As part of our due diligence when talking to potential clients, we engage in a series of qualifying questions to ensure that we aren’t wasting anyone’s time by taking on buyers who are unrealistic or unprepared. Though some buyers may believe they’re ready and committed to purchase, this can be far from the truth. As part of our initial interview, one of our questions is “How long have you been searching?” If the response is more than 12 months, the warning bell sounds and I dig a little further. In most cases, buyers have been looking “on and off” over a period a time, or their definition of “looking” has only been restricted to surfing Domain and RealEstate- hardly definitive research to build up knowledge of an area and it’s values. At least wearing out some shoe leather to attend opens and auctions is a start, if nothing else, and a necessary part of any serious property search. After all, we all know how different the pretty ads can be in reality!
However, every now and then a buyer who has been searching for a longer period of time approaches us, hoping that we can find something that they haven’t been able to. Our second question then is “Why do you believe you haven’t found something during this period of x months/years?” The response to this can be extremely telling, and really provide an insight into the type of buyer we are talking to. After all, despite their best intentions, not every purchaser is a committed buyer and we need to find out why before beginning a detailed search on their behalf, or not.
Unfortunately, some buyers simply cannot make a decision as they fall into the trap of over-analysing everything. We have only had a few buyers throughout the years whom, sadly, we were unable to help, despite our best efforts to do so. Interestingly, these have predominantly been home buyers who simply couldn’t make a decision as the “ideal property” didn’t arise during our search. It can be a very frustrating process if you are an inflexible or unrealistic buyer, unwilling to make simple modifications or allowances for the perfect home. As we all know, the perfect house is often a Utopia, especially for those buyers on limited budgets or searching in restricted areas. Most of us enjoy putting our own “stamp” on our home, no matter how small, so it’s important to remain open when searching, and view alternative possibilities as well as striving for perfection.
Investors can also suffer from analysis paralysis, as they can become so caught up in pinpointing the “perfect location” that they can let buying opportunities pass them by. Whilst it’s fine to concentrate on criteria such as minimum rental yield, proximity to preferred amenities (such as transport, shops, schools) and position of property, the age-old goal of buying a property in a suburb with potential for great capital growth is certainly something all of us, as investors, strive for. However, none of us have a crystal ball and whilst it’s fine to draw educated conclusions on factors such as historical growth, demand/supply figures for a particular area as well as infrastructure and development updates there is no such thing as a guaranteed return when it comes to property. We all know this. Investors who are smart enough to understand this, and yet are still willing to take risks, eventually make a buying decision, secure in the knowledge that there is no one perfect suburb or type of residential investment. Buying well entails research, but not to the nth degree that analysis results in information overload and indecision.
As a recent example, I had an interesting conversation with a former client a few weeks ago, who was referring a colleague to our BA services. When I requested further information about the buyer, I was told she had been “embarking on analytical research for a period of time but couldn’t come to a definite decision on what or where to buy”. However, when I asked how long she’d been researching the response was, “About 5 years”….
Now that’s what I call analysis paralysis overkill. It also turns out that this particular lady had contacted four financial planners and about fifteen buyers’ agents as part of her “research” and was none the wiser…. oh dear.