A new twist on happiness as applied to real estate is presented by Daniel Gilbert, Harvard University psychology professor and author of "Stumbling on Happiness". Gilbert talks about how owners of material things like houses experience a sense of loss when they have to part with the thing they own. The loss seems more stubstantial to sellers than the buyer's gain through acquisition of the same item. Gilbert thinks this one insight may be the key to why it's so difficult for sellers to reduce the price on their homes when they list them. It's not necessarily about the monetary loss but the emotional attachment and subsequent loss the sellers will experience when they part with their home.
Sellers see their homes differently than buyers because of their emotional attachment. Sellers attribute more value to the home than others with less emotional involvement. In our office, we have an illustration of how different people in a transaction view the same house. The picture the owner sees is like the Taj Mahal. The inspector sees the same house depicted with bandages and all kinds of imperfections. The appraiser sees the house as very small. The buyer sees a dreamy house. It's hard to admit, but our history and our feelings sometimes get in the way of seeing the house logically. That's why it's important to base the price of your home strictly on comparable sales in the neighborhood and then increase or decrease the price based on whether the market has remained stable or changed as ours has in the Minneapolis St. Paul area of Minnesota.
(c) Bonnie Erickson 2006
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