“A moment’s insight is sometimes worth a life’s experience.” – Oliver Wendell Holmes

In the first six months of 2008 there have been 71 homes purchased in Carmel with an average days on market of 151. A steady, though slower market is unfolding notwithstanding the incessant drumbeat of bad housing and economic news.

As a student of human nature and motivation, I am curious and intrigued with the way we make important personal decisions. Why does this particular group of buyers choose to go forward when most pundits are predicting the worst? What makes these buyers different from the majority who stand on the sidelines and watch? How is it there are even any buyers in this business climate?

For thirty years I have enjoyed counseling buyers and sellers in the Carmel marketplace. Over this timeframe we have together worked our way through 5 business cycles and downturns. Every buyer demonstrates their own unique patterns of behavior, and many different individual circumstances give context and meaning to their decisions. From my own personal experience, however, I believe there are four general patterns of behavior that we witness in buyers in every business cycle. Many of my clients have studied and identified with these behaviors and have developed a greater awareness of their own unique circumstances.

“Quiet minds can’t be perplexed or frightened, but go on in fortune or misfortune at their own private pace, like a clock during a thunderstorm.” – Robert Louis Stevenson

In general, I believe there are four types of buyers in the market. Many of my buyer clients are a combination of the following , but there is usually a dominant pattern in their behavior.

1. The “right house, right now” buyers. These are the buyers who minimize market risk by having a long-term perspective. They do not focus on the ups and downs of the market. If they find the right house, they enter the market and negotiate the best possible deal. These buyers tend to place a high premium on their personal time versus money, but paradoxically, these are also the best long-term investors because they enjoy the benefits of long term ownership.

2. The “follow the crowd” buyer. These buyers tend to be moved by headlines versus their own timelines. Money is more important than time, the best possible “killer” deal being the goal. Unfortunately, these buyers tend to follow the crowd and get hurt in two ways. When the crowd says the market is going in the tank, they hesitate to break away so they miss opportunity. When the crowd says the market is hot, they get caught up in the frenzy and pay too much. These buyers tend to “see the crowd’ rather than “see the market”.

3. The “market timer”. These buyers try to pick the tops and bottoms of the market. They are convinced that their “crystal ball” is on target. Unfortunately, no one rings a bell at the bottom of the market. In most cases, these buyers never do purchase and at some point they become frustrated or they are priced out of the market by the next upward cycle.

4. The “experienced buyer”. This buyer is a bit of a contrarian thinker and does exceptionally well by stepping away from the crowd. Typically these buyers are able to “see the market” and they seem to have experience in assessing risk and reward. This buyer appears to be comfortable with the workings of the business cycle and takes advantage of opportunities that flow from having more choices, more buyer clout, and a quieter marketplace.

I hope these thoughts give you some personal insight into those feelings and behaviors that we all experience as buyers and consumers. I personally recognize myself in many of these scenarios and the increased awareness helps me keep balanced, purposeful, and intentional.