Recently I ordered a bowl of black bean soup for lunch. The server returned from the kitchen and said they were out of black bean soup. I told her I would have tomato soup. After she wrote it down, I changed my mind and ordered a Caesar salad.
Did I lie to the server? No. I did what most home buyers do. I compromised.
If your prospective buyers tell you they want a three-bedroom, two-bath resale home, but purchase a new four-bedroom, three-bath residence, did they lie to you?
No, of course not. Seriously — why would any buyer purposely lie about they want to purchase?
Buyers are not liars. They are compromisers.
According to research conducted by the National Association of Realtors, 67 percent of buyers compromise before purchasing a home (NAR’s 2012 Profile of Home Buyers and Sellers).
If this is true, then a longstanding attitude about "needs assessment" must change from what prospects want in a home to what they THINK they want and need, does it not?
If two out of three of my buyer prospects will compromise what they told me during the qualifying process, I need to become acutely aware of "compromise" issues so I can change my showing schedule or my normal way of doing business, as shown in these two case studies.
Case Study No. 1 (Closed in December 2012)
Here’s an example of how a couple with different wants and needs compromised, and ended up in a home that wasn’t exactly what they’d envisioned when they started looking.
He wanted a new home like the one he’d found on the Internet in a gated community. He was eager to move out of what he considered a deteriorating neighborhood. In addition, he needed a private office for his part time video business.
She did not really want to move from their home, which they had lived in for more than 20 years and owned free and clear. But if they did move, she was taking the oversized desk that she never used. She thought looking at resales was a good idea. But, they never did see one.
The new homes they liked did not pass the "room for the desk" test. So we took the desk measurements to a new home builder. If the builder could make the right adjustments to fit the desk into the model home they liked, they’d have a sale. Within days, all of us were sitting in the new homes sales office looking at modifications to the floor plan that would provide more than enough space for the desk.
He gave up a few feet of his video production area, but it worked. They moved into their new home on Dec. 27. The community did not have a gated entrance, and they purchased from a builder they had not shopped on the Internet, and they paid about $25,000 more than they had planned, using the builder’s mortgage company instead of paying cash.
They went through a difficult, stressful home buying process, compromising on just about everything important. They never lied to me one time.
Yes, I had to wait for my commission because it was preconstruction. But it still made for a nice Christmas, as opposed to getting the "We have decided to wait" phone call, and not getting paid at all.
Case Study No. 2
In March, I wrote a column about a Realtor who listened intently to a couple looking to buy a short sale property. The couple realized that every short sale the Realtor showed them would require an expensive remodeling job. The couple’s indecision over the course of several weeks was testing the Realtor’s patience.
The agent was going on vacation, and suggested that the couple look at new homes while she was away. There were new homes in the market for the same money they would have put into the short sale, after renovating it.
The prospects agreed. The agent set the appointments, and while she was on vacation she stayed in touch with her prospects and the new homes consultants. The couple bought a new home from a builder recommended by the agent.
The couple never lied to the agent. They made a major compromise going from short sale to new home after learning that for them, "new" was a better solution. This is why we are in business.
The agent earned a commission for a sale that might otherwise have been lost, and her happy buyers thanked her profusely at the closing.
In both cases, there was plenty of negotiating going on with both couples, but not with the agent. They were negotiating compromises with each other — sometimes in front of the agent, and sometimes in private.
Addressing compromises puts a premium on your ability to relate what you are hearing to your knowledge of inventory that will meet their needs.
According to the NAR study, here are the most likely areas your buyers will compromise and to what degree they will do so.
- Price of home (18 percent)
- Size of home (16 percent)
- Condition of home (16 percent)
- Lot size (13 percent)
- Style of home (12 percent)
- Distance from job (12 percent)
- Distance from friend or family (6 percent)
- Quality of the neighborhood (5 percent)
- Quality of the schools (3 percent)
- Distance from schools (2 percent)
- None — made no compromises (37 percent)
- Other compromises not listed (8 percent)
Source: Exhibits 2-27, 2-28,2-29, NAR 2012 Profile of Home Buyers and Sellers.
Most buyers will compromise when buying a home. At least we better hope they will, if we cannot show them exactly what they said they wanted in the first place.
It’s no different than compromising on a menu choice at a restaurant when you find that what you wanted is too expensive, unavailable, or that something better has showed up on the menu.
Compromise training, anyone?