Keep Your Clients' Emotions in Check
September 5, 2013
Home buyers often let emotions cloud their judgment in real estate transactions. That's why buyers "need someone in their corner who can counsel them and make sure they are making a smart investment, not an emotionally driven purchase," says Nick Jabbour, a New York City real estate professional and vice president of Nest Seekers International.
Bankrate.com recently highlighted several emotionally driven mistakes that practitioners say their clients have made:
- Allowing love at first sight. Jabbour says this is his rule for buyers: "We will look at no less than five properties before we sign any contracts. It's easy to fall in love right away. [But] jumping on the first or second home that a buyer looks at will often result in buyer's remorse, overpaying, and the inability to sell at a reasonable price down the line." Buyers still need to do necessary due diligence before they rush in.
- Overpaying for perfection. "On the remote chance that a buyer does find perfection, the emotional attachment will sometimes become so high that the buyer will overpay or overextend themselves financially," Jabbour says. He has his buyers consider an exit strategy from the beginning to help avoid losing money when it comes time to sell. "There is definite value over time for the enjoyment and use of the home, but that number is slight when compared to the total investment,” he notes.
- Lowballing in negotiations. Buyers who make lowball offers risk losing out on the property or lengthening the process and annoying sellers, agents say. "Buyers can come in with unrealistic expectations about what a property should go for," says Tracie Hamersley, senior vice president and associate broker at Citi Habitats in New York City. “It's best for a buyer to make a realistic bid not too far off from where he or she would ultimately like to end up." Cash buyers may be the biggest offenders of lowballing, says Hamersley. The cash discount may not be worth as much as some buyers think, however.
Source: “5 Emotional Mistakes Made by Homebuyers,” Bankrate.com (September 2013)
Updated: July 14, 2020