The Psychology of Homebuying

The Psychology of Homebuying

Buying a house is a big decision, and it’s not just about the money. Buying a house is emotional and even touches on the logical part of your thinking. There’s a lot more to it than finding the ‘perfect house.’

While the number of bedrooms and bathrooms is important, just as the open floorplan is, many other factors must be considered before buying a home.

Keep reading if you’re interested in what goes on ‘behind the scenes’ when buying a house.

What Goes Into the Home Search?

If you’ve never bought a home, you might think you just look at a bunch of house listings and pick the one you want to see. You fall in love and make an offer, voila!

Unfortunately, it’s not that easy.

Yes, you can look at a lot of listings and look at the houses you think you’ll love, but there are many more thoughts and feelings that you’ll experience as you continue the search. You may walk into a house you LOVED when searching online, only to find that it’s not what you thought when you see it in person.

You may also find that the houses you thought were just ‘okay’ when looking online greatly exceed your expectations.

No matter who you are or where you come from, you’ll likely go through some or all of the following when looking at homes:

  • Opinions of others: You can typically guarantee you’ll get unwarranted opinions from others during the home search. This may be family and friends, your real estate agent, or a complete stranger. These opinions can interfere with your own thoughts on the house and influence your decision.
  • Overwhelming feelings: It’s a bit scary to walk into a house and think this is where you could spend the next 10+ years of your life. Uprooting your family and finding somewhere else to live is emotional and can be overwhelming.
  • Excitement: No matter who you are, chances are there will be excitement involved when looking at houses. Just the thought of making it yours can be enough to make you squeal with excitement.
  • Fear: It’s natural to have some fear when buying a house. It’s one of the largest investments you’ll make in your lifetime, and it’s a decision that affects your entire family. Making the wrong decision can be detrimental to everyone, so fear is normal.

The Psychology of Homebuying

So, now that we’ve discussed some of the feelings many people experience when buying a home, here is some of the psychology behind it.

Fear of Missing Out

One of the largest driving factors in homebuying is FOMO, or the fear of missing out. This happens a lot in a seller’s market. When there is a lot of competition, and buyers get into bidding wars, it could cause some buyers to bid higher than they originally intended.

The problem is when you’re dealing with a handful of others who want the same house, it drives you to make a bid even if you aren’t sure you’re ready. The FOMO can cause you to make irrational decisions.

How to Deal with FOMO

The best way to avoid FOMO from pushing you into a transaction you otherwise wouldn’t do is to take a step back. Don’t let the pressure of other bids push you into one.

It helps if you work with a reputable real estate agent who knows your budget and needs/wants for a house. They can keep you in line with your original plans and not let you overbid just because you get caught up in the excitement or worry about FOMO.

Fear of Making a Mistake

Buying a house is scary! You must come up with a lot of money and/or commit to large monthly payments for 15 – 30 years. That’s not something to take lightly.

Many factors go into buying the right house, including:

  • Finding the right neighborhood: When you buy a home, you invest in the area too. You could find the perfect home but if it’s in an undesirable neighborhood, you could be miserable, not to mention, your home may not appreciate as you hoped.
  • Choosing the right house: You need a house that will be sufficient for you now and in the future. If this is your ‘forever’ home, you need one that will grow with you and your family.
  • Selecting the right mortgage term: The mortgage term determines the size of your mortgage payment, plus how long you have to repay your debt. A 30-year mortgage has the lowest payments but the most interest overall. You must decide what works best.
  • Choosing the best interest rate: The interest rate determines your mortgage payment, and if you choose a fixed rate, it remains the same for the entire loan term. If you want to change it, you must refinance.

With all of these decisions to make, it can be worrisome that you’ll make a mistake. What if you buy the wrong house, don’t choose the right neighborhood, or select the wrong mortgage?

It’s a lot of pressure to take on yourself.

How to Ensure You Don’t Make a Mistake

Making all these big decisions can be scary, but with the right support, you can make the best decisions. To avoid making a mistake, enlist the following professionals in your home purchase:

  • Real estate agent: Work with an experienced and reputable agent who will help you find the home that suits your budget and fits your needs both now and moving forward. Let your agent help you find the right neighborhood and handle the negotiations.
  • Mortgage professional: Work with a reputable mortgage professional who will give you options on your mortgage loans and help you choose the program that best suits your budget while minimizing your costs.

Pressure to Act Fast

The housing market can feel like everyone is staring at you, waiting for you to make your next move. They pressure you to look at homes, make an offer, and sign the contract.

You might worry that you’ll lose your dream house if you don’t act fast enough, so you act without thinking. This pressure can cause you to make mistakes and have buyer’s remorse.

How to Avoid the Pressure

Don’t let anyone tell you how fast to move when buying a house. If there is a lot of interest in the house you’re viewing, but you’re not ready, look for the next house. The worst thing you can do is make a rash decision only to regret it later.

Tell your real estate agent that you’re interested in bidding wars right off the bat. Take your time looking at homes and making decisions. If you are in a bidding war, think carefully about your next move, and avoid making an offer just because someone might beat you.

The Need for Trust

Overall, when buying a house, you need a lot of trust. You must trust yourself and any professionals helping you in the process.

You’re even trusting the sellers to tell you the truth about the property. Then, you trust the appraisers, inspectors, lawyers, real estate agents, and mortgage lenders. Everyone has your future on the line.

How to Ensure you Can Trust your Network

It can feel scary to wonder how you’ll trust anyone with such a big decision. While ultimately, you are the one who decides which house to buy and how much to pay, you have to trust those who help you through the process.

To ensure you’re working with trustworthy individuals, do the following:

  • Read reviews: Check out any professional’s reviews on the Better Business Bureau and other reputable websites. See what others say about their experience and decide if they are a good fit for you.
  • Interview your professionals: Don’t be afraid to ask anyone who will help you in the homebuying process questions. You have the right to know how they conduct business and what you should expect.
  • Be vocal: If there’s something you don’t like throughout the process, say something. This is one of the largest investments of your lifetime; don’t take it lightly.

Final Thoughts

There is a lot of psychology in the homebuying process. Getting to know your thoughts and feelings about the process is essential.

The key to successfully buying a home is to go slow, do your research, and ensure you’re on board with every decision made. Don’t rush into a home purchase, and ensure you have professionals with you who are reputable, caring, and able to help you make the right decisions.