The psychology of the buyer

Buyers are our missing links to the completion of any real estate deal and they played are an important part of any realtors’ career. Since they are of such importance in our career, it will definitely help us all to learn how they “tick.” Before you get any further reading this post, please keep in mind that this paper is to help realtors better understand the psych of the buyer and is not providing any methods to be employed to create a fictional relationship to lure buyers to jump onto the wagon instead of real commitment.

I believe many of us are familiar with the term “buyer’s remorse” and this is what we should be preventing your clients from experiencing. Buying a property is usually the biggest investment among most Singaporean and with the recent cooling measures in place, and this make our role as realtor more important – to ensure that our clients purchase the correct property, be it for investment or own stay. In short, we are out to make buyers happy about their purchase.

The most crucial take-away from this article will be “people do not like to be sold; but they like to buy.” Simply put, free will buying. Many might refute by saying that sometimes the buyers do not know what they want and if they were to continue to window shop, this opportunity might not be there by the time they make their decision. We, as the realtor, should intervene when necessary to make sure the opportunity is not lost and our buyers will not regret in the future. As logical as this may sounds, a large portion of this argument actually falls on the realtor’s notion, which is to close the deal as soon as possible and move on. As the present market buyers are mostly as well informed as us, thanks to the ease of information on the internet and many other sources, what gives us the rights to decide? Let’s say that we are right and the buyer had missed the boat, will he be a happy buyer when he was compelled to buy at that instance?

To clarify the situation, I am not saying that we should allow all our buyers to start window shop, take their time for decision and so on. Remember, we all worked on commission and if our role is simply bringing the buyer to the properties without any recommendations, we are not exactly that useful. The question is how to make the potential buyer become a happy buyer? And the difficult task is how to balance a salesperson’s urge to just close the deal with the “happy buyer” concept so that we know we can sleep better at night?

Needs versus wants – The essential question. Without the knowledge of this about your buyer, you cannot really start the search or execute the necessary recommendations. You would have to agree that a newlywed couple looking for their dream home will have to be treated very much different from a businessman with the intention to buy his 3rd property for investment. This is the fundamental question that you should place on your buyers during the initial phase. With this answered, further questions such as urgency, area of search, size of unit and so on can be better put into context. This will help create your layers of empathy as you progress.

We all buy from someone we like. We all share this similar experience whereby despite the fact that you wanted a certain product, but as the salesperson was not exactly someone you like (maybe because of the bad attitude he had shown or his messed up outlook) you did not buy the product from him but later purchase the similar product from someone more pleasant to your eyes just a few units down the street. Sounds familiar? This is because we all want to buy from someone we like – it is that simple. Now the question is how to we make that connection?

Be interested in your buyer’s needs/wants. You need to be interested in your buyer, wholesale. Show to him that you care about his needs/wants and is willing to listen and thereafter hunt down his ideal unit for him. The fact that most of the buyers can in fact easily tell at an instant whether you are interested in his requirements and constraints make this even tougher. Thus, the advice is to be genuine, listen more and talk less. The old school method of hard selling is gradually losing her stand in today’s time. Coupled with vast amount of information easily available on the internet, this makes no one or products irreplaceable.

Be a professional realtor. Simple as this may sounds, many do not know what this entice. This bring us to our most valuable point – be interested in what you do. How many a times do you find yourself not in line with the latest property development only to find yourself saying “I will find out more” or “I do not know this” throughout a short 20 minutes viewing session with the buyer? If you are not even interested in your own field, how can the buyer trust your recommendations and advice?

Try some of these advices on your clients. You will be surprised how such simple common knowledge can actually make an impact. Remember, sometimes it is not about thinking outside the box, it’s about what is in the box – in this case is what is in your box. Always fall back on fundamentals and should more or less be on track.

Seeing 2011

What has 2010 been for the Singapore Residential Property Market?


2010 has been the period whereby some important policies had been introduced to the Singapore’s property market. The most significant being measures to curb the property fever. Known to many, Singapore’s overall property market has always been following Hong Kong closely. Similar to Hong Kong, Singapore is also seen as one of the best property investments in Asia with good capital appreciation potential in 2011 of about 10-20%. In 2010, both government bodies had introduced various policy to prevent the any bubbles forming, such as the 15% stamp duty fee for any properties sold within 6 months of purchase and a 50% down payment for properties S$2 millions and above in Hong Kong. And in Singapore, similar effective measures are taken, such as reducing the maximum bank loan from 80% to 70% for properties purchased after the first and also the implementation of up to 3% stamp duty for properties sold within 1 year of purchase.

Despite the new cooling measures setting in, the market seems to had only slightly shifted. With still many strong buys, especially foreigners and Permanent Residences snapping up one in three private properties in November 2010 and at new price peak. This is where the second most significant event for Singapore’s property market steps in – the regulation of the property agencies. A new body, Council of Estate Agencies (CEA), has been set up to regulate property brokers in Singapore during the second half of 2010 to ensure that all brokers to be licensed by 2011. This is very much similar to the insurance market some years back, which provides more transparency. This is definitely a sound measure as the barrier to entry is now greater and chances of brokers committing fraud will be expected to be much lower as their licences are at stake, with a fairer play in the market.


Hold on tight, 2011 is just by the corner.

The number one question that comes to investors will always be “How will the market be like react next?”

The property market goes through a continuous series of highs and low, with occasional unforeseen plunges or hike, like the financial crisis in 2008. Many often talk about how some periods are “perfect” opportunity to either sell or buy – this is an urban myth. There will never be a “perfect” time. Buying at the bottom and selling at the peak of the market is often by chance. But this does not mean that one should start buying or selling without considerations. Every piece of information is a guide and so is this article.

Every market move through a standard form of pattern, and chances are that they will replicate history. For 2011, it is advisable to start monitoring the happenings in Hong Kong. With the new measures and prices, real estate might be slowly losing its edge to more liquid assets, such as equities. Return on investment, though is higher for the estate segment, takes relative longer period to yield, especially the high end markets. This will be particularly obvious during 1Q 2011 when fund managers and equities brokers return from their year-end extended breaks.

However, with the current interest rates at all times low, it is still attractive to grab a piece of the pie, especially non-TOP projects. This phenomenon tops the property market towards the end of 2010 with attention mainly at new launches. How will this affect the entire market? Not so much for 1H 2011 but more towards 2H 2011, with as much as 150% more projects expected to be TOP in year 2012 and 2013. This sudden surge of supply as compared to 2010 and 2011 will inevitability slide the buying fever.

Are we looking at the bubble bursting? Odds are low. To put in proper terms, there is no bubble to start off. While many see today’s property market as start of a bubble, they are overly focused on the speculative fragment. The property market can be divided into two main sectors – the home-owners, people who buys for the purpose of own stay, and investors. And within the investors, there are the long terms, short terms, capital-focused and yield-focused investors. In the event that the buying fever was to slide as predicted but if the interest rate remains attractive for 2011 as it is for 2009 or 2010, the impact might still be cushioned with investors still having a reasonable holding power. This will leave us with a portion of the market that will be affected – the speculators which make up roughly 15% of the entire Singapore market.

Year 2011 will be an exciting year with some minor corrections expected towards the latter half of the year. With the cooling measures fully set in, we can expect to see more stable transaction volume and prices with speculators reducing their holdings in the market.