Leave the emotion out
NEW research from CommBank reveals many home buyers allow emotions to influence their property purchase With the current state of the property market a hot topic of conversation among prospective home owners and experts alike, research from Commonwealth Bank highlights the importance of keeping a balanced perspective during the home buying process.
Whether it’s home buyers overspending because they really liked a property, or simply having a gut feeling that the house suits their personality, the bank’s survey of more than 1000 home buyers and investors has found many purchasers are letting their emotions through the door when purchasing property.
While there’s clearly a number of important factors that influence prospective home buyers from the price and location to the size and associated maintenance costs the research commissioned by Commonwealth Bank, in partnership with psychologist Dr Tim Sharp, found that while the majority (75 per cent) of property buyers claim to be rational rather than emotional buyers, in reality, emotions have a significant influence over their final purchasing decision.
The most common emotional characteristics that influence home buyers are: liking the feel/ vibe of the property (37 per cent); an instant attraction to the property (22 per cent); and suiting the personality of the buyer (21 per cent).
The research also uncovered differences when it comes to the most influential emotional characteristics
between different types of buyers: subsequent home buyers are more likely to be influenced by having a vision of what they wanted before they moved in (22 per cent); first home buyers are more likely to be influenced by the de´ cor of the interior (19 per cent); and investors are more likely to be influenced by the place making them feel successful (17 per cent).
The research also revealed emotions not only influence which property home buyers purchase but also how much they end up paying, with nearly half of recent home buyers (44 per cent) claiming they have paid more for a property simply because they really liked it.
According to Dr Tim Sharp, Executive Coach and Clinical Psychologist, emotions can materialise at numerous points during the property buying process, but they are most influential when it comes to deciding which property to buy and for how much.
‘‘We know that many home buyers start their journey to a new home full of excitement and optimism, but are gradually worn down by the sheer exhaustion of researching and inspecting different properties. More often than not, by the time it comes to signing on the dotted line our heads are crammed with all sorts of emotions that ultimately end up influencing our decision,’’ Dr Sharp said.
Clive van Horen, general manager, home loans, Commonwealth Bank, also believes prospective buyers need to consider the long term implications of purchasing a property.
‘‘Given buying a property is one of the biggest financial decisions most of us will ever make, it’s vital the final purchasing decision is based on sound rational judgement and not emotional justification,’’ said Mr van Horen.
In contrast to the role emotions play at the buying stage, the Commonwealth Bank research found the majority of home buyers are initially driven to purchase a property by rational factors, which is particularly interesting considering many home buyers move on to make emotional purchasing decisions.
For subsequent home buyers the most prevalent drivers for purchasing a property are ‘‘needing more space’’ (25 per cent), ’needing to downsize’ (15 per cent) and ’needing to relocate’ (15 per cent). While for investors ‘‘wanting to invest in property’’, rather than other options (e.g. the stock market 23 per cent) and ‘‘ my investment money is earning limited interest’’ (15 per cent) are the most common drivers.
‘‘I find these results really interesting, but not all that surprising. When we start looking for a property we have a very clear objective, for example, needing to get a bigger house to make room for a new member of the family.
But as we go through the different stages of looking for the perfect property we start to become emotionally connected to different drivers, such as imagining ‘‘how great it would be to entertain friends and family in this room’’ or ‘‘how much the kids would love the garden’’.
‘‘All of which starts to influence the types of properties we become attached to and removes us further from our original objective, and more importantly, in some cases budget,’’ continued Dr Sharp.
Mr van Horen added, ‘‘My advice to anyone who wants to get the right property, for the right price, would be to constantly revisit their original objectives for buying a new property and use them to assess properties on which they are looking to make an offer.’’