Mortgage Bits and Money Pits: The Psychology of Buying Your First Home

You’ve thought about buying a home for a while now. You’ve written down all the facts. You’ve researched the rates, spoken with lenders, and it all makes sense – on paper. But, there’s a psychological aspect to buying a home that many people totally disregard and never truly think about. Believe it or not, knowing what’s going on in your head (as well as the seller’s head) can make you feel better and even help you get a better deal.

Love Potion No 9?

One of the first things that sellers do to entice you to buy is pretty up the entrance. They’ve learned that this has the strongest influence on your buying behaviour. Why? Because most buyers actually make an unconscious decision about the home within 30 seconds of seeing the place.

However, looking at the entrance only can cause you to make a chain of serious and financially deadly mistakes about the house you’re looking at. You may get “blind-sided” by emotion when you see the home. This is what accounts for home-buyers’ “love at first sight” reaction to a home that, on paper, doesn’t look all that great.

Take a step back, and really think about everything you want from a home. Take a checklist with you, and articulate what you need, and what your optional wants are. Think of it like a shopping list.

Getting Emotional

A lot of first-time homebuyers make the mistake of falling in love with the first house they see. It’s sort of like a person’s first love experience. People get irrationally attached to a home. It’s the first one that looks pretty, and it’s a huge potential – much bigger or better than the current apartment they’re living in right now.

But, fight the urge to get attached to the first home you see. When you move from “this is a potential home for me” to “I have to have this house,” you’re in trouble. Of course, everyone wants to feel that they’re getting their “dream home.” But, be realistic. It’s probably not going to be the first one you see.

Negotiating The Dealings

Negotiating the deal is a major part of buying a home. It’s not as simple as it sounds, either. A lot of people get themselves into low deposit mortgages and then proceed to chase the seller by low-balling him, paying the minimum amount they feel comfortable offering. This is usually a mistake.

You have to think about things from the seller’s point of view. Just as you are trying to pay the lowest possible price, the seller is trying to get the highest possible price out of you. Additionally, the seller has probably hired a professional real estate agent who negotiates prices and makes offers day-in-and-day-out.

You’re up against a professional. If you don’t have a professional on your side, you’re probably outmatched.

Even with a broker or agent, you need to be careful about the bids you put in. Generally, sellers price their home to include a “buffer.” So, there’s the price they really would like to have, and then additional money on top of that. But, there’s also a minimum threshold of what they will accept. What you have to do is find out what the real price is that they want (ideally) and then negotiate down to just above their minimum threshold. It’s not an easy process but, if you can figure this out, you’ll end up with a price that both you and the seller can live with.

Charlotte Connor has a passion for personal finance. She especially enjoys writing about aspects of the decision making process that are often overlooked but are essential to understand.


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