Understanding the psychology of buying a home

Understanding your home’s strongest selling points requires a dispassionate view of your property. It also requires an appreciation of basic psychology. Here are a few insights that will help you understand what’s really going on inside the heads (and hearts) of buyers.

The disproportionate power of a first impression: People buy on emotion and then use logic to justify their decision. That’s why making a positive first impression is so crucial. The first emotion often remains dominant, regardless of subsequent information received. We’re not only led by our emotions when buying a home, but it’s the first emotion that sticks.

“I knew it was the home for us the minute I stepped inside.” Sound familiar? Equally, if someone feels ho-hum from the start, they’re going to struggle to get past this emotion.

Your home isn’t going to ‘connect’ with everyone who walks through the door, but you can increase your chances of a good first impression by addressing potential knockoffs. For example, if there’s an obvious crack in the ceiling, what conclusion might buyers jump to about the overall quality of the building?

Home as a status symbol: For many buyers, a home reflects their status and social identity. It influences how they see themselves and how they believe others see them. Factors that come into play related to a buyer’s self-identity could seem quite obscure – such as postcode and address, school zone, scope for entertaining, privacy, architectural style, architect, and previous owners. The more a home appeals to the buyer’s ideal self, the more they will pay for it.

Future potential: Home buyers often consider the investment value and future potential of a property. They assess factors such as purchase price, market conditions, a town or neighborhood’s prospects regarding infrastructure investment and urban planning rules, and potential for appreciation. Buyers may also consider the possibility of renovations, expansions, or rental income as part of their longer-term goals.

Appeal to these three cognitive biases: Cognitive biases play a critical part in influencing purchase decisions. Here are three to bear in mind:

• Confirmation bias: Individuals to favour information that aligns with preexisting beliefs or expectations. In the context of buying a house, confirmation bias can lead people to selectively notice and remember information that supports their desired purchase, while ignoring contradictory evidence, such as crumbling retaining walls or evidence of structural leaks.
• Accessibility bias: People give more weight to information that is readily available or easily accessible. That means properties that are more visible online and in other marketing channels will be more actively sought out. Accessibility bias can lead to a limited perspective and a narrow consideration of alternatives. It can result in missed opportunities, overlooking potentially better options, or being influenced by the opinions of a select few rather than making an informed choice.
• Anchoring and adjustment bias: People tend to judge a product in relation to previous products seen. Anchoring bias occurs when individuals rely too heavily on an initial piece of information (the anchor) when making decisions, and subsequently adjust their thinking based on that anchor. In the context of buying a home, this bias can manifest when people know the asking price of other homes and anchor their judgments to this initial information, often failing to adequately adjust their assessments based on additional information. This bias can lead to overpaying for a home or undervaluing alternatives.

Thinking of selling? Call 0800 GOODWINS to discuss your property’s strong points and how we can maximise its appeal to current buyers.