In a Journal of Psychiatry study, Martin Linstorm says, “almost our entire understanding of the world is experienced through our senses.” When it comes to buying and selling a home, the excitement of the experience can often be what takes the driver’s seat. This rings even more true when buying a home in a seller’s market.
For that reason, it’s easy to let emotion dictate our decision-making in any financial situation. Specifically when it comes to buying something as significant as a home. Many Canadians’ primary reason behind the desire to own a home is emotion. A 2020 Zolo survey found that for 23% of buyers, stability and permanence are the biggest motivators.
But, what if homes are selling faster than you’d like, and you’re starting to become impatient? Learning how to manage your emotions during the sale of a home, whether you’re buying or selling, is extremely important.
How Should You Prepare to Buy In a Seller’s Market?
“There are few things more frustrating than trying to buy real estate in a seller’s market,” says Kevin Ali, Vice President and Broker of Record at Zolo. He says it’s an unfortunate reality that a buyer could submit an offer at the full asking price and still discover another buyer offered tens of thousands of dollars to outbid them.
So, instead of jumping into the home buying experience with certain expectations, it’s best to understand the current trends and seasonal shifts in the real estate market. For example, if you are looking to buy a property in the spring, historical data would show that this is a busy time of year, and typically homes are purchased much quicker than they would be in the winter months.
How Can You Stay Ahead of Other Offers?
There are typically more buyers looking for homes with a seller’s market than there are homes available. This means that the inventory does not align with the number of consumers, making it sometimes challenging to find a property without dealing with multiple buyers and offers.
If you are eager to buy a home in a sellers’ market, Ali suggests looking at homes below your budget and leaving room for negotiation. For example, if your budget is $500,000, but properties at this list price typically sell for $100,000 over asking, you should not be submitting offers on properties listed at $500,000.
“The better play, instead, would be to look at a property listed at $400,000 and be prepared to bid as high as the recent comparable sales in the neighbourhood.”
Sometimes, being a buyer in a seller’s market means accepting that you may have to be flexible and stay open-minded.
How Can You Manage Your Emotions as a Buyer?
As we know, our senses trigger emotional responses that can be positive or negative. Some triggers are familiar to most people, and others are personalized based on individual memories and experiences.
For that reason, real estate experts know that positively engaging as many of the senses as possible, whether it be sight, smells, warmth or noise, can make a real difference in whether a property sells. It can also completely change how we view a property as buyers.
But, Ali says the strategy many sellers employ when selling their homes is the opposite of appealing to the emotions of a potential buyer. Instead, sellers will declutter and depersonalize their property to the fullest extent possible.
“In using neutral colours and generic furnishings, the seller hopes to create a space where the buyer can project their vision for the property onto the canvas of the home.”
Therefore, it’s essential to go into any viewing with a solid list of make or breaks you desire in a home. This way, you can refer to your list to ensure the property satisfies what you need, rather than allowing your emotions to take control.
Remember that what you need in a home tends to be much different from what you may want. For example, three bedrooms might be a need, whereas we may see a walk-in closet as more of a want. Hiring a real estate agent to help you focus on those needs can be a huge help.
How Can You Appeal to the Emotional Side of the Seller?
Although 99% of sellers may select the offer with the most profit, the other 1% of sellers could feel differently. Instead, it may be more enticing to find an offer that makes them feel like their place will be well taken care of or see an offer that suits their timeline.
There may also be scenarios in which there are two similar offers, making the difference negligible to the seller’s financial situation. In those cases, Ali says you could sway the seller by creating a personal connection.
“For the buyer, this may mean communicating a compelling story about why this is the perfect home for their family, writing a heartfelt letter, or even including photos of their young children,” says Ali.
“Is this a bit corny? Yes. But can this edge out the competition? Absolutely.”
If a seller has been in their home for a more extended period, they may have a different attachment to the property than someone who has been there for less time. If they are bound to make a profit regardless of the accepted offer, emotions can play a much more significant role in the process.
Final Thoughts
Ultimately, if you plan to buy a home in a seller’s market, that overwhelming experience may feel even more onerous. To make sure your focus is less emotionally fuelled, do your part to know the market, get to know what you want versus what you need in a home, and temper your expectations.
Ali says to remember that the price it may take to purchase a property may be an order of magnitude higher than the list price of that property. “Whether you are a buyer or seller, managing your expectations based on the objective data available is key to a successful real estate transaction.”
