Buying a home is one of the biggest life decisions you’ll ever make, and with that comes a number of complicated emotions. No matter how hard you try to disconnect your feelings from the process, it’s almost impossible not to be swayed by emotion to some extent. However, understanding the psychology of home buying can help you navigate the process with more ease and confidence.
Emotional Factors When Buying a Home
From the start of the house hunt until the closing date, the home buying process brings about many positive and negative emotions. You might experience anxiety, longing, excitement, or uncertainty due to the complicated emotional and social factors involved in buying a house.
Fear of Missing Out
Fear of missing our, or FOMO, is one of the most common emotional factors that drive people’s decisions in the real estate market. You might feel like you have to pursue every opportunity that comes your way in case nothing better comes along in the future.
Uncertainty about the overall real estate market can drive FOMO, too. Buyers may worry that the market will soon take a turn for the worse, so they have to find their perfect home before they miss their chance.
Emotional Attachment
A house is not just a physical place to live or an investment opportunity. For most buyers, a home offers a deep sense of comfort and security. Your home may feel like an extension of yourself or a part of who you are.
When searching for a home, you also search for this sense of belonging. Once you find a property that fulfills it, it’s easy to become extremely emotionally attached. You’ll do anything to get the home because it already feels so personal to you.
Social Status
Many people are guided to some extent by social expectations. Buying a home is seen as a major life milestone and financial achievement, and you may feel like it boosts your social status. However, if your home search is rooted in a desire to impress or keep up with other people, you might begin to ignore your true needs and wants.
Pressure From Outside Sources
When you announce to your friends and family that your home search has begun, you may find that everyone has an opinion. It’s natural to seek advice and approval from others, but some buyers find themselves making decisions based solely on what others pressure them to do. For instance, your family may encourage you to buy a home in their area when you otherwise would choose to live in a different city.
Cognitive Biases Among Home Buyers
Not only are there lots of emotions attached to buying a house, but your mind can also play tricks on you. You should be aware of the common cognitive biases home buyers experience so that you can make a sound and rational decision.
Anchoring Effect
The anchoring effect is people’s tendency to place more weight on the first piece of information they receive. In real estate, this means that the first price buyers see will become their reference point.
For example, if the first house you look at is priced at $500,000, a house that costs $400,000 will seem inexpensive in comparison. However, if you start by looking at a $300,000 home, that same $400,000 property will feel more expensive.
Anchoring bias is also why the listing price of a home is so important. It’s the first number buyers see, so it’s what they’ll assume the house is worth. Swaying too far from the listing price in either direction will feel uncomfortable or impractical.
Confirmation Bias
Confirmation bias occurs when you look for information that confirms your existing belief and ignore information that contradicts it. If you’ve already decided that a home is perfect for you, you’re more likely to overlook the downsides.
Confirmation bias can become especially troublesome once you’ve already made investments into the sale. After you put down the earnest money, for instance, you’ll want to confirm that you’ve made the right choice. This could lead you to ignore issues that come up during the home inspection or other problems along the way.
Sunk Cost Fallacy
When you’ve invested time, money, or effort into something, deciding to let it go is incredibly difficult. You convince yourself that you need to continue with your pursuit so that you don’t waste everything that you’ve already invested. This can lead to even greater losses, though.
For example, you might make an offer on a house, put down your earnest money, pay for the home inspection, and start packing to move. Then, you discover that the monthly bills will exceed what you’re comfortable paying. Because you’ve already invested so much into your decision, you may feel like you have to continue with the sale even though it’s against your best interests.
Framing Bias
A framing bias occurs when people make decisions based on how information is presented instead of on the information itself. Sellers and listing agents obviously want to present a home as positively as possible, and this can lead to framing bias in buyers. Staging, professional photography, and an eye-catching description can make a property appear much better than it actually is.
How Buyers Can Avoid Common Emotional Pitfalls
Understanding and avoiding the common psychological pitfalls will help you maintain control as you navigate the real estate market. Here are some key guidelines to follow to keep a clear head:
Define Your Needs and Wants
Having clear and specific priorities from the beginning of your home search can prevent you from making decisions out of emotion. Create a list of non-negotiable needs that your home must fulfill. If a house doesn’t meet all of your needs, don’t go to a showing. Separating your needs from your wants will help you approach your home search practically and methodically.
Take a Break
Remember that taking a break from the house hunt is always an option. If you’re feeling desperate, overwhelmed, or burned out from the process, it’s time to step back. Continuing the search in this state of mind could lead to poor decisions. No one knows how the market will change in the future, but there will always be another opportunity.
Work With an Agent You Trust
Your real estate agent should be a trusted sounding board. They understand the market, the process, and the common emotional pitfalls that buyers experience. Work with an agent that you believe will be a voice of reason throughout the process. Let them handle all of the negotiations and communication so you never feel pressured or cornered into a decision.
A lot is at stake when you buy a home. Your decision will impact practically every area of your life, so it’s normal to feel anxious or uncertain. Everyone is vulnerable to emotional decision-making and cognitive biases, but you can put safeguards in place to stay calm, collected, and in control.
