While looking for a home this summer, first-time buyer Xinyu Li felt emotionally overwhelmed. She and her boyfriend saw several rejected offers, and Xinyu compulsively checked the ads online.
“It was a lot of stress and anxiety,” she says. “I had to go to therapy.
Xinyu’s psychotherapist advised her on mindfulness strategies and suggested that she only check the online ads once a day. After Xinyu closed a condo in New York City and no longer spent endless hours looking for a home, she felt better and stopped seeing her therapist.
Buying a home is a stressful experience, even in normal times. Partly because of the size of the deal – a home is the biggest purchase most people make. Then there are the emotional considerations about lifestyle issues such as commute times, the quality of schools, and neighborhood crime rates.
Raising the ante for the sanity of homebuyers, the 2021 housing market is anything but normal. Prices are at record highs, stocks are very tight, and bidding wars are common.
These market conditions have escalated an always difficult process into one that can test the sanity of even the most experienced homebuyer.
“There is a deeply emotional connection to home ownership in general,” says Ryan Gorman, President and CEO of Coldwell Banker Real Estate. “In a difficult market and a market with limited stocks. There are more buyers than homes to buy. When something is emotionally important to you, financially important to you, and difficult, it can be quite stressful.
House prices on a tear
During the coronavirus pandemic, house prices have increased at double-digit rates. The typical American home sold for $ 352,800 in September, up from $ 311,500 a year earlier, according to the National Association of Realtors.
In Xinyu’s case, the stakes were even higher. She and her boyfriend paid $ 882,000 for their condo in Brooklyn.
These are the kinds of numbers that create high pressure situations, says Dan Ariely, behavioral economist at Duke University and author of Predictably Irrational and other books.
“All big purchases have the potential to create a lot of stress,” Ariely says. “By definition, big purchases mean that any mistake can be big. It’s inherent.
Bidding wars make many losers
While buying a home is always stressful, today’s inventory shortage adds a new wrinkle: Buyers with sharp elbows are fighting each other for homes.
Only one person wins a bidding war. If there are a dozen buyers vying for a home, 11 are losers.
“The biggest source of disappointment for buyers is losing a property,” says Xinyu broker James McGrath of Yoreevo real estate brokerage firm. “To avoid disappointment as much as possible, it is important to have appropriate expectations. Losing it always stings, but if a buyer knows their odds are 25 percent instead of 95 percent, it won’t be so disappointing.
Of course, the level of competition adds a new layer of stress. Buyers know they must bid aggressively to win in a bidding war, but this reality adds the risk of overpaying.
“A hellish experience”
The first buyer John Dempsey moved into his new premises in early November. He paid $ 255,000 for a townhouse in Wilton Manors, Florida.
The victory only came after a months-long home search which he describes as “a hellish experience”. Dempsey has lost auction wars over six properties – after each time imagining himself moving into the house he didn’t own.
“You place a very small piece of your heart in the house. And then all of a sudden the rug rips out from under you, ”Dempsey says. “You start to get discouraged. “
Dempsey struggled with an agent who often took hours to respond to his requests. He eventually moved on to a buyers agent with Better.com, the real estate and mortgage company where Dempsey works as an executive assistant.
“She was so communicative,” Dempsey says. “She said, ‘Don’t worry, you’ll have it.'”
Dempsey is happy at home in his new home, and says the experience has underscored the importance of feelings in the home buying process.
“I think people are forgetting the emotional connection that home has,” Dempsey says. “For me, home is your comfort. It is your peace.
How to Face a Tough Home Selling Market
Homebuyers often focus on the numbers. What is my credit rating? Where are the mortgage rates? How many houses can I afford? What deposit do I have to pay?
But emotions can be just as important, especially in an unbalanced market. Here are some tactics and tips to calm your mind and maintain your sanity:
- Understand how crazy this market is. Gorman of Coldwell Banker suggests a “level-setting conversation” with your real estate agent to establish expectations regarding price, pace and level of competition. “Even if you’ve bought a home before, this market isn’t what it used to be,” Gorman says.
- Prepare to lose. “Losing is no fun, whether it’s a game of checkers or auctioning a house,” says Gorman. The deep emotional issues involved in buying a home make the loss especially difficult.
- Your pace. Xinyu’s frantic search for listings didn’t leave her close to landing a property. “There’s kind of a paradox there,” Gorman says. “I’m not sure that a long google search is going to give you more information. Hitting the refresh every 5 seconds probably stresses you out and doesn’t really help you.
- Find an agent to guide you through the process. Dempsey says his first agent’s spotty communication messed up the process for him. Gorman is not surprised. “A lack of information creates a void that is often filled by fear,” he says. Gorman says “a calm conversation with a trained agent” is crucial.
- Embrace the mindset of inevitability. Ariely says you should eliminate the yes or no part of the decision. “People need a new home, and there’s no option not to get one,” he says. By getting rid of that bit of uncertainty, you can focus on choosing the right home.
- Give yourself a time limit. Ariely proposes, for example, to set a deadline of three months. Within that time frame, accept the best property you can find.