When you buy a stock, it doesn’t matter what the seller paid for it. You are going to get the price for the stock that a transparent market tells you it is worth. You are buying the stock because you think it will go up in value more than the thousands of stocks you could buy with the money.

When you sell a stock, you may be selling it because you need cash, you think the stock will drop in value, or you found a different stock that you think will grow more quickly. This should be a straightforward transaction.

Home buying, on the other hand, is messed up. Unless there is a competitive-bid situation so an actual market is created, there is no way of determining how good of a deal you struck. Buying a home is inefficient, exhausting and often brings out our worst traits.

The stakes of buying a home feel incredibly high. It is most likely your largest lifetime purchase, it can affect where your children are educated, how your social network changes, and the time you spend in a car. You are not buying a structure, you are buying an imagined lifestyle.

The stakes feel even more elevated because you are buying from someone who has different motivations. They could be selling because they are relocating, had a change in family situation, are ready for a change, or because their image of what their lives were going to be like when they bought went unrealized. Most sellers have an amount that they want out of their home, which may not reflect what a buyer wants to pay for it. They may also be emotional because of the memories they created or the financial situation they are in.

This is the worst kind of transaction: an emotional buyer and an emotional seller negotiating in an imperfect market.

Here is some advice:

• Create a list of the things that are important to you in a home and prioritize them. Then try to adhere to the top half of the list.

• Competing interests and an opaque market put both parties at a disadvantage, so don’t make it personal. If your heart is not set on a home, a low offer may insult the seller, but it may also be accepted or countered.

• Let your heart win if you can afford to. If you found the place that sings to you, then buy it.

• If a year or two down the road you realize you made a mistake, figure out how to get out of it, even if you lose some money.

Homes are not stocks. The life you create is their ultimate value.

Spend your life wisely.


Ross Levin is the chief executive and founder of Accredited Investors Wealth Management in Edina