How our emotions influence the homes we choose and the prices we pay
A recent Wall Street Journal article took a look at some psychological missteps that buyers and sellers often make as they wade into the housing market.
A home is a refuge from the world, a place to raise a family and, for some people, an investment they hope will bring them a good chunk of money down the road. We fall in love with houses in a way that we never fall in love with a portfolio of stocks and bonds.
All too often, though, we don’t realize that how we feel about homes blinds us when it comes time to buy or sell. We let our emotions blind us to cold facts about the market or the realities of ownership. Or we prioritize one set of emotional needs over others that are just are strong but may not be evident at first. And ignoring them can lead us to make bad financial decisions that can affect us for decades to come.
For instance, people might focus on their desire for a house that’s a certain size or style, but ignore the fact that they want to spend as much time as possible with family. So they might buy a “perfect” house that requires them to make a long daily commute to work and keeps them away from home for two extra hours each day.
The home-selling side of the equation brings its own set of thorny issues. Homeowners often have an overly rosy view of their home and expect it to increase in value far beyond reasonable expectations. And when they put it on the market, they often stubbornly cling to their asking price—even if it means leaving it up for sale far longer than they planned, and risking the possibility of not selling it at all.
Source: “The Psychology of Buying and Selling a House,” The Wall Street Journal (June 12, 2016)
One issue that is very common in today’s market is that, as a result of low inventory, a seller receives multiple offers (if fairly priced). In this situation, two or three buyers could end up making an offer for the same amount of money at full price, or only a few thousand dollars apart. Often times, in a case like this, what can help a seller choose the new occupants for their beloved abode is the emotion factor. Along with a second chance at “highest and best” it can come down to more than just dollars and cents. A good buyer’s agent will ask their client to write a letter to the seller telling them why they want to buy their house and what living in the home will mean to them. The letter that tugs on the sellers heart strings the most, and most sincere, could be the one that gets the house!
if you’re not sure you’re ready to pull the trigger but would like to find out how much your home is worth in today’s market, or if you’re trying to decide a good time to make a move, give me a call!