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Playing on Your Emotions

I hate how so much of the real estate industry likes to play on your emotions as an investor. They create a sense of urgency when the market is going up and out of control to ensure you don't "miss out". All the while, "urgency" is inflating values. That sucks.

But, they do it again by taking you on bus tours to view homes being lost in foreclosure so you feel a sense of urgency to "buy now" while you're surrounded by other buyers.

Be smart about what you allow salesman to do to manipulate you. As an investor, you want facts. Emotions must be laid to the side.

Posted by Derek Guyer on 03/28/2008 01:53 PM

Comments (6)

real estate, foreclosures, emotions, buyer, sales, urgent, investing, inflation, value

6 Comments on Playing on Your Emotions

MAR

2008

Hi Derek!

I have a different opinion about the tours. I just finished up a tour in the Sacramento (CA) area that was specifically for investors. To be honest the point of the tour was not to sell homes. I know that must seem crazy to you! Our intention was to get folks out into the streets so they could realize there are deals out there right now! Many of our clients are sitting on the sidelines waiting for the absolute bottom of the market. Our job with the tour was to show them how much prices have come down and cashflow is a reality in certain areas of our town.

The fact of the matter is we did write offers that day, but what was most important to us was to educate prospective clients on what they should be looking for in our market! We feel we acheived our goal in that the bus was filled with folks excited about buying area investments.

Erin

MAR

2008

Erin, thanks for reading and for sharing your side of it. I don't disagree that good can come from educating the investors and am glad to know you spent time doing that for them. I'll be honest that it's hard for me to believe the intention of the bus tours isn't for selling homes, as you make your money by selling homes. I don't doubt for one second that you do desire to educate them on the market and I applaud you for it. But as you said, you achieved your goal "in that the bus in that the bus was filled with folks excited about buying area investments."

I agree Erin. Many new investors are tire-kickers. Tours give them a feel of inclusion. And hopefully, you can formulate relationships with them early on in their investment careers.

As for the raised sense of urgency- We are emotional buyers. Of course you want to display all of the facts but there is an emotional aspect to the buying and selling of property.

MAR

2008

Interesting observation, I am curious did anyone actually decide to purchase or were they all as cautious?

Derek,

First rule of investing...don't get emotionally attached. If the numbers don't work on paper, then don't bother even looking at the house. Back in 1996-97, we used to send out 5-10 offers to purchase each day, sight unseen. Owner financing in our area was common, then and it was the favorable way to go. If we could get the financing we wanted, to make the numbers work, then we looked at the property (our offer stated it was contingent on seeing the property). Then we would proceed ahead.

Why bother looking at a bunch of houses that you can't buy or that don't make sense from an investment standpoint anyway? Back then we bought about 15 houses that way.

Now, since the market has changed so much, and there are foreclosures, some with extensive repairs necessary, we have to get out there and look at the condition. We still analyze the numbers first, and if it doesn't look good on paper, we don't bother.

Have been buying, selling and renting houses ever since.

Don't ever fall in love with a property, because as you know, you make your money when you buy, not when you sell.

In real estate investing...look to see what everyone else is doing...and do the opposite!

Happy Investing!

Sandy, you are the real deal. That's exactly what I'm talking about. Emotions have no place in real estate investing or buying decisions in general. That's how we incur debt, not assets.

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