Bypass the Endowment Effect
(2-minute read time)
There’s no shortage of articles about things you can do to increase the sales price of your home. It’s the boring stuff real estate newsletters are made of. Add seasonal color to your yard. Install fresh carpeting. Paint your front door. Blah blah blah.
But there are more subtle and psychological considerations that can enhance your experience as a home seller. They may not directly affect your bottom line, but they will affect your perception of it.
Let’s start with “endowment effect” and “mere ownership effect” and how they can get in the way of your progress. The endowment effect is defined by Wikipedia as “the finding that people are more likely to retain an object they own than acquire that same object when they do not own it.” Mere ownership effect is described as “the observation that people who own a good tend to evaluate it more positively than people who do not.”
Simply put, a homeowner tends to perceive his/her house as being more valuable than it actually is – simply because he or she owns the house.
This is good for day-to-day living. In my sloppy Buddhist way, I truly believe that accepting “what is” is the key to leading a happy and meaningful life. If you’re lucky enough to both own a home and love that home, you are way ahead in the game of life.
But when it’s time to sell that home, it’s important to switch gears. And it’s not something you can do without professional help. So you hire a thoughtful and experienced agent like me: Someone who can see your home objectively and advise you accordingly.
You don’t want an agent who simply butters you up by agreeing with your inescapably subjective view. You want an agent who’ll tell you the unvarnished truth. It’s okay to take pride in your home. Just don’t let it get in the way of selling your home.
For example, you feel an “ouch” when your agent says you need a new dining room light fixture. You think it’s the coolest chandelier ever made in the history of home decorating AND you got it on sale at the Restoration Hardware outlet AND everybody who sees it loves it. Your feelings are (understandably) hurt. But don’t go all quiet and pouty. Remain curious and ask questions. There’s likely a very good reason your agent brought it up in the first place! (Yes, it’s just a light fixture but it’s the sort of focal point that can make or break the way a house looks online and in person.)
Real Estate Therapy tip: When you’re listening to your agent’s feedback about your property, lean into anything that lands as a negative. It might help you bypass the endowment effect on your way to a record sales price!
Cynthia Cummins is the founder of Kindred SF Homes and has been serving homeowners and homebuyers for 3 decades. For information on San Francisco Bay Area real estate visit KindredSFhomes.com. For my writing and mindfulness blog, visit WildHeartWriting.org.
