Highlights:
- Daniel Spencer gave a technique for first home buyers to consider when making a decision.
- He shared a scenario of an auction where an investor and a first home buyer were bidding on a property.
- The first home buyer was renting a property in Annandale, paying $3,800 per month, totaling $45,000 to $50,000 annually.
- Daniel advised the buyer to calculate the potential wealth they could have gained if they bought the property instead of renting it.
- He emphasized the importance of understanding the emotional reasons behind buying a home and how emotions can impact decision-making.
At OpenLot's recent Industry Training Event real estate expert Daniel Spencer shares valuable insights on the decision-making process for first-time home buyers. Spencer emphasises the importance of a key performance indicator (KPI) that transcends traditional measurements and has a profound impact on a buyer's trajectory. He recounts an auction scenario involving an investor and a first home buyer, where his advice played a pivotal role. This anecdote serves as a starting point for Spencer's analysis of the renting versus owning dilemma.
Spencer delves into the thought process of first home buyers, emphasising that they eventually take action when they realise how much wealthier they are making their landlords. He raises a thought-provoking question: What percentage of their rent goes into their salary annually? Most buyers respond that 20% to 40% of their income goes toward rent, and sometimes up to 50% for larger family homes. Spencer asserts that a significant portion of their daily work goes toward enriching their landlord rather than fulfilling their own goals and dreams. This realisation becomes the catalyst for change.
To inspire prospective buyers to think differently, Spencer employs an analogy of the human anatomy—skin, bones, and heart. While skin represents factual aspects such as the number of bedrooms, bathrooms, and the desired budget, getting into buyers' bones entails understanding the problems they are trying to solve. This could range from needing more space for remote work to downsizing due to physical limitations. However, the most crucial aspect is getting to the heart of the matter—the "why" behind their decision. By tapping into buyers' emotions, Spencer believes that they can transition from logical to emotional decision-making, leading to more fulfilling outcomes.
Spencer concludes by drawing a parallel to a recent episode of the television show "The Block," where emotion-driven bidding resulted in one buyer spending significantly more than necessary. He dismisses concerns about rising interest rates, stating that rental costs are increasing at a much faster pace. He advises potential buyers to evaluate current rental prices for similar properties and compare them to projected interest rate increases. This exercise aims to shed light on the affordability and potential financial implications of renting versus owning a home.
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