Explaining Your Buyer’s Behavior Can Help Change It
The key to all learning and habit formation is spaced repetition. Unfortunately, spaced repetition can reinforce unproductive habits. For example, buyers have recently developed two unproductive habits. They are:
- An exclusive focus on price—For several years now there has been a heavy emphasis placed on pricing trends by the media. This continuous barrage of pricing information has taught every buyer to overlook the emotional benefits of buying by focusing exclusively on price. Explaining this trend to your buyer will help them refocus on what’s most important, or how their purchase can improve their quality of life.
- Buyers have learned to sit on the fence—Unfortunately, many buyers have spent so much time not moving forward with a purchase that they now have mastered the art of waiting. Sitting on the fence has officially become a bad habit. Once again, pointing out this situation by using third party stories will help them change their behavior.
Seller Argument #5—Supply and Consumption Close
Although recent activity in some markets have led to the impression that things are improving because inventory and month’s supply of inventory are both down, these numbers should be compared to a healthy market to show the seller that we may still have a long way to go. For example, if the month’s supply on inventory has dropped from 40 months to 20 months in the past year, it may encourage the seller to hold out for a higher price. The 20 month should be compared to a 6 month supply of homes that is typical in a healthy market. Although these indicators are both headed in the right direction, we still have a long way to go.
Buyer Argument #5—Pent-Up Buyer Demand
Price depreciation and economic uncertainty have caused paralysis. Many, if not most buyers, are sitting on the fence waiting for things to improve because their afraid things could get worse and prices will drop. It’s important to explain to these buyers that once they are confident it’s time to move forward, this pent-up buyer demand will be released because other buyers are likely to feel the same way. By waiting for everybody else to jump in, they run a substantial risk of paying a lot more for a less desirable home. Buyers must remember that as demand increases, selection is lost and prices go up.