Like falling in love, house buying can make us more emotional than rational
Sometimes, looking for a house can be a bit like looking for a significant other. “You’ll know when it’s the one,” people say, adding, “what’s for you won’t pass you by”.
Well, so far quite a lot has passed us by, and, just like I don’t buy into the myth of there being a ‘one’ romantically, I’m not sure I buy into this magical feeling when it comes to house-hunting either.
Buying a house is a rational decision, isn’t it?
You decide on your budget (or rather the bank does), you check out the property pages and price register and figure out which of your preferred areas you can afford, you visit the houses and make a judgment on things like BER ratings, plumbing and the state of the windows. Oh and how much “potential”, that much-loved word of house-hunting, it might have.
Or is the process really as unemotional as this?
We visited one house that had a fire burning in the kitchen. It was a rainy, miserable early spring day and the fire showed us the house in a whole new light – as a cosy, family home. Later that day we bid on it. Would we have done so if the home fires hadn’t been lit?
Another friend, deflated from viewing so many houses that hadn’t had so much as a lick of paint in years, and chockablock with the paraphernalia of another generation, such as chair lifts and commodes, pretty much whipped out her cheque-book the minute she viewed a more modern house.
The tell-tale strips of masking tape left around the window frames, signalling that the house had been recently upgraded and painted told her that this was the house for her. Six years later she’s still happy.
Advertising can also play on your emotions. Remember the days of glitzy billboards promising you “gracious living” filled with champagne, pearls and cufflinks? Sometimes, if a developer spends a lot on advertising you can infer that they must have spent a lot on the development and it must be good. It no doubt convinces some people to part with their hard-earned cash (or not so hard-earned as it was in the days of 100 per cent mortgages). Even today, agents will use emotive language and images to try and attract buyers.
Sometimes, this can backfire. Take the agent who found himself on the receiving end of a rap on the knuckles from the Advertising Standards Authority of Ireland (ASAI) when he used the word “prestigious” to describe an area. The ASAI found the word had been used out of context.
Emotions are also to the fore during that difficult negotiation process. If you find yourself in a bidding war do you bide your time and match each counter-offer with a slight increase of €1,000 or so? Or do you aim to get the other bidders to give up the fight by throwing in a significant increase?
Starting the bidding process with an offer that matches the asking price can also dissuade other bidders – or at least it has done in my experience. If, after just a couple of days, the offer is already that high you tend to think that the eventual sale price will be well in excess of the asking price and your instinct is to withdraw – but is this rational?
In an attempt to put off another bidder, I have heard of a person making a double-bid. While waiting over a weekend to hear back, he pre-empted a counter-offer by upping his own bid. The strategy worked and he got the house – although he always wonders whether or not he needed to spend the extra money on it. I guess he’ll never know.
Why are house prices still falling? Or asking prices at least. According to myhome.ie, there were about 140 price drops in the Dublin south area alone in June, or more than 300 across the whole of Dublin.
Are agents just testing the water by slapping on strong asking prices? Maybe it’s the clients who are requesting it? Or perhaps, with not enough houses to sell, it’s an attempt to convince people who may be on the fence that values have risen and that they should put their house on the market?
It’s hard to say – after all, some areas are still capable of even surpassing asking prices. Take Ashton Park in Monkstown, where a three-bed semi-detached with “enormous potential” on at €495,000 managed to sell for considerably more, at €558,000. Just two months previously, a similar property in the estate on a site with perhaps less “potential”, was put on at €414,950. It also sold for more than the asking price, at €438,000.