House hunting should be relatively straightforward—you need X number of bedrooms, X amount of square footage, in this specific area, at this specific price, with this short list of features and amenities. But we often let our emotions mess us up, usually without even realizing it. Considering how much of your money and time is going into buying a house, you owe it to yourself to be aware of these six psychological traps that can lead you to the wrong house.
To defend against this, try to keep your imaginings unemotional—measurements, use of space, correct number of rooms, fixtures, and outlets. Avoid emotionally charged visions like prom pictures at the foot of the stairs or serving holiday dinners to a crowd of friends and family.
Price anchors
To fight back, research the fundamentals and come up with your own fair price for the property (your real estate agent can help you with this). Once you have an objective opinion on what the house is actually worth in the market, you can proceed using the list price as a starting point for negotiation instead of an anchor.
Another herding behavior that can push you to overpay for a property is the scarcity principle—the belief that a limited supply makes something more valuable. That can explain how a house that you thought a bit overpriced yesterday can suddenly seem worth much more once you realize the inventory of comparable houses is not as large as you thought—but the fundamentals of the house or the market haven’t changed.
Choice paralysis
Also called "analysis paralysis," this psychological phenomenon occurs when you’re overwhelmed by choices, decisions, or what-if scenarios. We tend to assume that having more choices is always better—but having to constantly sift through property features or having to choose between several very similar, comparable properties can leave you frozen and unable to make a decision. That can lead to losing out on a house that’s perfect for you and your family—not to mention much higher stress levels.
The sunk-cost fallacy is a psychological trick that you can actually play on yourself. It boils down to a feeling that once you’ve invested time and energy into something, walking away would transform the whole experience into a huge waste of time. That pushes you to try and salvage that time. When house-hunting, that translates into buying a house in part because you’ve put a lot of time into it.
FOMO
The fear of missing out can drive people to worry that prices or interest rates are going to rise and they’ll be priced out of the market; that a particular house will get snatched up by someone else if they hesitate to make the jump; or that time is running out for them to jump into home ownership. Once you convince yourself that you’re about to miss your one and only shot to get the house hunt right, you’re vulnerable to bad decisions.
The only way to defend against FOMO is to remove the fear part. Having the advice of a trusted real estate professional and doing some research about the market can reassure you about home prices, and getting pre-approved by a lender can give you confidence in your buying power and ability to make an offer when the perfect house comes along. Most importantly, hit pause and ask yourself if you would buy this house at this price if all the perceived pressure was taken away.
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