Psychologists list “emotional reasoning” as one of many cognitive distortions or errors in thinking. It can be defined as having emotional beliefs and opinions that affect one’s decisions without supporting evidence. We decide solely on the way we feel.
Emotions Attract…Facts and Logic Justify
Studies show that up to 90% of people’s decisions are based on emotion, and buying real estate is no exception.
Quite often, the eyes of buyers light up and you can see the allure of the home on their faces. Yet with the help of a good REALTOR®, most buyers attempt to justify their decision to purchase through investigation and confirmation of data to resolve whether to buy into what their emotions are telling them. Along with their REALTOR® they ask questions about any possible concerns they might have. They also make an offer with conditions, which if not satisfied render the offer null and void.
Typically, an offer is conditional on:
- Obtaining mortgage financing; after all, some 90% of buyers need to borrow to some degree to fully fund the purchase;
- Hiring a home inspector to assist in uncovering defects and noting any features needing attention in the near future.
Other conditions might include: verification of the home’s square footage if that’s important, whether the use of the property is legal, whether a building permit can be obtained to add on to the dwelling, and more.
When Emotions Rule and Emotions--Not Facts--Justify
Now and then buyers will buy based solely on their feelings. Their emotional reasoning takes over and induces them to buy without inquiry or research to justify their decision. Emotional reasoning totally clouds their decision-making. As a result:
- They want to rush into submitting an offer to the seller.
- They submit a cash offer and ignore advice to include conditions that support a due diligence buying process.
- Then again, they might remove conditions placed in the offer for their protection without making use of them.
- A buyer’s false confidence in the ability to fund the purchase without verification backfires, resulting in no closing and a breach of contract.
- Ignoring the home inspection undermines the legal notion of “Buyer Beware” that might have discovered a costly deficiency that could have been uncovered prior to closing.
Most buyers justify their purchase: they take a second more sober look at the property, sleep on it to see how they feel next day, and insert protections in the offer to ensure they are financially able to buy and have taken measures to feel comfortable with moving ahead. Eliminate these due diligence measures and you are buying with only one half of the equation, your emotions.