When buying a home, how do you approach the decision-making process?
Do you review all of your choices thoroughly, considering the pros and cons of the homes you like best? Do you analyze the financial and logistical aspects of your choices and make your decision based on research and facts?
If you’re anything like most buyers, you may do all of those things, but ultimately, you make your decision in a much less scientific way.
Buying a Home: The Decision-Making Process
When faced with a major decision, the human mind first frames the problem. In our example, the problem is that you need to buy a home, and faced with the choices you are aware of, you must select one of your options.
Next, we use the information available to us to analyze our options. In this case, you may compare amenities, prices, conditions and locations, as well as any other factors that are of particular importance to you.
In a perfect world, that analysis would provide you with an obvious best-choice answer. But being human, we allow bias in to influence our judgment. The psychological concepts of bias are complex, but suffice it to say, they relate to our tendency to selectively filter out some pieces of information that (perhaps) should not be overlooked, especially when buying a home.
How Judgment Bias Can Influence Buying a Home
The most common example, at least in the world of real estate, is what some agents call the “I can’t live without it!” phenomenon.
This occurs when, during the process of buying a home, you see a house that so calls to you (or your spouse, or your kids) that nothing else matters. You MUST have that house. It may be priced way above your budget. It may have termites or some other condition requiring costly repairs. It may be lacking one or more of the “musts” on your list of amenities. Nevertheless, you MUST have that house, even though a rational person, making a decision without bias, wouldn’t consider the purchase for a moment.
Now something known as confirmation bias enters the picture. You begin searching for all the factors that confirm your (irrational) choice as the right one. Even if the factors are ambiguous, you will find a way to bend them to confirm your rationale.
Tempering Your First Impressions When Buying a Home
When representing a seller, Realtors® know the importance of curb appeal, and it connects directly to the psychology of decision-making.
When you step out of the car to view a home and your first impression is an overwhelming, “WOW!,” bias is instantly established in your mind. This favorable first impression creates expectations of what’s to come.
If you walk through the front door only to be met by a less-than-impressive interior, you are much less likely to care if your first thought was overwhelmingly positive.
As you can imagine, these psychological factors work for and against both buyers and sellers. The home could be truly stellar inside, and have everything you ever dreamed of at half the cost, and you might still pass on it if your first impression was negative.
This fascinating phenomenon is yet another reason that both buyers and sellers should look to a licensed real estate agent to assist them in any transaction that involves selling or buying a home.
The Edie Israel Team understands how important it is for us to be the voice of reason, providing advice and feedback, and helping you make the right decision for you and your family. The financial and legal significance of a real estate transaction is too important to be left to human whims.
Contact us today to learn more about how we can assist you in the process of selling or buying a home.