Losing sleep and consumed with worry, Cheri Brewer says she is "overwhelmed" by the choices she faces in buying a house that will be "as perfect as it can be."
The 24-year-old collection agent has looked at townhouses in Ashburn Village, houses in subdivisions in Kings Park and Chantilly, and ranchettes in Loudoun County, surrounded by acres of land. She is puzzling over mortgages, wondering if a fixed-rate, adjustable or one of the new interest-only loans is right for her. She spends her evenings online, jumping from Web site to Web site. On weekends, she races from one end of Northern Virginia to the other, trying to see as many homes as possible before night falls.
"I wish everything was there, in one place," she said. "I'd like to go to a restaurant with a menu that's one page, not a book. . . . You need to do all the research to find the right thing. It's not easy."
Home buyers today face a dizzying variety of choices, even in a market notable for its tight supply of existing homes for sale. Once, a couple buying a new home would have selected a house near the husband's job, picking the best they could get with the only mortgage option typically offered -- a fixed-rate mortgage for 30 years. If they bought a new house, it probably would have been in a subdivision with only three or four models on offer, with perhaps three colors or grades of carpet or linoleum from which to choose.
Now a buyer must choose from among 150 to 200 different kinds of mortgages on the market, balancing the risks against the potential. What about the style of home? Condo, townhouse or single-family? And purchasing a newly built house now entails thousands of decisions, with some subdivisions offering a choice of 150 kinds of carpet, dozens of kinds of hardwood floors, and multiple variations on design plans for houses in far-flung locations in different states.
The shop-till-you-drop crowd may find the process liberating and exciting, but new research shows that the proliferation of choices causes many people a lot of stress. With too many options, researchers say, people sometimes defer decisions or make poor choices, such as paying too much for a house or picking an overpriced or risky loan.
It's "choice overload," said Allen J. Fishbein, director of housing and credit policy at the Consumer Federation of America.
"You create a kind of paralysis," said Barry Schwartz, professor of psychology at Swarthmore College and author of the 2004 book, "The Paradox of Choice: Why More Is Less." People find it harder to choose when many options are available, and after they do, they are apt to second-guess themselves, he said.
"It's easy to regret the decisions they've made," Schwartz said. "They think they should have achieved perfection."
The human mind simply doesn't handle multiple choices very well, said Eldar Shafir, a behavioral psychologist at Princeton University. In a study he co-authored, published in the Journal of the American Medical Association in 1995, Shafir found that doctors who were told about a patient with chronic hip pain and were advised of a specific medication that could help him ordered the drug in more than half the cases, but when told they had a choice of two drugs, they referred the case to the orthopedics department without giving the man any pain medication.
Shafir, who discussed economic behavior at a recent Federal Reserve conference on consumer lending, said choice overload can also lead buyers to fall prey to people who present themselves as authority figures. In one famous Yale University study, for example, study participants administered what seemed to be painful electric shocks to other people, if they considered themselves as under the direction of a supervisor who told them what to do.
Shafir said people particularly want to avoid looking "stupid," especially when they are being observed by someone he said "looks knowledgeable and is acting impatient."
At that point, they will easily accept guidance from the authority figure, first taking comfort in finding out what the most popular decision is, he said. "If you go with what the expert recommends, then you are at their mercy," he said. "You feel overwhelmed and scared and you go with what is perceived as the standard."
That deference to authority figures may partly explain a phenomenon academic researchers have found: Some people who could quality for low-cost, or prime, mortgage rates sometimes accept high-cost or subprime loans.
"You need somebody to provide you with advice," Fishbein said. "They rely on a trusted adviser . . . who may not be looking out for their needs, because their interests are not the same as the borrower. Their interest, first and foremost, is closing the transaction."
Not everyone agrees, of course, that picking through plentiful options is a problem. "They're anxious to shop," said Kellye Brill, vice president of the Design Studio for home builder Beazer Homes, which has more than 30 projects in progress in the Washington area. "We're a shopping society. More people love it than are stressed by it."
Many people who buy new homes relish the prospect of imagining all their options. Software consultant Rhonda Theoret, 40, of Fairfax County, happily confronted 30 to 40 typed pages of design options when she bought her $1.4 million house through Winchester Homes, which markets its choices with its "Your Home. Your Way" ad campaign. She found the process a "great experience."
"When they gave me the options list, I said, 'Are you kidding?' " she said. "They said no -- and there's more you can choose."
When she bought her first home, a new townhouse in 1984, her options were limited to what was then standard -- oak cabinets and builder-selected floor and countertops. All she picked was the carpet. This time, however, she was able to make numerous adjustments to the model she selected. She had Winchester install three sets of French doors across the front of the house so several rooms have easy access to the front porch. She converted a huge bedroom closet into a sitting room. She chose custom light fixtures, she bumped the house out four feet on three separate levels and she added a laundry room, a third garage and custom bookshelves in the library.
"This has been a truly my-choice house," said Theoret, who spent a lot of time studying the features she thought would best suit her family, which includes her husband, Todd, 37, a systems network engineer, and their five children. "If I had to do it again, would I? Absolutely."
Even picking a location presents more options. Builder Richmond American Homes, for example, gives buyers a choice of more than 50 communities in the Washington region, in four states. Richmond American, like other builders, has been going farther and farther afield to find affordable land. Consequently, buyers who want a new home now must consider not only the historic, cultural and tax differences among the District, Virginia and Maryland but must add Pennsylvania and West Virginia to the mix.
The number of design options has grown sharply as well, partly because customers have said they want more choices but also because builders boost prices by enticing buyers with add-on features. Shafir said people perceive costs differently when juxtaposed with items that are more expensive. In other words, once a buyer is committed to a $500,000 sales contract, $2,000 more for upgraded cabinets does not seem like a large expense, he said.
When the cost is "piggybacking on a house, it looks like a trivial decision," he said.
Flat kitchen cabinets can be upgraded with raised panels, finished with decorative knobs, constructed of maple, birch, beech, cherry or distressed hardwoods. Cabinet accessories? Consider wine racks, tilt-out sink fronts, roll-out trash cans, plate racks. Countertops can be laminate, Corian or granite, with a choice of edge styles. Sinks -- undermount or drop-in? Stainless, porcelain or Corian? Double bowl, single bowl, vegetable bowl?
And that's not all. Carpet color, grade and pad. Hundreds of kinds of backsplash tile. Kitchen appliances in numerous permutations. Wiring choices, stereos, security systems and central vacuum units.
Builders have found such items to be a good way to boost the final price.
"More and more builders are more and more encompassing on options," said real estate agent Robyn Burdett of Re/Max Allegiance in Fairfax. "You go with the hot tub, you go with the [extra] bath. . . . Let's watch those dollars keep going on up."
There are things people can do to help themselves through the thicket, according to real estate agents, home builders and psychologists who specialize in decision-making.
Many builders employ design counselors, often in central sales centers, who guide buyers through the process and help overcome the delays that can occur as buyers deliberate. Prospective homeowners also can hire their own designers or find design-savvy friends to help them make good decisions and save money.
Buyers also can duplicate other things the professionals do. Beazer gives buyers a red binder to organize purchase information and design documents so they can keep everything in one place. Buyers are given strict deadlines within which they need to make decisions -- and they are warned that inordinate delays could mean it will take longer to build the house. Buyers on their own can take similar steps to organize themselves, and impose some realistic deadlines of their own.
Schwartz, the psychologist, suggests that people not try to aim for perfection but be satisfied with something less. Sometimes good enough is good enough, he said.
Real estate agent Jane Fairweather, with Coldwell Banker in Bethesda, said shoppers need to identify a neighborhood and a price range and then not budge from the plan. The most important thing for a couple to do, she said, is say, "Here's the circle we live in." "As soon as you identify the price and the location, the choices narrow. It's not unlimited."