By COLLEEN KIRK //
With soaring prices, plunging inventory and fierce competition, navigating Long Island’s homebuying market can feel like a wild roller coaster ride.
When demand outpaces housing stock, buyers will make every effort to avoid being “scooped.” But, when forced to act swiftly, they may find themselves in the middle of a territorial bidding war or worse – buyer’s remorse.
In fact, a recent Zillow survey found that 75 percent of buyers who purchased a home in the last two years have at least one regret about it.
What’s a prospective homebuyer to do?
As a consumer-behavior researcher, I study a phenomenon known as psychological ownership: when shoppers feel ownership of “that perfect something” before buying it. This phenomenon is very applicable to today’s real estate purchases: A buyer attends an open house, touches the countertops, opens the closets and begins to imagine living there.
However, if consumers feel ownership of a home that they do not yet legally own, they can experience a great sense of loss when they are outbid or unable to acquire it for other reasons. That’s because when we own something – even psychologically – it becomes part of our “extended self,” and having it taken away feels threatening.
Colleen Kirk: Managing expectations.
The good news is that homebuyers can limit this self-threat and manage expectations.
First, they can prioritize “must-haves.” Focusing only on homes that have all the features you cannot live without may prevent psychological ownership in the first place, as well as cognitive overload. When consumers have too many choices, they become less satisfied with their purchases because they continue to think about all the choices they gave up. Therefore, making a checklist of “must-haves” can mitigate the “what ifs.”
They can also restrict “likes.” Even the small act of adding a home to a digital wish list can cause psychological ownership. Given this, prospective homebuyers should restrict their digital favoriting – such as saved homes on apps like Zillow, Trulia and others – to only those that they would realistically purchase.
Buyers should also limit their bidding. Research shows that the more frequently consumers bid on a product – in this case, a house – the more invested they can become, and feel that product is “theirs.” Homebuyers should set a limit on the number of bids they’ll place and stick to it.
They should also find something else that boosts their sense of self. Engaging in compensatory consumption by purchasing a different, unrelated product can restore self-confidence. For some, this might mean stepping away to shop for a special new piece of clothing; for others, it could be cooking a fancy dinner or vanquishing a video game opponent.
It’s also useful to amplify the flaws. According to psychological ownership theory, consumers feel greater ownership when they invest energy and time in an object. But homebuyers can create “distance” between themselves and the unsuitable or unattainable home by making it psychologically less attractive. Focus on one feature that you don’t love and why that undesirable feature does not help you communicate your self-identity to others or provide the sense of security and feeling of “having a place” that is essential to homeownership.
Buyers must also close the lid on the transaction, once the home is purchased. Limit potential buyer’s remorse by telling others about it or posting about it on social media. This can help buyers feel the transaction is closed. Even simply printing out a contract or photo of the home, signing it and filing it away can provide closure.
By curbing the negative feelings and infringement that can come with psychological ownership, consumers have the power to make the homebuying experience feel more like a major milestone and less like a roller coaster ride.
Colleen Kirk is an associate professor of management and marketing studies at the New York Institute of Technology.
