Without getting too psychological, let’s take a quick refresher course in what is known as Maslow’s Hierarchy of Needs. Described in a 1943 paper written by Abraham Maslow and titled “A Theory of Human Motivation,” this hierarchy can be invaluable information for real estate professionals looking to tap into the reasons a client says “yes” or “no” to a property deal.

In short, Maslow’s results are presented in pyramid form, divided into five layers with the most basic human needs on the bottom and evolving into higher level needs as you go up. The theory goes that, in order to achieve “self-actualization,” one must satisfy the most basic needs first.

Here are the basic needs Maslow lists:

– Breathing, food, water, sex, sleep, homeostasis, excretion

Unless you’re on REALLY friendly terms with a client, we’ll assume you’ll probably leave most of these topics out of the conversation, but there’s one should pay attention to, maybe two. We’re talking about sleep and homeostasis. In order to achieve sleep, and to a lesser extent, homeostasis, humans need a safe, comfortable place to go to bed at night. For most of us that means a house, apartment, condo, duplex, tri-plex, house boat, tent, mansion – some sort of protected structure that provides at least a modicum of peace and quiet.

Since nearly everyone on the planet wants or needs some sort of housing, it represents what Jason Hartman refers to as universal need. When you have something that everyone wants, price tends to rise according to the law of supply and demand. That’s why we see income property investing as vastly superior to doing the Wall Street shuffle. Granted, some people with last names like Buffett make an awful lot of money trading stocks, no one really needs a stock certificate to satisfy a universal need.

Put another way, stocks are sort of optional. Yes, the concept of a company being able to raise capital is critical to the expansion of the free market, but cave men and other early societies were able to get along just fine without an organized stock exchange.

What’s the point of all this? It seems to us that an explanation of universal need in relation to Maslow’s Hierarchy of Needs might be an invaluable tool when confronted with a stubborn real estate client who doesn’t quite believe that property investing makes a heck of a lot more sense than stocks or bonds.

Ask him or her this: Would you rather lay down for sleep tonight with a pillow, bed, and house, or a nice handful of stock certificates? (Top image: Flickr | theeruditefrog)

The AIPIS Team