Borrowing money

The “REAL” Real Estate Roller Coaster

Buying a home is a process fraught with emotional ups and downs. For most people, it will be the most expensive and involved purchase they ever make. On top of the importance of this purchase, is the lack of time one has to make a decision before purchasing a home. ImageThe average amount of time a potential homebuyer spends looking at a prospective home is 96 minutes! For a home that you may spend the next ten to twenty years living in, well, an hour and a half seems like an unjustly short amount of time spent to make such a drastic decision. This “hot” decision making environment, where the pressure is on, is one of the key aspects of a buyer’s emotional stress. But, the fact is, good homes sell fast, and buyers have to be ready to commit to a purchase in a short time. This being said, the “sure fire” way to make a good decision in such a short period of time, is to learn to become a smart, analytical shopper. Not that emotions need to go entirely by the way side – but you must know when emotions are playing into your decision making process, what is at the core of those emotions and whether or not they are helpful to your process. Be your own psychologist, and the sooner you do the sooner you will get off the doctors couch and into a new home!

One approach to help mitigate the emotional roller coaster of the buying process is to truly set out your specific priorities in terms of what you want and need in your new home. Ask yourself, “In order of importance, what are the most important elements for my/our new home?” Proximity to schools, the location and neighbourhood, commuting distance, rates and costs, energy efficiency, shopping accessibility, and recreational facilities are just a few of the considerations a buyer should prioritise beforehand. If purchasing with a spouse or partner, you may discover your priorities are slightly or even vastly different. It is very important that you spend the time to make concessions and get on the same page as best you can.

Other aspects of your priority list may include the type of home you are looking for. These parameters could involve the size of the home or a particular style of home. ImageIf you’re set on a particular style of home, this may affect the neighbourhood parameter of your search, as not all houses of certain types are in every neighbourhood. So, as you see, one way to help curb emotional reactions, is to make sure you know what you’re looking for, and in doing so narrow your search. This way, what you’ll be looking at will be within the list of parameters you set out in your priorities. You can then rank homes based on how well they fit into your priority system. Of course, there will be concessions to be made here, as it may not be that a home fits your every single priority in exact order – but at least you’ve done some good analytical homework in advance and have a system for ranking your prospects.

Another tip for dealing with emotions, is to catch yourself when you are honing in on one particular feature of a home, as the “dream feature” of the home.  A “dream home”, should be so, because it satisfies those myriad of components (priorities) that create “your dream of your home”. You may want to check in and ask yourself if you’re being clouded by one enticing feature and have lost touch with your list of priorities.

Another dangerous aspect of buying a home based on your “gut” feeling, is that your guttural instinct may be good for you, but not so great for re-sale. It is, in almost all cases, very important that you consider the potential re-sale value of your home as one of your top priorities. You don’t want to be stuck with a “dream home” that turns out to be everybody else’s nightmare. The investment aspect of purchasing a home, lies in its re-sale value. Now, this doesn’t mean you have to buy in a well-established, totally investment-proof neighbourhood. You may have done your homework and feel confident in buying in a neighbourhood that has great potential for five to ten years down the line. Likewise, the home you are investing in may need improvements that you have the funds and/or the expertise to accomplish. But, you must at least consider the re-sale value of your potential home. Otherwise, you could be investing in a money pit that you’ll never be able to unload for the money that you should.

Keep in mind, smart sellers are bound to know the realm of buyers emotions, and will appeal to your weaknesses. Keep your critical eye sharp, especially when a home seems to smell of professional home staging. It’s not that home staging is trickery, or dishonest, but you might need to work extra hard to look beyond the beautiful and well-appointed furniture and the incredible artwork and the smell of Lemon Meringue Pie – as none of the above are included in your purchase.  Just make sure you look at the house itself and not its decor, set-up – and, DON’T EAT THE PIE!

If all these steps have been taken, you’ve approached the searching process having analysed and prioritised your wants and needs, and you’ve considered the re-sale potential of the properties, then you can allow your emotions to guide you somewhat. Perhaps you’ve been lucky enough and smart enough to mine out two potential properties that fit both your priorities and parameters, at this point, a bit of the old gut instinct can refine your process and actually help, and not hinder the decision making process.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

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