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Published on 15 Aug 2025
We all dream of having a place to call our very own and the security of having a solid financial investment and, as such, buying a home is both one of the biggest financial as well as emotional investments you’ll ever make.
It's not just a transaction - it's personal. You're imagining your life in a new space, picturing future memories, and trying to secure your piece of stability. But in this emotionally charged process, even the savviest buyers can fall victim to unconscious biases and mental shortcuts that sabotage sound decision-making.
In the world of behavioural economics, these psychological traps are known as cognitive biases and they’re particularly dangerous when you're house hunting as they can lead to costly mistakes and deep regret down the line.
Lew Geffen Sotheby’s International Realty
breaks down some of the most common emotional pitfalls that can derail a smart home purchase and explores how you can stay grounded during the process.
1. FOMO (Fear of Missing Out)
You see a listing online that already has multiple offers and your agent mentions there's a lot of interest. Suddenly, you feel compelled to make an offer, even if the house doesn’t fully meet your needs.
FOMO creates urgency where there doesn’t need to be any and, especially in hot markets, it's easy to feel like if you don’t act immediately, you’ll never find a good home again. This bias can lead to overbidding or rushing into a deal without doing proper due diligence.
How to stay grounded: Create a clear, written list of your non-negotiables before viewing homes. When you feel emotional pressure, return to this list. Remind yourself that another home will come along — and that desperation is never a good foundation for a six-figure decision.
2. Loss Aversion
You’ve already invested time and emotional energy in a house and, even if a new issue arises (like a negative inspection report or a price increase), you feel compelled to move forward because you don’t want to “lose” the deal.
Loss aversion is a powerful cognitive bias because we tend to fear losses more than we value equivalent gains. Once you've mentally "claimed" a house, walking away feels like losing something, even if it's the smarter move.
How to stay grounded: Treat each step as a business decision. Build in “cool-off” periods between major milestones (like making an offer or signing contingencies). Ask yourself: If I saw this home for the first time today, knowing what I now know, would I still move forward?
3. The Halo Effect
You fall in love with the kitchen or the outdoor living area and it colours your perception of the entire home. You overlook flaws like a bad layout, small bedrooms or a long commute because of that one amazing feature.
The halo effect causes us to generalise one positive trait across the board and in real estate, this can make us blind to serious downsides.
How to stay grounded: Do two walkthroughs — one for emotion and one for logic. During the second visit, bring a checklist of practical considerations (noise levels, natural light, storage space, plumbing etc). You can even take photos and review them later with a critical eye.
4. Anchoring Bias
The listing price becomes your mental anchor. Even if the house is overpriced or needs R200,000 in renovations or repairs, you’re reluctant to offer significantly below asking.
Anchoring distorts your sense of value. You may compare other similar homes to a single price point rather than their actual worth, causing you to make irrational financial decisions.
How to stay grounded: Do your own market research. Look at recently sold homes in the same area and compare square meterage, condition, finishes and location. Base your offer on data, not the seller’s starting point.
5. Confirmation Bias
You’ve decided you love the home, and now you’re filtering information to support that decision, so you downplay negative inspection results or rationalise long commute times because you want your decision to be right.
Confirmation bias makes it hard to objectively weigh pros and cons so it can lead to ignoring red flags and silencing your own doubts.
How to stay grounded: Appoint a “devil’s advocate” — someone you trust to challenge your assumptions. Invite them to visit the home and point out things you may be overlooking. You can also write out a “pro vs. con” list and ask yourself if you’d give the same advice to a friend.
6. Sunk Cost Fallacy
You’ve spent months searching, submitted offers that have been rejected, and now you're exhausted so even if the current option is less than ideal, you feel pressured to just get it over with and buy something.
The sunk cost fallacy causes you to throw good money (or decisions) after bad, just because you’ve already invested so much in the process. This can lead to settling for a home that won’t serve you in the long term.
How to stay grounded: Step back. Take a week off from house hunting if needed. Remind yourself that the money and time already spent are gone but a poor home purchase could cost far more over time.
Although they can be a potential pitfall, emotions aren’t the enemy. They help you imagine what life could be like in a new home and are necessary for buying a property that you will be calling home for many years to come.
However, unchecked emotions can cloud your judgment, causing you to make decisions you may regret. By learning to recognise the cognitive biases at play during house hunting, you give yourself a huge advantage.
Create a home-buying plan that includes both logic and heart. Rely on objective tools — like checklists, comparable sales, and trusted advisors — to keep your emotions in check. The goal isn’t to strip the joy out of the process, but to channel it wisely.
In the end, the best home purchase is one that feels right — and makes smart financial sense.
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