The Psychology of a Successful Homebuyer
In “hot” markets like the Bay Area, buyers have been beaten up for years. Not literally beaten up, of course, but psychologically.
In fact, many buyers in these markets have become so accustomed to having the deck stacked against them that they fail to see opportunity when it finally arises.
As more inventory comes onto the market, buyers who were prepared to pay a premium for a house six months before now hesitate. They’ve been conditioned to be suspicious any time things appear to be going their way, so they begin worrying. “What if the market is actually going downhill? What if I pay too much for that house and lose out big?”
In situations like these, it’s critical that buyers learn to look objectively at the situation. If you’re interested in a home but can’t shake a nagging concern that the price could drop an additional 5-10%, then make an offer for 5-10% less of the asking price and see what happens.
What have you got to lose?
Thinking Like a Seller
Sellers aren’t robots. They’re humans whose behavior is neither perfectly rational or emotional, which buyers can use to their advantage when trying to understand the market.
For instance, most sellers won’t go to the trouble of putting their home on the market just to test the waters. Once they put the gears of selling their home in motion, they usually don’t reverse course. They’ve made a commitment to sell that usually won’t be displaced until it’s done. In fact, they may have already made plans for their next move!
This should give buyers confidence. Sellers want to conduct a swift, successful transaction as much or more than you do. Under the right market conditions, they are much more likely to consider a lower offer than you might expect.
The Myth of Perfect Timing
Many buyers are concerned about timing—specifically, timing their transaction to get the best deal possible. We get it—you’re pondering one of the biggest financial transactions of your life, and you want everything to go perfectly.
In our experience, this type of thinking is usually a distraction, at least when purchasing a primary residence (investment properties are different). Why? Because smart buyers are in it for the long haul—or at least a period of five to seven years—and over the long haul, market corrections just don’t matter that much. On the other hand, the market could heat back up to a boil any day, and your window of opportunity could pass.
Seize the Moment
For buyers in notoriously hot markets, it’s easy to forget you have leverage when an opportunity presents itself. We’re here to tell you that you nearly always have some form of leverage. Markets change. Corrections happen. If the market starts to go your way, don’t be afraid. Seize the opportunity, because it would be a shame to let it pass.