Constraints, expectations and real estate

One of my favorite shows on TV these days is (don’t laugh) the show Property Virgins on HGTV. In it, an experienced Realtor walks first-time home buyers through the house selection and offer process.

A lot of times the “let’s watch a couple pick a house” type shows highlight the inexperience of the buyers. Buyers tend to focus on the wrong thing, like paint colors or light fixtures, and gloss over things that are hard to change, like room layout. But the best part of the show happens right at the beginning, in a brilliant move to reset the usually unrealistic buyer expectations.

At the beginning of the show, the host asks the buyers a few key questions to identify both their budgetary constraints as well as their aspects of a home they most value. It could be location, layout, lot size, etc. But the buyers always have some sort of dollar amount they won’t go over.

The next step the Realtor does is rather brilliant – they take the first-time home buyers to a house that meets all of their aspects for an ideal home. It has the perfect layout, the perfect location, all the amenities they want, in the right condition, at the right size and so on. The buyers inevitably love this home, at which point the Realtor asks the buyers to guess how much the home costs. Also inevitably, the buyers are pretty far off the actual price, and inevitably their ideal home is typically at least double, if not triple or quadruple the buyers’ budget.

And inevitably, the buyers have sticker shock!

Talking buyers off the ledge

This fantastic approach accomplishes two important goals:

• Convey what perfection costs
• Force a prioritization

The host is never mean about showing the expensive house, but instead presents it as something to aspire towards. This also resets in the buyer’s minds that every house they see from there on out is going to have some subset of their valued aspects.

But instead of discouraging the first time home buyers, this approach tends to force them to focus on what is most important to them in a house.

Resetting expectations

We often have clients that are first-time software buyers, or first-time-with-someone-who-knows-what-they-are-actually-doing software buyers. A lot of what we do in the initial part of the project is framing the project for success. We look at everything the client wants, talk about scope and budget, then reset expectations back down to an attainable level.

What we don’t want to see happen are those buyers that look at dozens or even hundreds of homes looking for that house that checks every single checkbox and comes in at their budget. That house might exist, or it might not, but a lot of time can be wasted searching and searching.

Constraints force prioritization and hard decisions. Having an experienced guide (like that Realtor host) ensures that the buyer understands what’s feasible for their budget, as well as the guiding hand on helping to share experience on what things matter (the electric wiring needs replacing) or do not (the bedroom has shag carpet).

Delivering value is really only half the equation. It’s up to us as developers to make sure the buyer understands what they are getting for their money (or time), relative to what’s out there in the market. If you bought a house in isolation, it’s hard to know whether you’re getting taken to the cleaners. But by having frames of reference (Product XYZ is similar to yours, and took ABC man hours/dollars to build), we can center the conversation around “what’s most valuable to me” instead of “how can we squeeze everything in”.