Why Buying a House on Emotion Is a Losing Strategy
For years, economists have used the study of behavioral finance to explain the role emotions play in investment decisions. Their observations have turned up some interesting results.
First, they’ve found that while investors know very well that the stock market has its ups and downs, some will still base investment decisions on the assumption that what’s happening now will continue in the future. For example, the home buyer driven by a hot market will engage in bidding wars, assuming that the market will continue to heat up. The buyer believes he or she has to buy now or lose out.
Second, they’ve found that other investors follow the “anchoring” concept, in which they hold off selling an asset in hopes that it will increase in value despite evidence to the contrary. In this scenario, home buyers stubbornly anchor themselves to an offering price even though the seller and buyer are only a few hundred dollars apart.
Third, they’ve found that some investors buy too much house for their budget or they forget about the crumbling foundation, because they love the seller’s décor.
Fourth, they’ve found that other investors fail to see beyond the clutter as to possibilities of a home.
To prevent such problems, the emotional home buyer needs the perspective of a real estate agent. Such a professional can separate the emotion from the investment so your dream house won’t become a nightmare.
Author:Future Client Phone: 480-838-9613 Dated: November 4th 2015 Views: 768 About Future: ...
The results of the latest Rent vs. Buy Report from Trul
"My wife and I worked with Alan and other members of The Valley Solutions Team about a year ago when we were moving to Arizona to buy our first home. We searched website after website, but kept coming back to his team website. Thank goodness we did. Alan was awesome to work with, and was very flexible and dependable. While we had to fly in from out of town he was available to us when we needed him. The searching and buying process went very smoothly and we couldn't have been happier. Then, a just a few months ago, we had the pleasure of working with Alan again. We ended up buying our second home here in Scottsdale. Our situation was a bit more difficult as my husband was away more often then not for work. Alan was more then willing to meet with me when our schedule allowed us to do so, and did everything he could to help us purchase our second home while my husband was away. The second time around went just as smooth as the first and we couldn't be more pleased with our new home. Alan was very easy to work with. He responded to e-mails, and phone calls right away and have a vast knowledge about Arizona and the real estate market. They are the best of the best and we wouldn't buy from anyone else, or recommend anyone else to work with. They are just that good!!!"