Real Estate with Diane Saatchi: Buyers Are from Mars, Sellers Are from Venus

When there’s news in the economic or real estate market, buyers and sellers hear it differently.

For instance, let’s say interest rates are going up.

Buyers: “Prices are going to come down! It’s going to cost more for people to own houses — so the seller should lower the price, because we’re not going to pay more when interest rates are rising.”

Sellers: “There’s going to be a flood of buyers in the market now! People will want to buy homes before the rates get any higher.”

Or, let’s say there’s a significant drop in the stock market:

Buyers: “I lost so much in the stock market, I have less to spend on a house.” Or, “it’s a good time to invest in stocks, so I will have less available to spend on a house.”

Sellers: “I took such a hit in the stock market, I need to net more on the sale of my house.”

Same news, different reactions. It’s not that different from political partisanship, where opposing parties interpret the same information differently, because they have different perspectives. They both draw different conclusions, with a rationale that seems to make sense.

If somebody is both a buyer and a seller in the same market, they still have the same disparate views: Their dollar, they think, will buy more than the next guy’s dollar. I often have to remind customers in this position that if both trades are in the same market, they’re buying low, they’re going to sell low as well.

Because buyers and sellers have different goals surrounding the same property (buyers want to pay as little as possible, sellers want to realize as much as possible on the sale), they also tend to come to the deal with a similar message that counterintuitively puts them at cross-purposes: They don’t have much riding on this deal. They can wait for a better one.

We’ll often get a listing and the seller will say, “I don’t need to sell. I’m not in a rush. I need to net this much. I have all the time in the world.” That’s how it begins.

On the other end, the buyer begins with, “Well, we just started looking. We can rent another year. We don’t have to buy.”

Neither party wants to imply that they might be willing to compromise, in hopes of getting a better deal. From the broker’s point of view, then, why are you here? It is not easy to buy or sell a house. It takes time and it can be inconvenient. You have to really want it. You have to be willing to jump over all of the obstacles that come with purchasing real estate.

It’s the same thing for selling: It’s not easy to sell a house. You have to price it right, you have to get it ready, you have to put up with potential buyers’ and brokers’ schedules, have open houses, have to keep the house tidy, lawn mowed, etc. Both parties have to be motivated to do it, and the broker must match someone willing to work hard to buy with someone willing to work hard to sell.