Purchasing a home is one of the most emotional experiences of your life. The process will send you to the highs of the mountains and the lows of the valleys.
I would never suggest removing emotions entirely from the process; however, reducing your feelings to make sound decisions throughout the journey is a great idea.
Welcome back to the Road to Homeownership series (Part 1), where we make well-informed housing decisions to achieve greatness.
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Your home is not an asset. The first step to reducing emotions is understanding that your home is not an asset—meaning it will not make you money.
“Rich Dad, Poor Dad” can help you understand this concept better. In short, you don’t want to speculate on future home prices as a reason to buy your property.
Purchase the most functional and beautiful home considering your situation, family needs, and finances.
Looks can be deceiving. If you have a spouse, you will be in for the ride of your life during the home-buying process.
In most couples, one person is the financial guru, and the other is the aesthetics expert. It is tough to balance finances and beauty.
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Your real estate agent will always appeal to the aesthetics expert because it makes sense. There are so many options and trimmings inside a house that can get people emotional.
If you have time, read these books on being a real estate agent: “Sold,” “Skill,” and “Scale.” They will give you some great insight into their tactics to make the sale.
Avoid bidding wars. If you get emotional about a particular house, you’ll end up in a bidding war. This is a seller’s market, which will last for a very long time.
You will compete with deep pockets now that corporations, investors, and real estate trusts have moved into your neighborhood.
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They can afford to overpay; you cannot. I know this will seem to be your dream home, but I can assure you another home can replace it.
If you overpay up front, you’ll be sorry on the back end. As a couple, you must stick to your budget. I know; easier said than done.
Our emotional experiences buying homes. My wife and I own three houses we bought in 2008, 2017, and 2020. I want to review how passionate we were during the process and their outcomes.
Home #1 (Yuma, Arizona). Back in 2008, we were 27 and 24. We knew very little about the home-buying process or how much money to spend.
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That’s why I repeatedly talk about staying within your budget. My wife and I bought three acres of desert land in 2008.
We then found a general contractor to build the house of our dreams. While the place was excellent, the price was a nightmare.
It was an emotional experience for both of us because we did not prepare first. My wife was laser-focused on the trimmings (flooring, cabinets, ceiling fans, faucets, countertops, etc.).
I wanted to stay on budget. This created lots of arguments over the five months it took to build the home (think HGTV). However, we survived, and the house was terrific.
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If I had to do it again, I would. But, if I had the information back then, I would have bought a small starter home in a quaint neighborhood. We should have purchased something for $140,000 instead of $300,000.
House #2 (Pensacola, Florida). Buying this house was devoid of any emotion. We lived in Iwakuni, Japan, in 2017 and received orders to Pensacola, Florida.
I had a training event in Pensacola roughly six months before moving, so I decided to do some house-hunting with my buddy.
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We looked at two houses. I took some pictures and sent them to my wife, and she agreed to buy the home. I told her this home would be a long-term investment property, not our dream home.
Somehow she was okay with this, and we bought the home. It is a great money maker now, and we still love our time in the house. We have some fond memories there.
House #3 (Pensacola, Florida). In January 2020, we drove through a neighborhood with homes on acreage.
My wife and I hate living in the suburbs; we love to be on land. We discovered this hidden gem of a house and made an emotional decision to buy it.
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It was expensive ($340,000 compared to House #2 at $180,000). However, we did not let emotions overrun us completely.
We decided if we moved into this huge house, we would get two roommates. The mortgage was $1700, and our two roommates paid us a total of $1,600.
We both love this home, where we will live for at least the first five years of retirement. So we made an emotional decision with the proper financial planning.
Merging finances and emotions. Your real estate agent will facilitate your home-buying process, but you need to be in control.
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You do not want to be house-rich and cash poor. This statement means you have a lovely, expensive home but can’t go to restaurants, ball games, or vacations.
As a couple, consider your monthly budget before seeing your first house. Once you enter the process, it becomes the wild west.
There is no limit to how much money you can spend. The banks will let you push yourself further than they let on at first.
Once you start the process, everyone has invested time into you—real estate agents, lenders, inspectors, and title companies.
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They all want you to get the property, so they will bend further once you are deep into the process. You can get in over your head quite quickly.
You’ll hear things like, “Adding $10,000 to the purchase price is only $40 per month more.” Realtors say these statements to play on your emotions.
Conclusion. When we closed on our third home, the appraisal came short of the purchase price. The listed price was $350,000, and the VA appraised it at $340,000.
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The seller wanted me to pay the $10,000 difference in cash because the bank wouldn’t fund it. We were two months into the process, and we loved this home.
I told my agent that I would not pay the extra $10,000. I would have paid $350,000 if it appraised for that amount; I tried to be a good steward.
However, they should have had their home appraised before listing it and finding out the hard way. In short, the seller conceded, and we got the house. It was beyond emotional.
Stand your ground, know your limits, and compromise with the complete picture in mind. Remember, owning a home will be super expensive.
There is great value in owning a home, but if you get emotional and overpay, you’ll add more strain to your relationship and finances. Be careful, enjoy, and Good Luck!
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