pseller psychology pstuck pso psales psuffer? : Manhattan Loft Guy

Manhattan Loft Guy

Nov. 10, 2006 - pseller psychology pstuck pso psales psuffer?

Sellers are slow to adapt to current conditions, say some

Jonathan Miller on Matrix started a chat about seller psychology, expressing the view that (in general) sellers have not accepted the current market facts.

One of the interesting points he makes is that his experience is that it used to take sellers three calendar quarters to adjust to a weakening market, but this time it is taking five quarters (and counting, for some stubborn sellers).

Then, setting prices involves more ego than greed for sellers, which can explain why appeals to pure logic don’t work so well. The Washington Post article he cites says:

Economic researchers have found that emotions are a bigger influence than was previously believed in how people make financial decisions. For a long time, economists believed that human beings made decisions like robots, that people applied simple logic in making financial choices. But a body of research developed over the past two decades, known as neuroeconomics or behavioral economics, has shed light on how powerful a role the unconscious mind plays. New imaging technology, meanwhile, is allowing scientists to peer inside people's brains while they wrestle with financial decisions.

These studies have illuminated a few key concepts: Many people will pass up sure profits for illusory ones. Some will turn down profits if they believe someone else is unfairly profiting more. Some will even refuse to sell if they believe they may come to regret it, because fear of future regret can be as powerful a motivator as money in the pocket today.

In other words, people will cling to prices they recall from a brighter day, even when market conditions have changed; they will walk away from a sale if they feel the buyer is getting too good a deal at their expense; and they are terrified that [if they sell now] the market will rebound and they will feel like fools.

Miller’s “solution”?

Brokers need to continue to educate the sellers on the accurate value of their property and simply don’t take the listing if its not priced within the realm of reasonableness.

Easier said than done, especially in a market in which some agents will “buy” listings by over-promising on price, in ways that support sellers’ natural inclinations to be optimistic (as Miller’s comment from blogger Urban Digs illustrates).

But essential. Otherwise, why should they pay us the big bucks?

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Nov. 10, 2006 - pseller psychology pstuck pso psales psuffer?

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