Buying a home for many people is one of the most important and expensive purchases they make. As such, the decision often requires a great deal of thought and rational judgement--or so you'd think.
The Real Estate Council of Ontario (RECO) conducted a study earlier this year that points out that more than 50% of buyers are influenced by emotions when purchasing a home. And that figure increases considerably to 65% in the 18-34 year age bracket.
Considering that first-time buyers represent nearly 30% of real estate purchases according to a ReMax Homebuying Trends 2013-14 report, the business of spending a large sum of money isn't nearly as complicated or mind-wrenching as you would believe.
It stands to reason that if purchases contain such an emotional component, there would be some vulnerability on the financial side. Such is the case, RECO found.
About 25% of young homeowners said they went over the budget they set and admitted to bidding over the asking price to close the deal on their new homes, compared to 15% of other buyers.
As you might expect, first-time homeowners are more susceptible to underestimate closing costs during the purchase process. While 43% of homeowners were surprised that closing costs were higher, the figure was 54% for those aged 18-34.
Is there any difference between men and women in the decision-making process? When engaged in a bidding war with multiple offers on the table, nearly three-quarters (73%) of women surveyed would ask their real estate professional for advice, compared to 63% of men. Furthermore, 37% of men surveyed would rely on their own research and gut instinct in making their decision, but only 27% of females would act in the same fashion.
A BMO study in 2013, identified excitement (48%), cautiousness (41%) and optimism (31%) as the top emotions expressed when buying a home. But there is a great deal of stress also, as indicated by 25% of homebuyers and 21% say they found the whole process made them feel anxious.
Perhaps the main lesson in all of this is to set realistic expectations ahead of time and to prepare for some of the setbacks that may occur before setting out on the exciting process of buying a home. This may improve the chance of getting a property you really want and gain a true sense of satisfaction when the deal is finally made.
