Emotional Factors Are Important in Home Buying

What a home is worth is a complex question, because no two homes are exactly alike. Appraisers rely on past sales of similar properties to establish a value. While that approach can put you in the ballpark, it usually ignores emotional factors that influence what a home ultimately sells for.

To illustrate, one home that was no bigger than others in the area sold for nearly $8,000 more than what similar homes had sold for. What did this frame cottage-style house have that the others didn’t? First, it had a lot of curb appeal. The owners installed vinyl siding and a new roof and kept the lawn and flower beds in top shape. White birch trees framed the house and contrasted with a dark green manicured lawn. It was one of those small homes you drive by and immediately think of home and hearth and swear you smell fresh bread baking. Next, the inside was freshly painted in a neutral color with newer carpeting, also in a neutral color. Nothing fancy, just a fresh clean look. No House Beautiful decorating here. Walk in, and there’s nothing to distract you from imagining your pictures, your furniture, and your ideas of how the house should be decorated. It was an emotional trip that three buyers took, and they ended up competing to see whose offer would prevail. With condos and co-ops, the interior emotional appeal is even more critical, since the curb appeal and exterior of all the units are the same. The buyer must get a favorable impression of the development first. If the development passes muster, then the unit that has the most appeal is the one that will sell first.

Most experienced real estate agents agree that a home is really worth what someone is willing to pay. A home may have an expert appraisal for $200,000, but if the colors, the way it sits on the lot, or the floor plan don’t appeal to buyers, it can languish on the market and end up selling for $185,000 or less.

Many sellers don’t understand this. They get an inflated drive-by appraisal from a lender for a home equity line of credit, and a price gets imprinted in their minds. Sometimes it takes months of being buffeted by the market and rejected by dozens of buyers before they get a clue that maybe they’re overpriced.

On the flip side, a home may appraise for $185,000. But the colors flow, the decorating is superb, there are few homes for sale in the area like it, and five buyers are making offers. In this case, the selling price could easily end up at $200,000.