Archive for the ‘Whimsical’ Category

PROBLEMS FOR THE 1st TIME BUYER

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Cover of "Buying a Home (Essential Financ...

Cover of Buying a Home (Essential Finance)

Real estate transactions place a particularly complex set of psychological and emotional stressors on buyers and sellers.  Clients are supposed to make wise financial decisions, find (but manage!) their emotional passion for a property, do diligent research, and handle an uncanny list of logistics – all at once.

This has been the case since the dawn of the real estate business. But the last decade has added two line items to this list of stressors that have sent some buyers and sellers over the edge – and pushed many others right to the (deal-breaking) brink:

The biggest recession in American history is one — this has ratcheted up buyers’ and sellers’ financial fears and the pressure to make smart, sustainable decisions.

The advent of the internet is the other — now that every bit of market data and advice is literally at hand, real estate consumers can overwhelm themselves and fall prey to “analysis paralysis” in the effort to get informed.

Client mindsets, unmanaged, kill deals. And you can’t manage what you don’t first understand. Even worse than glitching up your close rate, some of these anxieties can actually cause panic, paralysis and poor decisions. Let’s take a little trip inside the minds of our post-recession, constantly-connected home buyers and sellers, to get a better understanding for their freak-out moments and sticking points.

Neurosis #1: Interest Rate Fixation.

The buyer and refi-er with interest-rate fixation checks interest rates online all day, every day. They hang on Bernanke’s every word – and text or call you immediately after his every press conference to see what you think about it. They notice rates rise and fall by .375% one week, and have done the amortization math to reveal that this difference would save them $2,750 over their 30 year loan.  As a result, interest rate fixated buyers and home owners often freeze up when it’s time to lock rates, hesitating out of the hope/fear that rates will decline, even by a smidgen, tomorrow.

As with most human neuroses, interest rate fixation starts from a good place: the desire to be a smart, informed, wise money manager and real estate decision-maker. But it can spiral to a place where it borders on delusional. Something about the ease of access and constant information about every moment’s variation in interest rates makes mortgage borrowers perceive that they have more control over the precise timing of their rate lock and their transaction than they actually do.

How you can help

If you have someone with interest rate fixation on your hands, it might help to keep them mindful of the overall goal of buying the right home at an affordable price and terms, or saving money and paying their home off early, via their refinance.  Explain that they should be aggressive about moving their house hunt and refinance forward. But also inform them that their contingency and underwriting timelines have more impact on the timing nuances that dictate their precise interest rate than obsessively watching CNBC ever will.

Neurosis #2: House-Stalking Syndrome.

Your house stalkers are those buyers who are constantly asking you about homes that are not on the market, having seen a late-night infomercial that urged them to write letters to owners asking them to sell – and finance – their homes.  These are also the buyers who see a ‘Coming Soon’ sign go up on the most luxurious home in town and start checking online, calling the listing agent and emailing you 5 times a day to know the moment it comes on the market. Then, when it is listed at a price far beyond their means, they go to the Open House, put in a lowball offer (with a picture of their Yorkie) and go into mourning when the place sells for hundreds of thousands more than they could every have paid.

Believe it or not, these are the most benign symptoms of house stalking syndrome. I’ve heard of house stalking buyers who track the sellers down on Facebook, knock on their doors, and even attempt to sabotage their open houses. But by and large, house-stalkers reserve their fixation for late-night internet research into a property’s permit history, floorplans, owners and neighbors, estimated value, days on market and listing agent history.

How you can help

Historically, house stalkers were seeking to be the first to hear of a price reduction.  But on today’s seller’s market, house stalkers are often legitimate buyers driven slightly nuts by the prospect of getting outbid (again).

To minimize this mania, it’s essential for you, the agent, to be the calming presence in a crazy market.  Create a sensible house hunting plan and strategy, encourage them to view homes priced low enough that they can compete and stay within budget, and brief them up front about how many offers buyers normally are having to make before snapping up their ultimate home.

Neurosis #3: Home Voyeurism, aka Looky-Loo Syndrome, aka Property Peeping Tom Tendencies.

Home voyeurs are related to the aforementioned home-stalkers, with one big difference: they have no interest in actually buying a home!  Hence, these Property Peeping Tom’s can be the bane of an agent’s existence, because their phone calls, emails and texts place a real drain on the time you could be spending with serious clients.

As long as there have been open houses, there have been looky loos. But the advent of the internet has exacerbated their symptoms and encouraged their bad behavior by rendering so much more information about properties and the people involved with them publicly available.

How you can help

The toughest type of Property Peeping Tom to deal with are those friends and relatives who beg you to use your real estate agent superpowers to constantly pull comps, get insider information or even provide access to listed homes for what you know will turn out to be no good reason. One word: “no”.  Wait – one more word: “boundaries”

Neurosis #4: Décor Expectations Disorder.

Reality TV, real estate shows and design magazines have created some pretty unrealistic expectations about what the interior of a home should look like on any given day. While the average human being isn’t put off by some unopened mail in the basket or a pair of sneakers in the hallway, those with Décor Expectations Disorder are shocked and outraged by even the slightest signs of real life inside the homes they view. They are aghast when every pillow isn’t fluffed and completely incensed by out-of-date appliances.  No window valances? Quelle horreur.

How you can help

Truth is, the ante has certainly been upped. Buyers at all price points do have the right to expect listings to be clean and prepared for sale – and listing agents must know that homes which don’t measure up will not command top dollar. If your buyer client has Décor Expectations Disorder, remind them that the perfectly staged homes tend to get more offers and sell for more, so that a poorly prepared property might present a good opportunity for them.  Encourage them to visualize the place in the pristine condition they’ll keep it, if and when they end up owning the place.

And take every opportunity to remind your home sellers that the competition is fierce. In fact, remind them that they are not just competing against nearby listings, but also against the standard of cleaniness and decor that buyers see in the media. Encourage them to be vigilant about keeping their home pristine and clutter-free while it’s listed and being shown. Stagers, housekeepers and storage units are property preparation investments that can have pay off big, at closing.

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ANALYSIS/PARALYSIS Syndrome

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Raven's Progressive Matrices Example

Raven’s Progressive Matrices Example (Photo credit: Wikipedia)

A nasty medical condition has been diagnosed amongst a small segment of the population here in Santa Clara’s Silicon Valley.

It affects only Highly Educated, Computer Literate, people between 25 and 35, and only when they decide to try to buy a house.

The virus feeds off such people’s addition to “DATA” regardless of accuracy, or relevance to the Home Buying process, and despite the lack of sufficient knowledge to accurately evaluate it.

In a very short time they lose all sense of purpose and truly believe that if they could just know everything there is to be known about the history of a house and all persons who have ever lived in it, plus the ethnicity of every family living within 2 miles of it, and the IQ of all children of these families, there is a “DATA” supported formula which will tell them if they should buy it, and if so, how much they should be willing to pay.

The lack of such a formula throws them a frenzy of inaction leading to the diagnosis of the dreaded ANALYSIS/PARALYSIS Syndrome. Unofficially this is referred to as the “I can’t decide” problem.

Being Highly Educated (NOT THE SAME AS INTELLIGENT) they will blame the problem on their Real Estate Agent who is obviously not finding them the relevant “DATA” needed to make the correct decision.

They then select a new Agent based on his/her promise to provide them all the “DATA” they ask for and to never offer them advice.

To this date no-one suffering from this debilitating condition has  actually bought as house as long before they reach any decision the subject property has already sold at, on average, 15% higher than the price their process suggested.

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The Worst Addiction?

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Drugs, Drink, Gambling. From the clutches of these escape is possible with  sufficient help and hard work. 

From Golf,  NEVER!

Like all other forms of compulsive behaviour, for golfahlics even nine holes is too much, yet 18 holes are not enough to satisfy their insatiable craving for humiliation and self abuse.

Have you ever know a man who gave up golf?