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Buying and Selling a Home: What Emotional Factors Could Be Influencing Your Decisions?
Buying and Selling a Home: What Emotional Factors Could Be Influencing Your Decisions?

 
Friday, June 24, 2016

As a real estate agent, it’s a heart-wrenching scene I’ve witnessed many times: a buyer seeks my expertise to help them find their dream home, then soon realizes that their idea of “perfection” is not so clear-cut after all. What could possibly cause a once confident buyer such confusion? According to an article by the Wall Street Journal, the culprit behind this phenomenon is the one thing that binds us all as human beings: emotions. As with many things in life, our emotions can hinder us from making real estate investment choices that might actually be better for us in the long run; not only for our wallets, but for our personal well-being as well.

I’ve summarized the main emotional factors that influence the homes we choose and what we pay for them:

Ignoring the Big Picture

We are all guilty of it. From the time we are young we envision our future, hoping that one day we can have it all: the white picket fence, 2.5 kids, financial stability. Basically, the American dream. But what if that white picket fence came with a price? You may think I’m referring to money, but I’m actually talking about overall mental health and happiness. We often believe that a bigger house means a better life. However, if that bigger house creates a long commute to work or involves being socially disconnected from those close to you, perhaps it is time to consider a property that can better balance all aspects of your life.

Overlooking Big Expenses

When you are looking to buy a home, make sure you take into account all of the expenses that are adding up. For example, many homes require repair work. Make sure you are budgeting appropriately.

Buying vs. Renting

As I mentioned earlier, the idea of the “American Dream” is a huge psychological factor in why many ultimately choose to buy a house. It makes people feel proud, bringing a sense of accomplishment and status. Homeowners no longer have to deal with unpredictable landlords or privacy concerns. On the other hand, it is important to remember that home ownership comes with other stressors, such as lawn maintenance and unforeseen repairs. Make sure you are prepared to be much more hands-on with your home than ever before.

Expecting a Big Return

Researchers at Yale University have found that home buyers are overly optimistic about the payday they will receive when the time comes to sell their home. This trend is due to failure to take inflation into account. Remember that while purchasing a home can be a lucrative investment, with our current economy it is important to be realistic as well.

Not Wanting to Come Up Short

Wall Street Journal describes this as a fear of selling a home for less than you paid for it. Homeowners have a tendency to latch on to the price they paid for their home, and only want to sell it for that price or more.  However, if your home has depreciated in value, sometimes it is better to price it at or above the current market rate, even if you paid more for it. Your home may be on the market longer, but a study in The Quarterly Journal of Economics found you will have a higher profit when the house is sold.

For more information on buying and selling a home, contact me at realtor@joannedwards.com.

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