North Fork: "Ask Zen." Why do People Buy What They Buy?
Episode 3, "Ask Zen." Why do People Buy What They Buy?
Episode 3 continues our conversation with Barry Novick, a leading NF realtor. In this interview, the third in the "Ask Zen" series, we are picking up with the subject, "Why People Buy What They Buy." Now that sounds interesting! Links to the first two episodes are below.
HB: You have 20+ years of experience in real estate on the North Fork. You MUST have insight into the purchase behaviors of buyers!
ZEN: You are right--after this number of years, I should have some insight into this question. While there are often surprises regarding the ultimate purchase, my experience has taught me that there are specific dynamics that drive a purchase, and that there are basically 5 different categories of buyers.
HB: Tell us!
ZEN: I find that residential real estate purchasers mainly fall into these categories:
Value, Real or Imagined.
Some buyers are driven by their perception of value, real or imagined. Real value pertains to components like quality of construction, fair price for square footage, location, etc.
Imagined Value is more of a form versus substance issue, so superficial finishes, updates, innovative, edgy design features that are added for their own sake, but not intrinsic to the design or construction; or an “upscale” house in a compromised location.
Must be a “Steal.”
This encompasses much of the “flip” mentality, and incorporates the essential ingredient of upside potential—real or perceived. The underlying premise of, “If I buy it, I will make a profit,” can have its challenges, as other variables are sometimes at play: changing marketing conditions, lack of real knowledge of a specific region or location within the region, or simply not doing sufficient “homework.”
The pragmatic buyer is looking at the numbers, looking for a fair value, evaluating the schools, distance from transportation, nearby beaches. This buyer is looking at the property to check off certain prerequisites, and either it does or it doesn’t. Not a lot of emotion here.
This is when a property pulls on a purchaser’s heart strings. It might be like the home they grew up in, similar to the home of a favorite relative, something they always wanted and strived for, the land is special. There are many aspects of a home that have potential to grab the emotional buyer. Often we hear, “It just feels like home.”
I Can’t Have It! I Must Have It!!
Nothing makes a home more desirable that other people wanting it… a lot. When another bidder is successful, or someone sees a home that is going to contract, while the lack of availability turns off some buyers, some are driven by others coveting the home. I have seen crazy numbers thrown at sellers as the result. Interestingly, sometimes the infatuation diminishes when their bid is accepted and the purchase becomes real.
Once in awhile, a beautiful, quality home in a good location comes on the market at fair value. And, all of the buyer types above collide in a frenzy of activity with several bona fide offers presented as soon as it is listed. While many people feel that this is “fun” for the realtor and seller, in most cases, surprisingly it is not!
HB: Wow. It sounds like you have thought about this a lot! Is there word of advice you would offer prospective purchasers, regardless of the buyer category they fall into?
ZEN: Real estate is an industry segment about which everyone feels they are an expert! The prevalence of real estate, remodeling, home design shows might be giving some prospective buyers a false sense of industry expertise, especially on the "micro market" level. In many locations, buyers go from open house to open house, and/or research homes online and make appointments to see houses they select from websites. This is not a "commercial" for realtors, but rather an observation about purchases I see. Sometimes these buyers are missing out on real values and potential savings that can be afforded by working with a professional broker. A local broker often has real knowledge that can add value to the home purchasing process--much more than just opening up the door for a viewing.
HB: Like Chip and Joanna Gaines?
Catch up on Previous Episodes:
The above interview is third in the series. If you have specific questions you would like to see answered in upcoming interviews, please let us know by clicking here.
Note from HB: This interview is intended to give an insider’s view of the North Fork real estate market, and is not intended to provide investment advice.