Monday, June 19, 2006

The Zen of Real Estate

by Osman Parvez


Is buying a home an emotional or a practical decision? I think it's really the balance that matters.

Clearly both practical and emotional factors play into most real estate decisions. Lately the dualism that runs through the process has sparked up in a few interesting client situations.

Just today (well, yesterday), a colleague mentioned that it’s great that I provide blog readers with a local market analysis, but it must be tough to make the critical emotional connection on the Internet. After all, it’s emotional factors that create good relationships, engender trust, and encourage loyalty.

On the tactical side, we provide a wide assortment of tools and services for buyers and sellers. Some are automated; email alerts with “just listed” property, Google mapping, school report cards, property organizer accounts, and links to hundreds of local resources for example. Others services are custom tailored (for our clients only), the most intense being our opinion of value which usually requires several site visits and at least a half to full day of focused analytical attention. The end result is a 10-12 page report. As our buying clients get ready to put together an offer, we also provide a detailed analysis of recent sales and currently available property to check valuation and support our offer price.

On the emotional side, we try to slow things down a little and make sure we've connected with our clients. This is especially important in the early stages. It's as simple as taking time for coffee or having lunch together, allowing a little time to relax and pause an otherwise busy, house to house showing schedule. This is a great time to get questions about neighborhoods or financing answered and specific worries alleviated. In a more relaxed conversation, it's surprising how much useful information comes forth. Taking time to connect with a client is simply good business sense. Anxiety is reduced (and yes, buying or selling a home can be very stressful), a better overall relationship develops, and we both will enjoy the process. If glitches develop (on inspection issues, for example), the healthy relationship which comes from slowing things down can also reduce a client's frustration enormously.

The way I look at it, practical requirements in a home must be met first. Bottom line? The property should first satisfy the needs of buyers at a price they are willing and able to afford. But to get a deal done, the property must also appeal to the emotions of the buyer. The aesthetics must suit the client, the neighborhood must be right, and there must be an emotional reason to buy. Otherwise, unless it’s a seasoned investor (and sometimes even then), a deal based on numbers alone probably won’t get to closing.

To save my clients (and me) time and energy, I'll usually ask buyers to make a list of requirements of their new home and a separate list of preferences. Price range, SQFT, number of bedrooms, bathrooms, garage spaces, and of course, location are typical requirements. Colors, fireplaces, age of home, and style are common preferences.

Sometimes, despite my efforts at avoiding it, I see a conflict develop between a client's head and heart and I know it can really sting. In the end, usually the heart side wins because the client falls in love with the house and buys the property. Unfortunately, they aren't happy in the home for long because their practical needs aren't being met. They may even blame you for buying the wrong property. It usually goes something like this…

In between days (or weeks, in some cases) when we’re out looking at homes, I’ll have the system email properties that match the client’s required criteria. Of course, buyers like to surf around on the Internet and drive around to “see what’s out there.” Naturally, they’re exposed to all manner of websites some of which contain outdated or incomplete information. Or they might spend hours driving neighborhoods and picking up flyers for homes that aren't a good fit. They aren't getting full value from their agent, but it might help educate a buyer on the local market. Disaster strikes, on the other hand, when an emotionally appealing property found online or by driving around overwhelms a buyer’s practical sense, and they insist of going ahead with a deal.

This is one of the most important reasons to develop a good working relationship, comfortable enough so your agent can ask you point blank why you want to see a home outside your price range or why a 1,700 SQFT house is now fine when you said two weeks ago to look only above 2,300 SQFT. If the home met all the required criteria, it would have appeared in the listings provided. Otherwise, it probably doesn’t meet the criteria.

Pithy phrases such as “Caveat Emptor” bring no comfort when you're sitting in a house that is just wrong for you. If you’re thinking about buying or selling, give equal attention to the practical and emotional factors that might arise and be sure to get sound advice from an agent you can trust (interview several before beginning). And don't forget to choose a lender and title company with a solid reputation and with equal due diligence.

P.S. If you’ve spent much time reading this blog, you can probably tell that I’m a fan of analysis. I like studying the market and keeping abreast of the latest happenings. From new developments to remodels to price delineated market segment analysis, I keep my ears and eyes open to the latest. I just wish I had more time to write about it, but my clients get first attention.

If you’re buying or selling a home, local market information is difficult to find and make sense of. That’s why I publish all the charts and graphs. Boulder is a very well educated community, and I’m glad to see this work find an audience.

Since we’re all so busy and free time is such a premium, a practical approach to finding a home can save loads of time. Please use the tools available, especially listing alerts and your agent’s expertise. If you need help setting up alerts or need additional information, be sure to call your agent (or if you aren't subject to a buyer agency contract, feel free to call me at 303.746.6896).

My simple advice? Start with the practical but don’t get overwhelmed with the emotional. It’s critical to find balance if you want long term satisfaction with your real estate decisions. That's the Zen of Real Estate.


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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

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