Buying Strategy: The Psychology of What Makes a Home Desirable

Did you know that only 25 per cent of real estate is desirable? That means we have to wade through the other 75 per cent of dysfunctional, dying or outright dead properties, to find something worthwhile. In order to be successful property investors, we must first learn the psychology behind what makes a home worth purchasing in the first place. 

Unfortunately, this is a huge challenge in real estate, and the consequences of owning something other than desirable, could be the loss of thousands of dollars at auction time. 

I myself have fallen into this pit of purchasing a property that was structurally well past its use-by date (with a terrible floor plan), that then became too expensive to rectify based on what it was worth.

Ready-to-buy properties that are highly sought after are hugely undersupplied in the markets. Instead, our best chance is to look for second-hand or brand-new properties, which we can either easily renovate or design from scratch that will speak the secret language of real estate.

The secret language of real estate is a concept a lot of investors are yet to understand. Essentially it comes down to three traits that people search for in a property. Quite simply, it is what human beings are ACTUALLY looking for in a home. 

Together, these ideals create happiness, and believe it or not, when real estate makes people happy, they’re likely to pay more for it whether through rent or capital growth. 

FOCUS ON THE VISUAL EXPERIENCE

There are a tonne of property investors out there who focus only on analysing markets and crunching the numbers. But guess what? Renters and home-buyers could not care less about the data! 

What they do care about – what the secret language creates – is the visual experience a home provides. Let’s look at the three traits your real estate needs in order to appeal to human beings: 

TRAIT ONE: FUNCTIONAL DESIGN

Functional design is exactly what it sounds like, and people will pay huge money for real estate that does it well. Not only does this mean having a floor plan that flows effortlessly, it means meeting the changing needs of the market.

A lot of second-hand properties were built based on an entirely different era. Fifty years ago, it was normal to only have one bathroom to share as family, open plan living wasn’t a thing, and built-in storage was sparse. 

New builds aren’t necessarily better. The rate at which real estate is being produced means there are more poorly built properties than ever before. The rise of townhouse communities means land size is getting smaller, and what do we know above all about real estate? Houses depreciate and land appreciates. 

But today’s families want homes that are more liveable. They want at least two bathrooms, a kitchen that will flow into a dining area, smarter storage spaces, more natural light, and now, functional areas to set up an office as people transition to working from home. 

If you don’t have good functionality in your property or if your floor plans are out of whack, the truth is you’re going to run into some major problems when it comes time to rent or sell. 

Remember there is a lot of dysfunctional real estate out there, so we need to make sure we’re investing in a home that is actually designed well and meets the needs of our general target market. 

TRAIT TWO: REFLECTIVE DESIGN

We as human beings absolutely love reflective design. 

Have you ever wondered why people buy a Rolex watch? You could easily tell the time from your iPhone, what on earth do you need with a Rolex watch worth $35,000? Well, this is what is known in human psychology as reflective design. Most high-end brands work off reflective design. 

In the context of real estate, if you walk into a property and you see nice engineered flooring, feature panelled cabinetry, exposed stone or brick, a great kitchen with a feature splashback, or a bathroom with a big bathtub, all of a sudden you feel as though your lifestyle is going to look and feel better.

It’s the same concept as the Rolex watch. You don’t own a boujee watch to tell the time, you own one to show off your status. Reflective design in real estate works the exact same way, from the location of a home right down to the fixtures and fittings. 

A property without this visual energy though? A potential buyer will look at that and immediately think about the extra money they’ll be forking out to bring extra beauty into the home themselves. This may leave you losing out on thousands by only getting offers under the asking price. 

TRAIT THREE: BEHAVIOURAL DESIGN

Behavioural design is incredibly important for real estate, in fact the best property will create a behaviour that can transform someone’s life. 

For example, imagine you bought a home that had a tennis court or a pool. Not only do you have a property, but you now also have the opportunity to play tennis or go for a swim. 

It doesn’t have to be something as monumental or as grand as that. A lot of behaviours are quite simple but investors don’t realise it’s something people even want to buy. Is there a window you can put a breakfast bar under? Or a corner you can create a reading nook in? Great! Now you’ve created behaviours for future tenants or owners giving them a nice spot to eat and a comfy place to read. 

Not all desirable real estate comes primed with behavioural design, but if the opportunity is there for you to add in that value, you absolutely need to. It’ll make all the difference when it comes time to rent out or sell. 

INVEST IN THE VISUAL EXPERIENCE

Remember, people buy things because they either want to reflect a bit of energy, create more functionality in their life, or they want to create a positive behaviour.

As property investors, it is in your best interest financially to buy the most desirable real estate that speaks the language of functional, reflective and behavioural design. Invest in the visual experience more than the data if you want to see tangible growth.

Of course, the secret language of real estate is just one important aspect of successful investing. Positive Real Estate offers free property investing seminars to ensure you make well informed decisions that will build your wealth long-term. 

Get all the information you need in one place. Register here.

By Sam Saggers