The scenario is all too familiar: You see a home that calls to you, beckoning with its attractive features that make it love it at first sight. But according to a recent article in the Wall Street Journal, too frequently we fail to realize that how we feel about a home may blind us when it comes time to buy or sell. Our emotions, says writer Matthew Kassel, can blind us to cold facts concerning the market or the realities of ownership.
As an example, Kassel points out, 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 while they might purchase the “perfect” house, they fail to factor in a lengthy work commute that takes them away from home an extra two hours a day.
Home sellers aren’t immune to emotions either. Often they may have an overly ideal view of their home, expecting it to increase in value far beyond reasonable expectations. When they put it on the market, they may stubbornly cling to their asking price—even if it means leaving it up for sale far longer than they’d planned.
Here are some psychological errors that buyers and sellers often make as they ponder the housing market:
- Ignoring the big picture. A 2008 study showed people with longer commutes had “lower subjective well-being” than those with shorter commutes. Stop to consider how the places you’re considering will shape your social relationships.
- Overlooking big expenses. People buying homes tend to compartmentalize expenses and not add up the total cost of everything needed to fix up and furnish a house. That can lead to making poor choices about how much to pay for a home, perhaps overspending on a down payment and leaving limited funds to purchase decorations, furniture, and the like.
- Buying vs. renting. Research reveals that home ownership can cause undue stress. The amount of work necessary to maintain a home plus being tied to a big monthly mortgage and keeping up with repairs and other unforeseen costs may be too much for some people.
- Expecting a big return. A 2014 Yale University study showed that home buyers have high long-term price expectations, leading people to buy homes that aren’t a good fit socially or location-wise because they seem like good investments. Often retirement plans are staked on a certain percentage return that leaves homeowners scrambling when things don’t pan out.
- Not wanting to come up short. Research shows that the most powerful emotional drive during a sale is not wanting to sell a home for less than what you paid for it. Houses can depreciate in value. It’s a fallacy to assume you’ll be able to recoup losses you’ve already incurred.
Considering a new home or remodeling within your current home? Talk to us, at (256) 775-6457. For more than 25 years North Alabama Builders has been focused on delivering the highest possible quality in every project we do.