The short answer is yes; weather affects buyers. In an interesting study done by The National Bureau of Economic Research, four researchers scoured millions of automobile and home sales and analyzed how the weather affected buyers. And, if your guess would be that more people are impulsive in the summertime, then come on down, because you’re right.
We all make “high frequency” decisions on a daily basis- Should I put extra creamer in my coffee, Where do I want to have lunch?, Should I leave the office early today? Those decisions don’t necessarily have a long term impact on our lives and those choices are less weighted and more easily made than “low frequency” decisions. “Low frequency” decisions are decisions like- Should I get married? Should I buy a new car?, Should I buy this new house?” According to behavioral economics, many decisions can be impacted by various factors that may be seemingly unrelated. For the purpose of this article, we are going to focus on housing and purchase price as impacted by the weather; that’s right, the weather… But, you probably knew that from the title.
The fancy-pants term researchers use to describe the mistakes that people make when projecting what they will need in the future is called “projection bias.” We humans sometimes believe that things that are valuable to us now will be equally valuable to us in the future. That, however, isn’t always true. Think about all of those times that you spent money on something you thought was “cool” to only think it was super lame the next year. Projection bias exists across all industries including the real estate industry and it drives sales and sale prices.
Due to projection bias, people will often pay more for homes with a swimming pool and/or central air in the summer months than in the cooler months. Researchers discovered through these crazy, amazing formulas and data sets that a swimming pool adds more value to a house that goes under contract in the summertime than it adds to the same house that goes under contract in the wintertime. According to the report:
[A] house with a swimming pool that goes under contract in the summertime sells for an average of 0.4 percentage points more than the same house when it goes under contract in the wintertime. Given the average value of homes with swimming pools in our dataset, this effect suggests a swing in value of approximately $1600 between summer and winter contract dates.
There’s a good reason that a buyer may act in a potentially irrational way and it’s not just from the heat… well, it kind of is, I suppose. The idea of the immediate utility of a pool may be worth more to buyers given the season and they may be more open with their collective wallets because of that. But, very simply, buyers are willing to pay more for the same property if its hot should that property have a pool and central air.
The logical follow-up question for anyone in the Real Estate industry is then: How can we leverage this natural behavioral impulse given how we list or even show our properties?
It’s 8:45 AM on the West Coast when I call Adam Saget. He promptly answers the phone and we say our hellos. “Have you started your day yet?” I ask him.
“Oh, I started my day hours ago” he tells me with a bit of a laugh. Adam’s personality is casual and friendly. He has been an agent for three and a half years when he started to notice a downward trend in his previous space of design and event planning. For years, his friends had told him that he should be working in real estate given his natural penchant for people, organization, and referrals. Adam had been sending clients to an agent-friend named Evan for a long time and when it came to sell Adam’s grandmother’s condo, Adam asked his friend Evan who he would recommend to do it. It was Evan who told Adam that he should sell his grandmother’s condo for himself. Then, he let Adam know approximately how much money he missed out on over the years in referral fees. Adam was astounded. The shock value coupled with the passing of his grandmother, a very influential figure, urged Adam to finally make the change and join the real estate industry.
Since we were speaking referrals, we naturally segued into REALLY. Adam tells me that he sees the potential of the app, but he’s aware that it is in its “infancy stage.” He sees referrals as an important component of a person’s business and having a platform on which a person can build a network through a database and gain out-of-state cooperation is a real benefit. Like others have told me, Adam sees REALLY as a Facebook for agents and brokers.
As an agent, Adam is definitely self-disciplined and is having much success in this field. He serves all types of buyers and sellers from a first time buyer to a seasoned investor. He is scheduled and regimented and believes that this is the key to his success. Adam’s history of planning is evident in his philosophies although his easy-going nature can put any client at ease.
When I ask Adam what he finds most challenging about being an agent, he exhales deeply, pauses, then answers. “The day to day grind can be difficult.” It seems the constant nature of the profession can take its toll on any person. But, Adam believes in a personal philosophy that helps combat the most weary. “Keep going like a tank,” is the attitude Adam carries toward his practice. You have to “hustle and be smart,” he says. And, true, this industry can be tough; it can be time-consuming and fruitless. But, Adam tells me it’s about “not getting discouraged. There’s always an opportunity.” But, Adam implores that you must “do,” in order to make something happen. We, at REALLY, definitely admire a strong hustle, clear work ethic, and a commitment to the daily grind. And, it’s obvious to us that Adam Saget is giving that to his everyday.
The deep colonial heritage of San Antonio is ingrained throughout the seemingly ever-growing city. It is within this city that the famous Alamo battle was fought — brave Texians, small in number, fighting for their independence against a great Mexican army. About ten minutes Northwest of this famous location sits Dee Chambers, a former paramedic-auditor-army veteran- turned Real Estate Agent. Dee is decorated and experienced, but completely unassuming as he answers the phone at Stonepoint Properties. He has a friendliness and lightness to his voice that communicates both wisdom and kindness. We begin our call and discussion seamlessly.
Dee is only a full year into the profession, but has risen in Stonepoint and is set to take over the agency when his predecessor retires. Since his start, Dee has taken the smaller firm and refined it in order to scale and grow. “We are opening a new office in Austin,” Dee tells me with jovial enthusiasm. Dee has been working on re-branding Stonepoint and creating a new website on top of other changes. He loves his job and his agency because, he says humorously “everything I didn’t like, I changed.”
The act of creating and crafting something is nothing new to Dee — he started early on in his life with helping his grandfather build houses. Following many other experiences and careers, Real Estate felt like the next step after several friends who were also in the industry sparked his interest. It was the “right time for me,” Dee says. “I put everything I have into it!” Over the phone, you definitely get the impression that Dee does truthfully put all he has into his career; he’s one of those people that is not afraid to roll his sleeves up and work at something.
Dee, like many agents, experiences struggle. He finds leads to be one of the most challenging aspects of the industry. “Grabbing ahold of them and closing” is a bit of an obstacle he tells me. Referrals, too, are something that can be a time-consuming and fruitless process. Like many agents that find the REALLY app, Dee found it online and downloaded it with the thought that Stonepoint is “always accepting referrals.” Quickly, Dee was able to see the utility of the app. “It’s brilliant,” says Dee, “like the Facebook for agents.” He seems as excited as we are for our future. He sees REALLY growing and taking off and he wants to be a part of that experience, as well.
Having a conversation with Dee is light and easy; he is incredibly present despite having so much going on. I can’t help but think of the irony that his small firm is trying to expand in San Antonio despite having larger forces out there as competition; it harkens back slightly in spirit to those early Texians fighting for something that they truly believed in. When I ask Dee about his personal philosophy he tells me that integrity is his number one. He believes in “doing the right thing when no one is looking.” The automatic response lets me know that he’s thought of this idea a lot; it lets me know that with integrity is how he truly lives. Before we get off the phone, I ask Dee what else he has going on for the day. He has several things scheduled, including interviews and calls, and lastly, he tells me that he is going home to make dinner. We both laugh at his candid response and say our goodbyes. I hang up from our phone call and can’t help but feel just a bit happier having spoken to him even though we’ve never formally met. Dee’s authenticity gives me the sense that his career as an Agent, although just beginning, is one he will flourish in and stay with for a very long time.