Thursday, March 3, 2011

Decisions, Decisions!

On one of those rare occasions (hah!) when I can't sleep in the middle of the night, I read Newsweek from cover to cover. The article that stayed with me in the morning was "I Can't Think!" You can find it at for March 7th. Or just search for "The Science of Making Decisions" and the article by Sharon Begley comes right up.

The basic premise is that there is just too much information out there right now and that information prevents not only good decision-making but hampers any decision-making. How this relates to real estate is so very simple and so obvious that I see it daily.

In the olden days, say 2005 and before, a buyer would contact me and give me his/her criteria for a house. I would probe a bit deeper - what is important, how long will you stay, what is the current status of finances, needs...and then I'd go looking. After listening, I would pull up 5 or 6 houses and we'd see them. Generally within two searches the house would appear that was "perfect" or close enough and an offer would be made. The important part was the listening, I always thought - and still do to a certain extent.

Aiding and abetting this process was the knowledge that there were few houses that met the initial criteria, at least around Skaneateles. In a single day we could see all the 4 bedroom, 2.5 bath homes (and usually we had to go to the 1 bath homes, as most of you know) in the village or close to it. Always there was the fear that if the buyer didn't buy, someone else would...and generally did. Homes sat on the market for maybe three months. Maybe.

Then the world changed. Information became plentiful via the internet - thank you Zillow and all the other outlets. At first it seemed as if this was a good thing - hey - the more information you can give an engineer, the better, right? Well, maybe.

Options also opened up. Instead of just existing homes, now there were the "to be builts" or the lots available without a specific builder. The numbers grew exponentially. Showings became compartmentalized: one day for existing, older homes, another for under construction, a third for build your own. As homes came on the market, the initial tour became three days of existing homes.

Begley's article states that people can hold in their memory roughly 7 numbers, as in the 7 digit phone number. I think this can apply to real estate as well - 7 homes at the very most in one day - more and all is lost. "Was that the one with the fireplace?" "What was the floor in the kitchen?" and often "Gee, I don't remember that one at all!" It happens!

"It is easier," states Joanne Cantor, author of Conquer Cyber Overload, "to look for more and more information than sit back and think about how it all fits together." And that's what buyers do.

Until they get scared that nothing will work, and they hurriedly make a choice. Generally, the researchers assert, this choice is less appropriate and meets fewer needs than the others available. Even if they like the choice, the amount of information still out there creates anxiety that this was not the best choice.

Enter the unconscious! In several experiments, the researchers showed that if the subjects did not engage their critical brain, they made good choices. They "fell in love" as we like to say, rather than opted for the facts. One of the more fun experiments cited by the article had people researching strawberry jam to such an extent they ended up choosing the jam that didn't taste good but looked the best on paper. There is something wrong here when that happens....

In the past few years I have experienced clients who both overwork the information or ignore it, and all points in-between. When I think of the people who bought after months and months of searching (and information-gathering) and the people who took the first house they saw because they fell in love, I have to say that both groups are pleased with their decisions still to this day. And that is my job, or part of it after all - to find good homes for my clients - however long it takes!