House Hunting With Your Head, Not Your Heart
Posted by Lee Cameron on Thursday, April 28th, 2011 at 2:41pm.For most people, buying a house will likely be the biggest financial decision they will ever make. It should be done carefully and rationally, with every option considered without bias and every detail worked out. But, unfortunately, buying a home is a completely different thing. You might be surprised at how much psychology - as much as numbers - can have an effect on a home purchase.
It really should come as no surprise. Many of our large purchases are based more on emotion than on financial prudence. Do you really need that sports car to get you to and from work? Is a designer bag necessary to carry all of your stuff? The same thing happens when buying a home. Your home is such a defining thing in your life, that it is nearly impossible to be impartial about it.
There a numerous factors that may determine whether you like a home or not - and many of them may not have much to do with the home itself. Studies have shown that everything from the state of the weather to the attractiveness of the real estate agent can have an effect. Minor issues like not liking a wall color and being unimpressed with the landscaping can skew your judgment, even when those issues are easy and cheap to fix. A buyer may opt for a more expensive home because it looks nicer, when a cheaper one with a few minor fixes would have made more financial sense in the long run. This is why curb appeal and staging often play a big role in home sales.
This sort of psychology doesn't happen only on the buyer's end, either. A seller's perception of their home can often effect the price. Though an impartial outsider would recommend a competitive price based on an analysis of the market conditions, the long-time homeowner will often insist on a higher price based not only on what they originally paid for the home, but also on their fond feelings towards the house. This has been especially measurable in recent years as sellers who bought at the peak of the market are generally far less likely to list their home at a reasonable market price than sellers who bought while prices were low.
So what can be gained from being aware of this phenomena? Well, for sellers it's simple - if you want to sell your house, let the market determine the price, not your emotions. For buyers, it's not so cut and dry. You're looking for your new home and how it "feels" is an important factor. But a little impartiality is a good thing. It can help you make the best decisions. Remember that until you start your life in it, that house is just a house. It's only a home when you make it one. Sometimes all you need are a few cans of paint and a hedge trimmer.
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