How Emotions Can Hurt a Home Buyer

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Three years ago, when my husband and I first moved to our current home in Lafayette, Indiana, we got a pretty rude wake-up call about how emotions can make the process of buying a home even more costly. (See also: Your Finances: 4 Emotional Decisions to Avoid)

At the time that we moved, we were in contract on a house that we had really fallen in love with. I also happened to be seven months pregnant at the time, and we were anxious to close on the house and get settled before the baby arrived. Unfortunately, the detached garage was years overdue for a new roof, and the roof on the house itself was also in need of replacement.

Since we were already in contract at that point, the sellers' agent decided to start playing hardball. Knowing we loved the house and that we had an immovable time constraint, she advised the sellers to refuse to fix the garage roof at all and to only pay for re-shingling the house roof, despite the fact that it was past due for a full replacement. We were in the unenviable position of having to decide if we wanted the house badly enough to accept their terms.

Thankfully, even though we had already started envisioning ourselves living in that house, we felt so uncomfortable with the agent's tactics and the state of the roofs that we were able to do a real cost-benefit analysis and decide the house wasn't worth it.

For many home buyers, however, logic can sometimes take a backseat when making such a big decision. Not only can your emotions get the best of you, but agents and sellers can play on those emotions to lead you into a costly mistake. Here are some of the common emotional mistakes new home buyers can make, and how to avoid them.

1. Falling in Love at First Sight

Often, this particular emotional speed bump is only described as problematic if you're looking at houses outside of your price range. And while that certainly can be an issue (particularly if you're looking for a mixed-use property where you can start your ghostbusting business), even falling in love with a home you can easily afford can still be an issue.

Anytime you let yourself get carried away with visions of living happily in a particular home, you leave yourself vulnerable to making a big mistake. That's because you're more likely to fall into the confirmation bias — a cognitive bias wherein you look for information that reaffirms your belief in the soundness of your choice and discount any information that suggests otherwise. You are so enamored of the granite counter tops and spacious sun room that you ignore the fact that your new home is in a lousy school district or has mold in the basement.

Confirmation bias was part of our problem with the home we were in contract on. We knew that there were several downsides to the house — not including the roof issue — that we had basically ignored. On reflection, we realized that a homeowner who does not take good care of a basic home structure might also neglect other aspects of home maintenance that hadn't been revealed by the inspection — a fact that we simply disregarded when we were still in love with the house. (See also: How We Brainwash Ourselves Into Brand Loyalty)

Our situation made it abundantly clear that every home buyer needs to be willing to walk away from a sale, no matter how gorgeous the hardwood floors are. Allowing your love for a house to overcome your logic could really hurt your finances.

2. Not Seeing Past the "Trappings" of the House

When you first walk through the front door of a house for sale, it can be easy to be seduced by all the positives that the seller and agent are playing up. This is something like going on a first date with a house. The house is all dressed up and ready to impress — and it would be ridiculous to propose marriage (that is, make an offer) right on the spot.

Seeing past all the positive attributes can be even harder considering the fact that many sellers and agents are savvy enough to manipulate the atmosphere to make the house feel like your home: having the lingering scent of chocolate-chip cookies in the air (and a plateful waiting for you in the kitchen), removing family pictures and other personalized touches that might make it more difficult for you to imagine yourself in the house, and playing soothing and welcoming music. (See also: 6 Cheap Ways to Stage Your Home in a Buyer's Market)

But as much as the home staging can show off the house in its best light, it's a mistake to overlook all the possible downsides of the home. Having a house be a good home is about a lot more than cookies, closet space, and well-appointed kitchens. Don't forget to think about what work the house needs, how livable the house would be for your family, and whether the neighborhood truly meets your needs.

3. Looking for Perfection

While some buyers can fall for the vaulted ceilings in a house whose neighborhood is like a demilitarized zone, other buyers can fall into the opposite trap — wanting their home to fulfill any and every expectation they have ever had for an abode.

These types of home buyers are what Barry Schwartz, author of The Paradox of Choice, describes as "maximizers." Maximizers are absolutely certain that there is a perfect house out there for them, and they will not be satisfied until they find the house that meets all of their requirements.

Not only will looking for perfection in this way make your home buying experience prolonged and frustrating, but it also opens you up to overspending. Once you do find a house that fits your criteria, you will feel justified in spending any amount of money in order to make it yours.

But there is no such thing as a perfect house, and even once you've found "perfection," you'll find aspects of the house you don't like, and you'll resent the amount of money you've spent.

A better way to view the home buying process is to be satisfied with a house that meets about five criteria that you deem to be most important. Not only will that open up your options, but it won't set you up for disappointment.

4. Overestimating Your Ability to Perform Home Improvements

My husband and I are old house aficionados. We both grew up watching "This Old House" on weekends and have become the sort of tourists who drive around old neighborhoods to check out the architecture.

Because of that, we tend to fall for old houses when we're in the market to buy. The problem, of course, is that our price ranges run to the "fixer-upper" end of the old house spectrum. Thankfully, my husband is an engineer and actually knows how to fix many things. (I excel at supervising him.) If it were up to me, however, I would not be able to afford even the inexpensive old houses we're drawn to, since I simply do not have the handy-woman skills (or inclination) to handle repairs and improvements. (See also: DIY Home Improvement: 10 Free Options for Training and Advice)

After years of watching Bob Vila and Norm Abram, not to mention all those successful property flippers on TV, many of us may feel more confident in our abilities to handle home repairs and maintenance than we should. This is actually a symptom of the cognitive bias known as the overconfidence effect. Basically, we overestimate our ability to handle tasks.

Anyone who has ever gotten hip-deep in a home improvement project before realizing it's beyond their abilities (like me, for example) can tell you that having to call in professionals at that point makes your project far more expensive than it would have been had you simply called in the pros from the beginning.

Basically, if you are tempted by a house that will require you to strap on the tool belt as of day one, stop and think about whether you already own a tool belt. If you have to buy one for the occasion (or locate and dust off the one your father-in-law gave you several years ago), then you should probably step away from the home purchase. Know your limitations.

Avoiding Emotional Decisions

While emotions should certainly be a part of your home-buying decision process, it should not be what is driving your purchase. You will have to live with your decision for years, and you'll be much better off without indulging your emotional side and ignoring the rational reasons why a particular house might end up being more headache than dream home.

Did emotions influence your home — or any other — purchase?