How Open Houses Reflect Emotions at Play in Real Estate

RISMEDIA, Oct. 20, 2008-(MCT)-Fear is a powerful motivator. It can drive banks to failure, nations to war and people watching their growing waistlines to put down that third slice of pizza.

Extreme fear, mixed with hope, was behind recent manic gyrations in the world’s stock markets.

Hope also is a powerful motivator.

To think, the financial crisis gripping us today started when people imbued with hope purchased homes they could not afford. That misplaced emotion led to a massive housing market bubble.

With the bubble bursting before our eyes, what emotions are at play now in the housing market?

Last Sunday, I drove around to open houses in search for answers.

“I’ve been doing this for 33 years,” said Realtor Gentil Smith, as we both stood in the kitchen of a Torrance house she hoped to sell. “This is the first time I’ve seen such a somber mood.”

Wearing a deceptively cheery Halloween-themed pirate skull belt buckle, Smith said she had noticed this dour state of mind when meeting with fellow Realtors.

“It’s not bad, it’s just serious and somber,” Smith elaborated. “You don’t open your office door Monday morning with seven offers like you used to a few years ago.”

A block over, Realtor Mary Woerner hosted another open house.

“It’s a buyer’s market, and a year ago it was a seller’s market,” Woerner said.

She noted that advantage in the industry fluctuates between those two groups.

As a result, buyers and sellers often deal with different emotions depending on which way the pendulum is swinging.

“Buyers are afraid to buy because they think prices are going to go down more,” said Woerner, who entered the industry in its heyday five years ago. “And sellers are really angry. They’re like, ‘Well, my neighbor got $100,000 more for their house a year ago. Why can’t I get that?”‘

By contrast, a year ago, it was buyers who were “really angry because prices were so high,” Woerner noted.

While afraid to purchase too soon, prospective home buyers who do make a bid on a home become “very cocky,” Woerner said.

“They come in with low-ball offers and they ask for everything,” she said. “They want everything fixed, and they expect a low price because they figure if you’re selling in this market you must be desperate.”

Desperation, of course, is another powerful motivator.

Amid financial chaos and the volatility of world stock markets, it is puzzling, yet somehow reassuring, that the most powerful forces controlling our economic destiny happen to be our own emotions.