Buyers feel excited. Sellers feel nostalgic. Buyers look ahead. Sellers look back.
These differences help to explain the profoundly different psychologies with which buyers and sellers approach both a marketplace and a negotiation. Buyers and sellers not only represent opposite sides in the negotiation equation but also experience the tugs of the give and take in very different ways.
Agents spend their professional lives in the middle of this equation, trying to get the two sides to balance out so the problem can be solved. In order to succeed with this delicate task, agents must first manage the profoundly different motivations which animate their principals.
Buyers feel excited
It’s a truism of real estate markets that in a rising market, buyers adjust quickly, while in a declining market, sellers adjust slowly. Why? Part of it is as simple as the laws of supply and demand. In a rising market, demand tends to exceed supply; under these circumstances auction fever sets in.
Most people instinctively value something more if someone else wants it, too. But other factors also impact buyer behavior. A home purchase signals an investment in the future, a commitment to looking ahead. Most buyers experience this as energizing and exciting.
In that frame of mind, caught up by the scarcity of supply, the possible interest of other bidders, and their own excitement as they visualize themselves in the property during the months and years ahead, buyers may well stretch to secure the home.
Sellers feel nostalgic
Unless the property under consideration has served only as an investment, chances are the seller or his/her family have lived there. This creates an entirely different dynamic for the seller than that experienced by a buyer.
The seller is likely to imbue the property with excessive value precisely because it belongs to him. He will detail to his broker the things which make it better than other similar properties available for sale and feel offended if the agent disagrees. His view of the property, often unrealistically, revolves around his memories of the role the home has played in family life and the events which he has experienced there over the years.
Just as the buyer’s excitement centers around the future, the seller’s attachment tends to revolve around the past. Sellers’ reluctance to reduce prices in a descending market reflects the words of the famous tune from Cabaret, “If You Could See Her Through My Eyes.” If you understood how much this place means to me, you would never devalue it this way!
Understanding both sides
Understanding these two perspectives and their ramifications mark one of the areas where agents become indispensable to facilitating a transaction.
In an upmarket, we try to apply some brakes to buyer enthusiasm to make sure they think through all sides a decision before impulsively leaping ahead. At the same time, we remind sellers that the mauve bedroom which Mom loved so much may not translate for a stranger entering the property and looking to imagine their own life in it.
And in a down market, we remind the buyers that a home purchase is like a marriage: you don’t go into it with a two-year window and you have to envision the life your family will enjoy there. At the same time, we remind sellers that lowering the price to reflect changed market conditions doesn’t devalue them or their history in the home.
When both parties can be brought to the present moment, blending the past experiences of one side with the future hopes of the other, that is the locus of consummated transactions.