Picky home buyers and real estate slowdown

Why would a major real estate industry player predict a slowdown in home sales? The L.A. Times reported on May 5^th (Real estate giant predicts slow home sales for months to come) that Realogy Holdings Corp, the parent company of Coldwell Banker, Century 21 and Sotheby’s, claims that a slowdown in mid and low bracket homes could hurt the brokerage business and could prove to be a difficult 2014.

Meanwhile, a recent “Real-Time Seller Survey” conducted by Redfin (refin.com) indicated that 52.4% of home sellers were confident about selling their homes; however 40.9% of sellers were concerned about affording their next home. This may be why 40.3% of those surveyed planned to price their home above market value – maybe not the best strategy. The May 8^th Business Wire article (Redfin survey: 40% of home sellers plan to price higher than market value) quoted Redfin agent Paul Reid as saying; “Buyers this year are far less tolerant of overpricing, and homes that aren’t priced appropriately are likely to sit on the market until the seller is forced to reduce the price … Buyers often interpret a price drop as a sign there is something wrong with the home, leading some to negotiate even more aggressively or lose interest altogether.”

Economics aside, some experts say that a slowdown is in part due to institutional investors having all but left the market as distressed properties are decreasingly a part of the housing landscape; and the housing market is once again reliant on the owner occupant home buyer – who is often characterized as “picky.”

A lot has been said about “picky home buyers” since 2008, and the fact is that home buyers have not changed much – indeed, they may even be pickier today. It could be that the lessons of the financial crisis are still fresh in their minds; home buyers as group seem to be a hardy and savvy group. 2008 was a transition year, as home buyers shirked distressed properties for homes that exuded value. “Cheap” did not necessarily mean the home was a bargain to those who planned to be owner-occupants. Many home buyers were turned off to short sales and foreclosures, not just because of the process but because of the realization that the combined cost of the home purchase with repairs often exceeded the price of a re-sale that was in move-in condition.

Even though there is a perceived dearth of available homes for sale today, doesn’t mean that home buyers will pony up for an overpriced home. Home buyers are typically looking for a combination of location, quality, and value. According to Lyn Underwood (Home buyer turn-ons and turn-offs; McClatchy-Tribune Business News. April 26, 2014), home buyers are attracted to homes for a number of reasons; some of the top home characteristics include an updated kitchen with stone counters and maple cabinets; an open floor plan; new or refurbished wood floors; and flexible spaces (rooms that can be used for a number of uses).

If you’re selling this spring, don’t take home buyers for granted: don’t over price your home; and stay away from cheap renovations meant to look expensive (buyers are turned off by poor workmanship, sloppy installation, or inferior materials); and keep your home neat and tidy when showing. Your listing agent can provide guidance on preparing and pricing your home to sell in today’s market.

Original published at https://dankrell.com/blog/2014/05/15/picky-home-buyers-and-real-estate-slowdown/

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. This article was originally published the week of May 12, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

December 12, 2013December 13, 2022

Games people play in real estate

Studies suggest that your experience during a real estate transaction may depend on you and your agent’s 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 counterpart. How to understand the games people play in real estate.

A pop-psychology theory called Transactional Analysis, originally used as a psychotherapeutic tool, has been touted as a way to facilitate communication and assertiveness. One of the giants in the field was Dr. Eric Berne, whose work seems to carry more weight in the corporate world today as it did when his self help book “Games People Play” was first published in the 1960’s.

Games people play during real estate transactions

Have you ever wondered why a certain person makes you respond in a way, which, after the fact you thought was unpleasant or embarrassing? Transactional Analysis theory suggests that, unbeknownst to many, we often react and interact with each other in a way that can be described as games. Not so much the games that you might think, but more precisely these are psycho-emotional games that are played to satisfy unconscious needs that were not met during our childhood and adolescence (also called ulterior motives). And because these behaviors and traits are part of our behavioral “repertoire,” we are more than likely unaware of them in many situations. These ulterior motives can get in the way of a successful real estate transaction.

A simple explanation of Dr. Berne’s theory is that there are three mindsets from which we interact: the parent, the adult, and the child. When you interact as the “parent,” you are acting much like you perceived how your parents’ responded to situations; acting as the “child,” you react as you would have when you were very young. However, when you interact as the “adult,” you are reacting autonomously and objectively. Conflicts can arise when the mindsets are not amenable.

For example, if you’re butting heads with your agent because both of you are claiming to be the expert and the other should listen intently, chances are that both of you may be interacting with each other in a “parent” mindset. Likewise, if a home buyer and seller tantrum and attempt to bully each other over accepting the other’s offer, they are most likely reacting as the “child.” While the objective “adult” interacts and reacts free from unconscious motivations, and is most likely to communicate clearly and resolve most issues that interfere with a successful transaction.

Negotiation, like communication, is sometimes described as a game of personalities. It is a common misconception successful negotiators are good at bluffing; this belief may actually originate from a person’s own unconscious tendency toward dishonest communication described by Berne as “ulterior motives.” In fact, top negotiators happen to be honest communicators. Even though Sun Tzu’s “The Art of War” is often thought of as a metaphor for negotiation, it might be considered an early precursor to Transactional Analysis, since the piece is about sizing up and dealing with your counterpart.

This article not meant to give psychiatric advice (please seek a mental health professional if necessary); rather, this is meant to offer an alternate perspective of communication with your agent and counterpart. Regardless of the outcome, communication is a key factor in determining whether your home buying and selling experience will be positive or negative.

by Dan Krell
© 2013

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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. Copyright © 2013 Dan Krell.

November 26, 2013November 23, 2021

Increasing anger about real estate issues

What’s behind the increasing anger about real estate issues?

Did you know there is an anger epidemic in the U.S.? Dan Bowens of Fox 5 (New York) cited a USA Today study indicating that 60% of American adults polled reported they had angry or irritable feelings – which is a 50% increase from a 2011 poll. And if you are in a service industry, such as a real estate, you not only encounter the occasional obstinate client; but you can also find yourself engaged with bullies.

by Dan Krell © 2013

According to the American Psychological Association (apa.org), “Anger is an emotion characterized by antagonism toward someone or something you feel has deliberately done you wrong.” Anger can be used constructively to solve problems, but it can also cause problems that can interfere with thinking and “…harm your physical and mental health…”

Anger was common when the market declined: Many home owners were irate about deflated home values; many other home owners were outraged about their underwater mortgages, while others were furious about lenders foreclosing on homes. In fact, it was common to see foreclosures that were trashed by the owners as a way to express their anger.

Anger was also common as the market strengthened: Home sellers were irritated by buyer push back on price. Many home buyers were frustrated about multiple offer situations on some homes; while a few buyers were aggravated by the notion that they were no longer able to purchase foreclosures at steep discounts.

Regardless of the reasons for America’s reported increase in anger, the issue really isn’t the anger per se; anger is a useful emotion that can be productive. But rather, anger seems to be increasingly manifesting in irrational and aggressive means – even in the real estate industry.

A recent edition of Realtor® Magazine (Daily Real Estate News; October 20, 2013) reported that there are increasing incidents of physical assaults of real estate agents; attacks have been reported in model homes, open houses, as well as in their offices. Although these acts of physical aggression are increasing; the article did not report or discuss the more common verbal aggression, which includes threats and intimidation.

Anyone can get caught up in their anger and cross a line; agents, clients, neighbors, and even those who are engaged in a seemingly noble neighborhood cause are not immune. Fortunately, anger can be short lived and resolved; however, if the anger becomes all consuming – it may be time for mental health intervention.

The anger statistics didn’t surprise me. It seems as if we can find something to be angry about if we want to. However, it may be worthwhile, especially those who have been chronically angry and have lashed out at those who do not acquiesce or comply, to let go and be thankful for the good in our lives.

Goal Auzeen Saedi, Ph.D. sums it well (Why Are We Americans So Angry? Psychology Today; Millennial Media; April 30, 2013): “But what do we do with all of this anger? We let go. We forgive. We meditate and pray. We surround ourselves with loved ones…There are parts of all of us that could be made softer and kinder. We can learn to see the good in each of us that exists and teach our children to do so. Or we can continue to get angry, bully each other, make threats and demands. It is our choice.

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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. This article was originally published the week of November 25, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

August 30, 2013July 4, 2019

A glimpse into home buyer and seller behaviors

Buying and selling a home can be one of the most expensive and complex transactions you may undertake in your lifetime. Many are increasingly seeking assistance from real estate agents; according to the Highlights of the 2012 National Association of Realtors® Profile of Home Buyers and Sellers (realtor.org), eighty-nine percent of home buyers purchased their home through a real estate agent (a substantial increase from the sixty-one percent who indicated they purchased through an agent in 2001), while eighty-eight percent of sellers listed with an agent.

If you plan to hire a real estate agent, conventional wisdom dictates that you should interview several before choosing an agent. However, the logic is countered by the survey results. Approximately two-thirds of home buyers and sellers only contacted one agent. Additionally, a majority of buyers and sellers reported that the top means of finding their real estate agent was through a referral from a friend or family member. Forty percent of home buyers and thirty-eight percent of sellers found their agent through a referral from a family member or friend. First time home buyers were most reliant on their friends’ and family members’ referrals.

Repeat business was also a frequent way indicated in choosing a real estate agent. Although ninety percent of home buyers and eight-four percent of sellers reported that they would work with their agent again in the future; only twenty-three percent of home sellers and ten percent of buyers reported that they had worked with their agent in the past.

The internet is increasingly viewed as an important source of information for home buyers. Ninety percent of buyers surveyed indicated that they used the internet for their home search; the percentage rose to ninety-six for buyers under the age of 44.

Ultimately, your home purchase or sale falls upon the experience and skill of the agent you hire. Because of the increase in specialized transactions (such as short sales, 1031 exchanges, etc), it is probably a good idea to find out if the agent has the experience if your purchase or sale falls in this category.

A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the notion that an experienced agent can yield a better result than an inexperienced agent. They concluded that hiring a “veteran” agent will have a positive effect on your home sale. The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.

Asking friends and family for referrals as well as calling the agent you previously worked with is a good way to find a real estate agent. However, vetting out potential issues can be achieved by asking the right questions before you hire them.

Regardless of how you find your real estate agent, it is probably a good idea to find out more about them. A conversation about their experience, knowledge, and expertise is probably a good way to start. Additionally, knowledge about the local market is extremely important these days as market trends have become hyper-local. Not understanding the neighborhood market can lead an agent to over or under price a home.

by Dan Krell
© 2013

May 31, 2013October 8, 2018

Handling home buyer feedback

You’ve spent months preparing your home by de-cluttering, painting, and maybe even making renovations; the last thing you want to hear are objections from home buyers why the home is not suitable for them. Obviously, you’ve had years of enjoyment and you’re thinking about all the benefits the home offers. However, getting honest home buyer feedback when they visit your home is invaluable information to help get your home sold.

Asking for home buyer feedback is one of the tasks that your agent performs throughout the listing period. However, soliciting feedback from agents who bring buyers to your home is often hit or miss; although many agents offer good and honest feedback, just as many don’t respond (for various reasons) to feedback requests unless their buyers are interested in the home. Additionally, home buyer feedback is solicited when they visit open houses and includes questions such as: “What do you find most appealing about the home?”; “What do you find least appealing about the home?”; and “Is the home priced right?”

Ok, it’s nice to hear the good things people have to say about your home; these are obvious benefits and what others find appealing. Buyers may list various home features, upgrades, and/or renovations as appealing or beneficial; but it is also important to put weight on the negative feedback too. All the de-cluttering and neutralizing can make a home look good, but it may not change home features that do not fit other’s needs. Likewise, making cosmetic and minor repairs also increases your home’s appeal; but may not make obsolete systems acceptable.

One of the most common pieces of feedback you might encounter is about the home’s price. Since home buyers typically view similar homes, you get perspective about how you priced your home compared to other similar homes. If there is overwhelming feedback that the home is overpriced, then you should consider reviewing additional comps with your agent and correct the price as needed. It is also not uncommon that buyers may feel that the home is priced well, but for various reasons they are not interested in making an offer.

Keep in mind that the feedback you will receive is subjective and offered from various points of view, so don’t be surprised with seemingly contradictory objections from different home buyers. Some objections can be addressed readily while others cannot.

For example, objections about the size and/or location of the home or yard are not easily overcome; and it may be that buyers offering such objections are looking at the wrong home. However, objections about shabby flooring or lack of updates can be addressed by either taking action or changing the list price to reflect the home’s condition.

Sometimes in pushing their client’s limits, home buyer’s objections may actually be a commentary on their limitations rather than the home’s attributes. In the hopes of getting a great deal, buyers are taken to view homes that are out of their price range and/or in need of updates they cannot make.

Buyer and agent feedback is the easiest way to gauge how your home is positioned in comparison to your competition on the market. Clearly, the home’s positive attributes and benefits should be highlighted as these items would be appealing to home buyers. However, buyer objections should also be considered and addressed if possible to help facilitate a sale.

Original located at https://dankrell.com/blog/2013/05/31/handling-buyer-feedback-and-objection-for-home-sellers/

By Dan Krell