The Psychology of Buyers

• Maslow’s Hierarchy Of Needs
• The Buying Process
• Types Of Buyers
• Consumer Behaviour Influences

Have you ever wondered what your clients are thinking during their property purchase journey?

Knowledge of buyer’s behaviour is important in any sales field – real estate is no different. Buying behaviour of customers across industries is different; understanding your customers buying behaviours will help you plan how to sell to them.

No matter where you are in your real estate career, this article will give you valuable insights into property seekers’ motivation, needs and habits. You can also register for a workshop on this topic at Bayut Academy, our in-house training series for real estate professionals.

Before we delve into understanding the average real estate buyer’s thought process, let’s take a look at the big picture and understand human needs using Maslow’s Hierarchy of Needs.

Maslow’s Hierarchy Of Needs

This psychological tool is used to show the priority of different human needs. This pyramid of needs is divided into five categories, which are achieved in a hierarchical order starting with our basic needs.

• Physiological Needs: These are the basic needs for survival, such as air, food, shelter, and water. It is the driving force behind good property infrastructure because we as humans need access to resources to survive. At this very basic level, a house has the core purpose of functioning as ‘shelter’
• Safety Needs: Next, we move on to satisfying our need for security and stability. This includes your emotional stability, good health, a secure home and your overall well being. In real estate, this translates to clients looking for safer neighbourhoods, gated communities with security/surveillance, etc.
• Love And Belonging: Moving up the pyramid is our need for love and belongingness. This relates to our desire to have connections and support systems. Factors such as family bonds, friends and social circles all play a role at this level.
  Property seekers may want to live close to their friends, upgrade to a bigger place to start a family or live close to their hobbies and interests
• Esteem: Our higher-level demands begin with self-esteem needs. As humans, we want to feel valued and respected by our peers. In Maslow’s hierarchy of needs, our esteem comes from the respect we get from others as well as our self-esteem. At this level, you can find clients seeking upgrades, investors with large portfolios or anyone looking for their dream property.
• Self-actualisation: The top of the pyramid focuses on fulfilling your full potential as a human being. This stage is vastly different for each individual; some people may see self-actualisation in buying a large luxury property, some may buy an office to start a non-profit, some may even decide to downsize or move away from the city and focus on spending time with their family and friends.

In real estate, these needs can help us understand a client’s motivation behind looking for property. For example, someone at the safety stage may be looking for security and stability in the form of a gated community whereas a couple at the love and belonging stage may be looking for a place to raise their kids within a community tied to family and friends.   

The Buying Process

• Need Recognition: Any purchase begins with recognising a need. If you’re walking down the street and start feeling thirsty, that’s you recognising the need to get a beverage. Similarly, property seekers have various needs, they may be looking to start investing, upsize, downsize, buy their first home, etc. The possibilities are endless.
• Information Search: Once you recognise a need, the next step is to look for information. This can be doing a Google search on popular areas, looking at listings on Bayut or getting recommendations from friends and family.
• Explore Options: This is when customers start arranging viewings and exploring different areas. They will be making key decisions about their requirements, such as the number of bedrooms they want and the type of property they prefer.
• Evaluation of Alternatives: At this stage, the buyer has already viewed several options that suit their interests and is now ready to choose their ideal property. This is done through critical evaluation based on various factors such as quality, price, and availability.
• Purchase Decision: Here, the property seeker decides to go forward with the purchase. This is when they arrange funds, apply for a mortgage, and execute paperwork.
• Post Purchase Evaluation: In this last stage of the buying process, the property seeker evaluates their purchase decision. This is a key stage as it is the perfect time to request for referrals and testimonials.

Types Of Buyers

• Savers: These are budget conscious buyers who tend to do heavy research before making a purchase. They usually have firm expectations about costs and may resist the urge to spend money. Savers make up 24 per cent of the market.
• Spendthrifts: This category of buyers spend freely and indulge in various purchases. They are not price sensitive and are usually driven by emotion. While the spendthrifts are any salespersons’ dream customer, they account for only 15 per cent of the market
• Average Spenders: Average Spenders accounts for the majority of buyers in the market. They tend to have planned budgets, save well in advance and tend to make decisions slowly. They carefully consider a product’s features and the value it provides and are heavily influenced by facts and data.

When looking at the types of buyers, do keep in mind that income level has no connection with the type of buyer an individual is. There can be extremely wealthy savers and spendthrifts with an average income.

Activity Time!

Read up on the three buyer personas from below. Take a minute to map out the type of buyer they are and the strategies to sell to them. You can refer to the word bank for reference.

Here are some tips to keep in mind when selling to each style:

Spendthrifts	Savers	Average Spenders
Spendthrifts Tap into the buyers’ emotions	Savers Be straightforward, honest, and precise	Average Spenders Create a balance between price and quality
Spendthrifts Highlight the unique features of the property	Savers Support your points with data	Average Spenders Overcome client fears using warranties/guarantees
Spendthrifts Leverage marketing	Savers Highlight value for money	Average Spenders Don’t be afraid to ask for the close

Types Of Buying Behaviour

There are four types of buying behaviours, that vary based on the amount of research involved with the purchase

It is important to note that real estate falls under the complex buying category and requires extensive research. This is because it is a long-term investment and involves a large amount of money. It can be very stressful to take out a long loan, which is why buying property is usually a long and slow decision-making process.

Factors Influencing Consumer Behaviour

• Cultural and Social Factors: This includes an individual’s cultural background, social groups, values and beliefs. In a multicultural city like Dubai, you need to learn how to communicate with different cultures and nationalities
• Personal Factors: Factors such as age, occupation, personality, and lifestyle can easily influence consumer behaviour. A 30-year-old first-time home buyer is much more likely to take out a mortgage compared to a 60-year-old buyer looking for a retirement home
• Psychological Factors: Psychology boils down to an individual’s intentions, motivation, and attitudes. Everyone has a different motive behind buying property; as a real estate agent; you need to adjust your selling style based on your clients’ personal needs and motivation.
• Economic Factors: This includes elements such as the individual’s personal income, family income and standard of living.

The Science Behind Decision-Making

There are two types of trust: Connection and Credibility.

When we say connection, we mean:

• People buy from people they trust.
• And they trust people they like.
• And they like people they know.

When we say credibility, we mean:

• People buy from people they trust
• And they trust people they respect
• And they respect

When talking with clients, which out of the two should you prioritise? 

It’s connection!

To really build the trust that comes from connection, it is essential to be:

1. Authentic (stay true to who you are)
2. Humble (check your ego at the door)
3. Honest (giving accurate and real information)
4. Vulnerable (admitting when you don’t have all the answers)

To really build the trust that comes from credibility, it is essential to show your:

1. Knowledge (of the market, project, area, clients’ needs, etc.)
2. Skills (communication, negotiation, emotional intelligence, etc.)
3. Capability (maximise value)
4. Insight (into real estate, the market, the process, etc.)

We can plot credibility and connection on a graph.

Read the following descriptions of agents and think about where they would fall on the graph.

The Brain Chemistry of Trust

As humans, we produce hormones to control several bodily functions. Out of all the hormones, there are two hormones that play an important role in buyers making decisions.  The first hormone is oxytocin, which plays a role in building trust and can be leveraged to your advantage. The second hormone, cortisol, is the stress hormone that you want to avoid flaring up in your clients.  

We can build oxytocin by engaging in relational selling and using empathy. For instance, if a client says, “You know what, we are going to wait,” we can reply with empathy by saying, “I get that buying real estate is a big deal, and it’s normal to be nervous at this stage; tell me what’s got you concerned?”

Conversely, we can inadvertently build cortisol when we start our first conversation by asking questions like, “Can I get the reference number?” “Is this cash or mortgage, and when are you looking to move.” These questions could potentially stress a client out as we are not getting to know their needs; it sounds like we are trying to close the deal on the first phone call.

Challenges With Consumer Behaviour

• Consumer behaviour is constantly evolving and often irrational.
• Real estate purchases are also highly influenced by others.
• Finally, consumer behaviour is unique to every individual. No two clients are the same.

For more educational articles just like this, check out our Content Corner or register for one of our interactive workshops at Bayut Academy.