Home buyer behaviour that can cost or earn you thousands of dollars.

The ABC Radio National program, The Money, recently aired a program called ‘House prices — why we pay what we do’ (ABC, 2019). If you’re considering buying or selling, have a listen, it’s an interesting insight into human behaviour and the concept of value when pricing real estate.

A take home message from the program is how important it is to be informed and objective when buying or selling your home. Yes, it’s very hard to remove the emotion from what is essentially an emotional process, however, being aware of factors like sunny weather, favourable time of year and street naming may influence decision making and price. When buying, it is often a good idea to place a cap on your emotional price premium. If you’re selling, understanding the difference between market value and owner’s value, can help manage expectations in setting a realistic selling price.

The concept of value is understood as the price agreed to by a willing buyer and a willing seller, with neither person under any compulsion and transacting at arms-length on the open market (Australian Property Institute, 2007). The key here, is compulsion, and not being unduly influenced by sentiment or intangibles.

References

ABC, 2019, The Money, House prices — why we pay what we do, ABC Radio National, retrieved 11 October 2019, https://www.abc.net.au/radionational/programs/themoney/house-prices/11564380

Australian Property Institute, 2007, Valuation Principles and Practice, 2nd Edition, Australian Property Institute, Canberra.