4 Psychological Factors to Consider When Selling Your Property
by Guest on Jul 26, 2017
Since the early days of commerce, sellers have always been interested in what drives the behaviors of buyers. What makes people buy the way they do? What makes property hunters buy a home and then immediately regret their decision? Why do some purchases seem to occur more at certain times of the day?
Let’s start with the nature of the property market. Perhaps the biggest investment a person will make in their lifetime is a property purchase, either residential or commercial. The decision is always a big one because it’s not just a financial investment—it’s an emotional investment too.
In marketing psychology, buying can be categorized into low involvement and high involvement decision-making. It’s almost impossible to discuss a consumer’s buying behavior without accessing the level of involvement in a particular product. This refers to a customer’s degree of information processing and importance attached to a product before purchase.
When it comes to property purchase/investment, the buying decision is a high-involvement one. It requires deep insight and high-level research, knowledge of the market, and a sizable amount of capital. All these factors contribute to the buyer’s mindset when they consider investing in a piece of land or property.
There’s no doubt that property acquisition is an emotional buying decision. As social animals, concerns about social status are a high priority.
So, think about your target buyer. Does he/she want to buy the rundown auction property or would he/she rather buy new? Humans are emotionally tied to the things that they own and are therefore attracted to possessions that add to their psychological wealth, not just their monetary wealth.
Therefore, even when you get everything right with the physical structure and aesthetics of your property for sale, you should as well consider a few psychological factors that can influence the buying decision of your prospect.
1. Uncertainty about the future
This could also be called “fear”. Fear is a primitive brain function that overrides almost every other brain process. Fear tends to cause people to freeze—and it’s no different in the property investment arena. What’s the best breeding ground for fear? Uncertainty. A good example is the market performance since British Prime Minister Theresa May announced the triggering of article 50 on March 29th, 2017. Ever since the number of people moving home has dropped. Beginning with the announcement of the Brexit polls, we have seen a 9% drop from the same time in 2015.
In terms of the price of housing, London was most affected as the initial boom cooled off immediately due to a price decline. Property investors are currently halting their purchases to study the direction of the market post-Brexit.
Fear of market instability can, therefore, be listed as an important psychological factor in property decision-making.
2. Scarcity mentality
In psychology, this is a common concept much like that of economics. In this situation, buyers tend to place a higher value of scarce properties, while they place a lower value on those that are abundant. For instance, if there is a limited number of housing units for sale in Kensington, there is likely to be a rush for the remaining properties.
In some cases, buyers show a reduced price-sensitivity because they are more interested in acquiring that property at the moment. Scarcity affects buyer psychology, which is why some marketers create a “Hurry Now!” sense of urgency.
Conversely, when properties are abundant (increased supply), people are less driven to buy. This can affect the price, driving it upwards.
3. Emotional involvement
Emotional involvement is also an important aspect of property purchase. When people have an emotional attachment to a piece of property, it can cloud their bias towards making a cognitive decision. If a person grew up in an apartment complex or enjoyed drinking coffee at a café, they might make efforts to acquire it for the nostalgic and emotional resonance.
There are many stories of individuals and communities raising money to prevent their beloved pub or store from being acquired by corporate estate developers. It’s this type of emotional attachment that inspires certain buying decisions.
4. Herd mentality
It’s impossible to discuss property buying decisions without mentioning the effect of herd mentality. In psychology, this concept describes the power of social influence. It’s the same reason people would rather join a long line in a queue even when there is a short line available. Surely, all the other people can’t be wrong?
Herd mentality often occurs when people don’t have a strong individual opinion about the choices available to them. According to studies attempting to understand this human behavior, rather than asking questions or taking time to learn about the product, people often turned to “social default”.
In property investment, the same occurs to some extent. Property investors who don’t want to spend money or research a professional agency rely on investment decisions of the public.
However, this is an ill-advised thing to do seeing as there are various types of investors:
- Wealth investors
- Prestige investors
- Empire builders
- Lifestyle investors
Each type of investor is doing so for their reasons. It would, therefore, be wrong for a wealthy investor to make buying decisions because several lifestyle investors are doing the same.
Even first-time buyers have different motivations for their purchase decisions and this must be taken into account by any property investor.
Property acquisition is ideally a high-involvement buying decision. It not only requires significant research and information processing but substantial purchasing power. As psychology remains a key part of human behavior, we can’t afford to ignore its influences in the purchase behavior of prospective buyers, especially in high-involvement investments like the property market.
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