Ignore the Noise - Focus on the Decision

With so much noise today about the direction of markets, what the Federal Reserve is going to do, how various asset classes are going to respond, what government is jamming its fingers into, etc., it can be very easy to slip into a state of Paralysis by Analysis. Anyone who knows me knows very well that I can quite easily suffer from this crippling condition and, when inflicted, it can be tremendously difficult to overcome. On one hand, you will not feel comfortable making a decision without all of the information. On the other, you know you will never have all the information, yet you feel an overwhelming compulsion to model and study what you have. What happens next is nothing less of mental gridlock.

This position is where many find themselves today. Between social media and traditional media, there is little opportunity to escape from the noise, which creates very little time for us to digest what we have heard and make a sound and rationed decision.

Within real estate markets, interest rates, pricing trajectory, and available inventory are daily worries. As a practitioner, we have become so accustomed to running from fire to fire, we can sometimes forget how daunting the thought of buying or selling real estate can be to the average consumer. My advice today, in consideration of all the noise and distractions, is to just calm down and focus on a few fundamental questions.

1. What decision(s) are we trying to make?
2. Why are we making The Decision(s)?
3. Do we need the result, or do we want the result?

1. The Decision: Are we trying to sell, buy, or lease? Those are the primary decisions we are trying to make. Often, in an effort to let the consumer know that they are being heard and understood, we will listen to worries about all of the minutiae decisions that have to be made with moving, staging, packing, cleaning, painting, etc. without productively directing the conversation back to the primary decision. Our role is to keep the ball moving down the field in the spirit of the client having made an informed decision that is in their best interests. Our efforts as a real estate practitioner should be focused on triage. We must tackle the immediate issue and take the rest with us, solving those problems as they become relevant and needed. All the ancillary decisions will need to be made anyway, so why let them all bubble up right out of the gate? Control the conversation, control the direction, control the outcome.
   
   
2. The Why: It is very easy to let external information creep into what would otherwise be a controlled environment. In our day-to-day real estate practice, we are generally counseling individuals whether now is the right time to sell, buy, or lease and for what amount we should commit to those decisions. In a vacuum this is very easy. We have information, we filter information, we make a decision. In the real world, we have a hyper-competitive market, several layers of expectations to meet, someone’s overprotective father, annoying sister, real estate expert uncle, or, worse yet, another real estate practitioner telling the consumer they know better. All of this, when viewed through the lens of the consumer, can call into question why they are making The Decision. These overwhelming feelings can be so extreme they stop all of the noise and retreat, ending the conversation and removing themselves from the process.   
   
   We can prevent this from happening by reminding the client at all stages of the conversation of why they are making The Decision. If The Decision is rooted in reason and action, the continued why should be self-evident to the practitioner. Continue to remind all parties of why The Decision was made, why the benefit is worth the process, why the end will justify the means, and most importantly, why they should trust the practitioner to handle the process and alleviate much of the stress and burden that comes from the mechanisms of the transaction.

1. The Want vs. Need: Interwoven with 1 & 2 is the need. Is The Decision made because someone wants something, or because they need something? A “want” product is very different from a “need” product. The Decision itself and the value that comes from The Decision is remarkably different between the two.
   
   1. The Want: If the real estate decision is being made because someone wants something rather than needing something, the trajectory of that transaction can swing tremendously at whim. Want tends to be quantified through the lens of alternative and/or substitution. Where else can I/the consumer find “X?” What else offers “Y?” These questions are very important to both quantify and qualify The Decision.
      
      Because a need is not the driver of The Decision, we must remain objective about the value The Want provides. Value can be quantified both in terms of financial gain and market position as well as quality of life. After making The Decision, a strict study of The Why will provide both the consumer, whether buyer or seller, and the practitioner with the insight needed to identify pain points, objections, deal makers, and deal killers. Objectivity is the key here.
      
      
   2. The Need: Needing to buy or sell real estate is a vastly more impactful scenario than wanting real estate. Housing and shelter are a core element of safety and security, both physically and mentally. It is also the largest store of wealth for the average family. Today, needing to sell is not so complicated a conversation. Saving for the challenges inherent to any transaction and the issues addressed after engaging a skilled real estate practitioner, only the unique, very highly valued, or distressed property will likely carry with it extraordinary transaction stress or risk to the seller. Buying, on the other hand, is a completely different story.
      
      In addition to the normal course of business transaction risk, with today’s market verging on lunacy, needing real estate can be a very complicated and stressful position for a buyer. It is not uncommon today for the average buyer to pay above asking price, waive various contingencies, and compete with multiple buyers for the same property. In these scenarios, the real estate practitioner must measure all the information provided by the buyer related to timing, pricing, property type, etc. and then inform the buyer of their position’s likelihood within any one of these hyper-competitive scenarios. When confronted with this level of stress or illogical approach to market conditions, a real estate practitioner and buyer alike must remember The Decision, The Why, and The Need. If any given transaction is impossible to consummate due to unrealistic expectations, changing course and moving on to another potential opportunity is ok. It may be the only solution and a fair response to unreasonable expectations. If transaction conditions are unreasonable in the context of a balanced market, but a buyer is able to perform and they need the property, putting aside the stress component and resolving to accomplishing The Need is a fair consideration. At the end of the day, The Need must be met. If that means ignoring the noise and unreasonable conditions of the current market, frustrating as that may feel, the buyer will still be in the winning position. There will likely be several other buyers who were not as fortunate and are clamoring for a piece of the ever-dwindling inventory pool.

Both the consumer and real estate practitioner alike are today being pushed beyond the customary pain points of a balanced market. Trying as we may find it all, as practitioners, the messaging we communicate to consumers must be balanced, communicate all of the variables, and consider the risk alternatives of changing direction. Ignoring broad noise and focusing on The Decision, The Why, and either The Want or The Need will guide all parties in the right direction, wherever that may lead.    

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