As a real estate agent, you know just how important it is to understand what goes on in the minds of buyers and vendors. In this quick guide, we’ll go through some key psychological factors at play.
The power (and speed) of first impressions:
You never get a second chance at making a first impression. And you don’t have much time either: anecdotally, buyers decide how they feel about a home within the first 7-10 seconds of arriving (or around 8 seconds on average).
This tiny window is your golden opportunity to catch their attention. A well-presented, inviting home may also tip the scales in favour of a faster sale at a more attractive price. This is where home staging and thoughtful pre-sale renovations come into play, putting the property into its best light.
Boosting perceived value:
In an interesting article, property valuer Craig Russell set out to answer a frequently asked question: “What does market value really mean?”
As you know, market value is an estimate, not an exact science. A house is worth just how much a buyer is willing to pay, and this may be deeply influenced by their emotions. Once again, strategic upgrades can go a long way in enhance the property’s appeal – whether it’s a splash of fresh paint or modernised fixtures.
Feeling safe in a new home is also paramount. Speaking of improvements, you can consider advising your vendors on adding features that boost this sense of security, like an alarm system, security cameras, or higher fences.
Plus, don’t underestimate the ‘herd mentality’ effect: a busy open home may cause the buyers to think that the property is desirable. This brings us to the next point…
The impact of FOMO and FOOP:
As we saw during the 2020-2021 upswing, Fear of Missing Out (FOMO) can be a powerful motivator in the real estate market. At the opposite end of the spectrum is FOOP, or the Fear of Over-Paying.
This push-and-pull dynamic is difficult to predict and works on two factors: the desire to want what everyone has and a lack of listings. So, how can you help vendors navigate FOMO and FOOP? By crafting a balanced marketing strategy.
During periods of FOOP, it’s all about reassurance. Highlight what makes that house a home beyond the price tag and share stories of happy homeowners who found value in their purchase. Then, when FOMO is back again, amp up the excitement without tipping into pressure. Use the buzz of the crowd as proof the property is worth a look. And when it comes to pricing, make it just right that it feels like a win for everyone.
Some cognitive biases at play:
When it comes to how buyers decide on a home, several cognitive biases can influence the decision-making process. These can include:
Confirmation bias – When buyers walk into a house and it instantly feels like home, they may start looking for all the reasons why it’s the perfect fit, ignoring any downsides. That first ‘this is it’ feeling can really stick.
Accessibility bias – It’s all about visibility. If a house keeps popping up in searches and listings, it’s more likely to stay on a buyer’s mind. And the more a buyer sees a house, the more they may start to think it might be the one.
Anchoring and adjustment bias – This one is all about first impressions with price. If a buyer hears a price first (for example, for another property in the area), that number will probably stick with them, and they may compare every other house to that price. If your house is the one setting the standard, you’re likely to be in a great spot to negotiate.
Friends and family matter:
When facing big decisions like buying a house, what our friends and family think matters a lot. You can leverage the power of buyers’ social circles by providing information that they can easily share around, so they can get that thumbs up from the people they trust.
Vendors can also be emotional
Physical evidence, the sixth P, refers to any physical representation of your service in the interaction For many vendors, selling their property can be an emotional rollercoaster too. Maybe it’s where they brought their baby home, celebrated milestones, or enjoyed simple, everyday moments. So, when it’s time to sell, those emotions can really stir the pot, making decisions a bit more complicated than just settling on a price.
In many cases, both the vendor and the buyer are riding their own emotional waves. That’s where a good real estate agent comes in, acting as the calm in the storm. With the right help, vendors can move on to their next adventure, and buyers can start a brand-new chapter, all with a smile.
We’re here to help
Does your client need finance to cover their property marketing, staging or renovation costs? We can help. With our innovative Pay Later option, your vendors can access marketing funds of up to $35k within 24 hours of application, with no upfront cost.
Like to learn more? Visit listnow.co.nz for all the details.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance