When one thinks about buying or selling a home, they think about the practicalities: price, location, amenities, and the market at large. However, the decision to buy or sell a home is also a highly personal one, involving complex emotions that can significantly impact the decision-making process.
“While we’d like to believe that we are completely rational when it comes to making significant financial decisions – like whether to buy or sell property – emotions do get in the way,” explains Grant Smee, Managing Director of Only Realty Property Group. “Here, understanding the psychology of home buying and selling can help you achieve your desired end goal.”
Whatever your property goal is whether you are selling for a desired asking price, selling within a certain time frame or securing your dream home, understanding the emotional, cognitive and behavioural factors that influence your decisions go a long way.
How emotions can impact your decisions
Studies have found that only 30% of decision-making is based on rational factors, while a whopping 70% of decisions stem from an emotional reaction. Within property, this could impact how you price your home or fog your decision-making process.
- Overpricing your home: Having an emotional attachment to a home can lead sellers to overvalue their property based on sentimental factors rather than market realities.
- Holding out for the perfect buyer and refusing to negotiate: Sellers who are emotionally attached to their homes might hold out for the "perfect" buyer who will appreciate it as much as they do and refuse to negotiate or accept what they deem to be ‘low-ball offers’.
- Ignoring the red flags: Falling in love with a home can blind a buyer to potential issues with a property, such as structural problems or needed repairs. “Having a critical eye on a property is key. Failing to do so could mean that you over value the property and stand to lose out later when selling.”
- Rushing into decisions: The fear of losing your dream home can push buyers to make hasty decisions without thoroughly evaluating a property or considering other options, for fear that it may be swept up by someone else.
“To avoid these negative impacts, it's essential for both buyers and sellers to maintain a level-headed approach throughout the process,” says Smee.
How sellers can use the psychology of home buying to their advantage
Tapping into your emotions during the home buying process can have its advantages, especially for savvy sellers.
“South Africa is currently in a prolonged buyer’s market, with slow House Price Inflation and properties spending up to 85 days on the market according to the June FNB Property Barometer,” says Smee. “This means that sellers must use every tool to get an edge on the competition and sell their property within their desired time frame.”
Sellers can leverage the psychology of home buying to their advantage by understanding the factors that influence potential buyers' decisions and tailoring their approach accordingly.
“Creating a positive first impression is crucial and staging your home to create an inviting and welcome first impression begins once they walk through the front door. Highlight your home’s best features and be sure to declutter so that the buyer sees the home as a blank canvas.”
Smee recommends appealing to a buyer’s emotions by using positive words such as ‘cosy’, ‘spacious,’ ‘welcoming’ and ‘well-loved’ to describe different rooms and features. “Tell the story of your home by sharing its history and the positive memories and experiences you’ve had in it as well as the potential for new memories to be made.”
Three tips to keep a clear head when house hunting
- Acknowledge the emotional attachment. “Buyers can become attached to a property based on aesthetics, memories, or dreams of their ideal living space. It's essential to balance emotions with practical considerations to avoid making impulsive decisions.
- Don’t overextend yourself. “Setting a budget and sticking to it is crucial. Avoid falling in love with a property that is beyond your financial capacity and be sure to consider additional costs such as maintenance, rates and taxes and transfer costs.”
- Avoid the FOMO trap. “In competitive markets, buyers may experience FOMO (fear of missing out), leading them to rush into decisions to avoid losing a property. Take your time and remember that there will always be other opportunities.”
“Establishing clear criteria, setting a budget, doing thorough research, and seeking advice from real estate professionals can all help in making more informed and less emotionally driven decisions,” says Smee.
Remember that buying or selling a home is ultimately a business transaction, and separating emotions from the process can lead to a smoother and more successful sale or purchase.
