Friday, January 28, 2011

The Emotional Sea of Real Estate Part 2

In my last post I touched on the emotional aspect of being involved in a real estate transaction and that neither seller(s), buyer(s) or REALTOR(S)® are immune to the flood of emotion that often takes hold of those involved in the purchase of real estate.
 Without a doubt the most significant things affecting the emotions of the majority of sellers is the price.  While some will confess they have no idea what their property is worth and are thus relying on their REALTOR® to establish that for them, most will harbour somewhere deep down inside a number and usually it's a higher dollar amount than the current market value.  A seller's price may be based on what they need to get out of a property to help finance their next purchase or to pay off their mortgage or other debts.  Their price may and often is based on what they feel it would cost to replace the home, cottage or whatever.  Unfortunately none of these factors affect market price so right off the bat, the seller's emotional tension is starting to build fueled by disappointment once they learn their listing price is not a realistic one.  Already on edge with a lower than anticipated list price, the seller's emotions then really erupt when an offer is received that is10% or more below the asking price.  If the asking price is realistic, I always recommend a starting point somewhere between 90% to 95% of the asking price.  Anything less may result in not getting a sign-back and worse, it creates a very emotionally charged almost antagonistic atmosphere for future negotiations.
  Buyer's on the other hand are faced with the emotional element of "fear."  Fear of making the wrong choice of area, fear of buying a home with problems, a leaky basement, mould, are the well and septic okay or the most prevalent on today's top 10 list of buyer(s) fears, are we paying too much!
  When a buyer and seller are negotiating an Agreement of Purchase and Sale numerous conditions and clauses are always prevalent and while some of these ie: the closing date, accepting an offer conditional on the sale of the buyer's current home are all emotional triggers, none are as flammable as the aspect of price.  The seller wants to maximize their price, they are mentally calculating the real estate commission they are going to pay versus the perceived value they are getting from their REALTOR® and lastly, they fear the buyer is just trying to unjustifiably beat them down on price.  Some terms in an Agreement of Purchase and Sale are equally as important as the price because in one way or another they too have a financial cost or benefit to the seller, buyer or both  These are often overlooked however and it's the responsibility of the REALTORS® involved to point that out.
  So what emotions do REALTORS® have.  Well, as I stated in my last post, every day we wake up unemployed.  That's emotional and you really need to learn to control that or you'd never get out of bed in the morning.  Every time we list a seller's property, despite our best efforts, the attractiveness of the property and or its price, there is no guarantee that the property will sell and we will get paid for our efforts.  After months of working on a listing, having it not sell and worse losing the listing to another REALTOR® that can be a major let down creating a whole sea of emotional thoughts.  The same applies when working with buyers.  We load them in the car, spend time driving them around burning up both time and fuel with again, no guarantee of them buying anything thus generating a pay cheque.  Obviously these scenarios can lead to frustration, resentment towards the clients and a host of other feelings which all fall into the emotional category.
Perhaps the worst case scenario in a real estate transaction is when the emotions of the REALTOR® or REALTORS® kick in preventing the deal from getting done.  Our job is to shrink or preferably remove the emotions of the buyers and sellers however sometimes they are only amplified by the REALTOR'S own thoughts and emotions.  REALTOR® egos can sometimes pose a real problem when a listing agent who believes they are 100% right in the price is bound and determined to show up one of their counterparts who may be representing a buyer in the negotiation process and vice versa.  Typically there are no winners in this scenario as the deal often reaches a stalemate and is aborted.  It's not that the seller and buyer do not want to move on a point, it's the stubbornness of the REALTORS® that is preventing the deal from getting done.  Cooler heads needs to prevail and the only way to do this is to remove the emotional elements that are preventing things from moving forward. 
  Removing or mitigating the emotional feelings with a seller(s), buyer(s) starts with the process of discovery.  As REALTOR(S)® we need to determine what the real objection is in order to diffuse the emotional feelings attached to it.  The process of dealing with the emotions of seller(s) and buyer(s) can't be addressed when REALTOR(S)® have their own agendas which more often than not are emotionally driven.  Our Code of Ethics stipulates that we have to follow the instructions of our clients.  That is not to say that we shouldn't step in and bring our knowledges, skills and unbiased opinions into the equation to solve a problem.  After all, it is a business transaction and most successful businesses run far more successfully by making fact based decsions versus emotional ones.        

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Royal LePAGE Locations North (Brokerage)

330 First Street, Collingwood, ON L9Y 1B4



Email:
rickcrouch@propertycollingwood.com



Direct: 705-443-1037



Office: 705-445-5520 ext 230




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Rick relocated to Collingwood from Toronto in 1985 through a transfer with Goodyear Canada. In 1987 Rick was recruited by a major client of Goodyear’s, managing their Canadian business based in Barrie before moving to Chicago in 1992 as Vice President of Sales & Marketing. Upon returning to Canada in 1996, Rick ran an industrial products manufacturing company in Stratford, Ontario. In 1998 Rick returned to Collingwood with his two children. Rick is a licensed real estate Broker with Royal LePAGE Locations North in Collingwood and holds his MVA designation (Market Value Appraiser-Residential). He is an active volunteer in the community serving several years on the Board of Directors with the Collingwood Chamber of Commerce as Treasurer, 6 years on the Board of Directors for the Southern Georgian Bay Association of REALTORS® of which he is the Past President (2008) and currently serves on a committee with the Ontario Real Estate Association. Rick is a diverse executive manager with extensive experience in strategic planning, manufacturing, finance, human resources and quality assurance management.