“Saticficing” in the home buying process
In his 1982 book “Models Of Bounded Rationality And Other Topics In Economics” Nobel-laureate economist Herbert Simon (1916-2001) coined the term Saticficing. With this hybrid term , a combination of satisfy and suffice, professor Simon describes a process consumers use to make decisions. According to this concept consumers (and all humans really) are predisposed towards making satisfactory decisions instead of the “best” possible ones mainly for three reasons: They don’t have (or feel they don’t have) enough information, their ability to process information is limited and/or they don’t have the time to collect all the relevant information and process it adequately. According to Simon, humans have the tendency to select the fist or one of the first options presented to them if it meets certain basic criteria.
Invariably this is the case with the home buying process. There may be hundreds of suitable homes in the market but the average home buyer will see no more than 12 before making a decision. It is notable that this is down from 15 in 2007 and it decreases steadily every year. As internet increases its utility as a primary source of real estate information and more and more visual information such as quality photography and high definition video is readily available, the home buyers will rely on the online material to rule out homes with less online appeal.
It is vital therefore to make sure that the home we are listing is within these 12 homes at least most of the times. How can we make sure of that? According to the “Digital House Hunt” report we discussed in our previous posts, 57% of the home buyers will search online for 60 to 120 days before going out to view homes. There is no doubt that the short list of the 12 homes they will view before making an offer will contain only the homes that really impressed them and stood out from the competition.
In the early years of Internet it was often prophesized that the real estate agents’ profession would follow the demise of a number of other trades most notably that of the travel agents. Unlike travel arrangements however where the choices are limited in a finite list of options, the home selling/buying process is a very complex one as it relates to human communication. On one hand the increased regulation of the process makes it hard for non professionals to navigate it safely. On the other, and most important, side the proliferation of home buying choices and easiness of communication makes it necessary to employ more complex and efficient marketing processes.
Before the internet revolution a listing’s marketing budget would be hardly enough to allow for a few Xerox flyers and, in the best case, a couple of newspaper ads. These marketing methods have been entirely eliminated today by the vastly more effective tools of real estate search engine placements and virtual tours with visual material of a quality that increases every day. That change precipitated a shift in the role of the real estate agent as well. Writing a contract, negotiating it and coordinating the sales process is the lesser and easiest of the Realtor’s tasks. The Realtor adds real value to the process by offering superior marketing .
The Internet revolution changed the home buying process fundamentally. The real estate agent can now add much more value to the process than in the past but the required skill set has now changed: The real estate agent is now a marketer more than anything else.