Buying a house used to be a big deal; nowadays, it feels like a hostage negotiation where your bankroll is the ransom and the hostage is a 1970s fixer-upper that has "potential." A recent survey conducted by Clever Real Estate found that the modern process is rainbows and butterflies in picket fences but rather a state of panic. Spring is approaching, and if you think that the biggest obstacle is simply a lack of inventory, then you’re not aware of the psychological thriller that’s currently playing in your head.
FOMO is a Terrible Financial Advisor
It turns out that your emotions are controlling your actions, and not in a good way; in fact, these emotions are driving your actions straight towards a cliff. A whopping 36% of recent homebuyers admit that they made a poor decision based purely on their FOMO (Fear Of Missing Out). FOMO is not just a problem for Gen Z, although that generation is particularly susceptible to FOMO since they view owning a home as a status symbol. However, if you’re desperate to post that "Key Day" pic to Instagram, then perhaps you shouldn’t worry that your foundation is literally held together by duct tape and hope.
To make it even worse, 76% of buyers deliberately ignored all these red flags and rationalized that it was "worth it" somehow and that's what a rational real estate agent is for, to be that designated driver. While your client is busy getting drunk on visions of a dream kitchen, it's your job to be a voice of reason and remind him that the air conditioning is older than the current president. If you're not willing to be that voice of reason right now, trust me that your client is going to be calling you in six months when the basement floods and turns into a pool.
The "First-Timer" Identity Crisis
If you're a first-timer yourself, then good news: there's a 50/50 chance that right now you feel like a complete and utter failure, though that's a fantastic start to what's hopefully going to be one of your biggest investments. Almost half of first-timers report that they feel like they've lost control of the entire process and another 44% report that they feel like a complete failure. Why? Because they're moving too darn fast. 37% of first-timers report that this is their very first house tour, that's like marrying your spouse after meeting at a bar and knowing each other for a total of five minutes.
The reason for this is that they're moving so fast that they're scared that if they don’t buy this house right now, they'll be renting forever. That's where you can be a hero, by slowing down the roll and giving your client a written checklist, because let’s be for real, if everything is moving at warp speed and your client is getting more and more stressed by the second, a written checklist can be just what he needs to keep him from descending into a "what have I done" spiral. You're not just selling a house; you're basically a therapist with a lockbox.
Living with the "Oh No" Factor
The result of such emotional decisions is, of course, the aftermath that you would expect: a tidal wave of regret. While two out of three people experience some level of "I messed up," the number is over . A huge chunk for first-timers who say they paid too much, did not negotiate hard enough, and rushed the finish line. All of this is because they did not have any idea of the long-term affordability and the true value of the property.
To avoid being the person who sells someone a lifetime of resentment, it helps to stage negotiation scenarios in advance of the actual negotiation. A buyer who knows how he will react if the seller counters his offer or if the inspection comes back terrible is less likely to make a rash decision he'll regret by the time the first mortgage payment comes due. Being strategic rather than reactive is the only way to survive this market without losing one's mind or savings.
