agent to purchase their home, compared to eighty-one percent in 2010, and eighty-six in 2003.

Ninety-one percent of surveyed sellers in 2014 reported their homes were listed on the MLS, but eighty-eight percent had assistance from real estate agents. Only nine percent of surveyed sellers sold “by-owner.” The 2010 seller stats are consistent with the 2014 Profile; while the 2003 survey indicated eighty-three percent of home sellers used an agent’s assistance to sell their home.

There are differences between buyers and sellers also. Among the differences in how they choose their agent: the 2014 survey indicated that forty-four percent of home buyers, compared to thirty-eight percent of home sellers, found their agent by a referral through a friend or family.

Original located at https://dankrell.com/blog/2014/11/06/how-home-buyer-and-sellers-have-changed-and-remained-the-same/

By Dan Krell
© 2014

July 16, 2014November 23, 2021

Reality TV and real estate – is the genre shaping buyer and seller expectations?

Reality TV has been a part of our culture since the 1990’s, and chances are that you’ve watched Reality programming at some time. Reality TV has benefited from the booming housing market of the early to mid 2000’s, when the number of real estate reality shows grew exponentially. Today, real estate related reality TV is prevalent, and you could probably catch one at almost any time of day.

What is it about reality TV, or more specifically – real estate reality TV, that draws us in like a moth to the light? Matthew Wilkinson and Paul Clark suggest in their research (2014. Pay No Attention To The Man Behind The Curtain: The Rejection Of Artifice And The Culture Of Choice. ASBBS E – Journal,10(1),132-143) that our affinity to reality programming is our culture’s desire for “fluid, ambiguous, and amorphous experiences.” And before I embark on their philosophical explanation based on “postmodernism” and its implications, it apparently boils down to our search for “authenticity” and the notion of participation.

Alternatively, Alex Weprin reveals that there is a feeling among programming executives that audiences have become bored by “forced, trite reality shows” and are attracted to TV shows that “feel more ‘real.’” But there’s a limit to “authenticity,” even in reality shows. Weprin quotes Animal Planet President and General Manager Marjorie Kaplan, saying “I don’t know that every nonfiction show is going to be authentic; clearly there is room for wonderfully inauthentic reality TV that we all watch and wink and nod and know is contrived….” (Jan 10, 2010. Cablers target laughs, authenticity, geeks. Broadcasting & Cable).

And why not? “Reality” TV is an escape from monotony and lets us perceive we are participants; real estate reality programming helps us imagine how our homes, our lifestyles could be different. Since the airing of MTV Cribs, we imagined how we could live like celebrities. Home renovation, real estate investing, buying foreclosures, house flipping, luxury homes, and home shopping: there is no lack of real estate related subjects on TV today – and they all seem to make it all look easy and exciting.

But there is a concern by some in the real estate industry that reality TV is doing more than entertaining viewers, it is also shaping consumer expectation. The real estate related reality format is typically a condensed version of the process that highlights only parts of the consumer experience; the portrayed drama in this sub-genre can range from the very subtle to the outrageous.

A recent Realtor® Magazine article highlights professionals’ thoughts on the matter (June 16, 2014. Reality TV Skewing Home Remodeling Picture?); and the consensus is that some consumers demand a similar experience to what they see on TV. Some real estate agents have also expressed concerns about home buyers and sellers whose expectations are not realistic; they want more in an abbreviated span, losing perspective on the elements and time that the home buying and selling process requires.

Maybe the entire genre is misconceived; maybe real estate Reality TV should be more realistic, where the drama is drawn out over weeks and months documenting the excitement and tedium of the real estate transaction. But then again, maybe T. S. Eliot was correct in the characterization (Burnt Norton): “…humankind cannot bear very much reality.” TV may not be genuine about being real, as much as it is about entertainment value.

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