Should social proofing help you buy a house?
If you work in marketing, or have ever tried to sell a product or service, chances are you’ve harnessed the power of social proofing.
What is social proofing? In simple terms, it’s basically ‘monkey see, monkey do’. We feel more confident to make a purchase if we see others purchasing the product. The more we see people making the purchase, the more our confidence increases. That’s why client testimonials and reviews are so important.
It’s a bit like seeing a long queue out the front of a restaurant. We are generally more prepared to wait for a table in that restaurant than visit the empty restaurant next door, because social proofing tells us the restaurant with the long queue must be the better one. Likewise, if a Facebook post has a lot of likes, we feel it must be worth viewing.
Social proofing is just one of the psychological factors that can influence our decision to purchase a house. CoreLogic has compiled a list of these psychological factors:
- emotional attachment
- the story behind a home
- perceived value
- ability to envision an ideal lifestyle
- cultural superstitions
- positive first impression
- social proofing.
As you can probably tell, none of these influencing factors relies heavily on logic.
While social proofing can help you decide which suburb you’d like to live in, or maybe which real estate agent to use, it’s important to bear in mind that social proofing is sometimes engineered.
For example, auction crowds can be artificially boosted to make a house appear more attractive. The market also influences social proofing. If people near and far perceive a particular suburb to be very desirable, houses there are more likely to sell.
While it’s easy to be influenced by the crowd, it’s important to make active, smart decisions, when it comes to buying a house. Thinking for yourself is imperative.
Here are a few ways to combat social proofing when buying your home:
- Know your upper limit and stick to it
Decide what you are willing to spend and stick to your guns, even if a house appears particularly popular. Don’t get swept along on the wave of influence. Talk to your Mortgage Choice broker and your financial adviser before attending an auction or making an offer, so you have a clear picture about how much you can afford to spend. Mortgage Choice’s home loan calculator can also help.
- Do your research
Don’t rely on social proofing alone to purchase a house. You need to spend time getting to know the location, have building and pest inspections done, and be clear about the characteristics you are looking for in a home, such as size and functionality.
- Make active, rational decisions
Just because a huge crowd has gathered to bid on 44 Smith Street, doesn’t mean 44 Smith Street is the best house for you. Talk to your advisers, do your research, and think independently and clearly about what you are looking to buy, and why. Buying a house is one of the biggest purchases you will ever make, so it’s worth taking time and clearing your head to ensure you make the best decision.
Book a chat with your Mortgage Choice Broker today to discuss your unique situation, so you can make a rational, sensible decision.
