Understanding the different value we place on ownership and how it changes the way we judge how much something is worth.
I'm sure that you have seen it happen hundreds of times. People who are trying to sell their personal items, like furniture and even their homes, sometimes set the asking price far higher than the item is worth. The problem can be so bad that, they even make themselves believe that the thing they are selling is worth considerably more than they would have been willing to pay for it themselves.
You can see this in action any time you look through a classified section of a newspaper or through the For Sale listings on Craigslist. This sort of “slippery slope” of assigning value is something that Real Estate agents have to deal with frequently. Especially when working with sellers who have lived in their homes for a long time .
In home sales, the buyer and the seller both have differing goals when it comes to setting a reasonable price. The seller wants to make as much money off of the sale as possible, while the buyer wants to get the best deal they can. In order to make both parties happy, many people will set the price a little higher than what they are willing to accept, in order to leave room for negotiation. However, this can't possibly explain why so many people seem to assign such a high price to the items they are selling. So, why does this happen so frequently?
According to a recent report at PsychBlog,there are several things about ownership that change the way we perceive value. Here are a few of them:
- Owning something increases our perceived value of the item – From the minute we own something, we bond with it and develop an emotional attachment to it. Simply owning an item makes it much more valuable to us.
- We want to minimize our losses – When we decide to sell an item, whether it is a piece of furniture or a home, we immediately focus on how much we stand to lose. Instead of thinking about how much money we will gain from the sale, we think about how much it will hurt to lose the item. When we think about what we stand to lose, there is a tendency to place a very high asking price on the item, in order to compensate ourselves for the loss of the possession.
- We simply assume that potential buyers view the item the same way we do – It is human nature to assume that the way we see something is the same way as someone else does. However, this couldn't be further from the truth. When you are bonded with something like, a home for example, when you look at it, you see how much it means to you. You see all of the small repairs you've made over the years and remember all of the good times you have had in the space. The potential buyer, on the other hand, is probably looking at the house and thinking about the things that are wrong with it and wondering how much the repairs and renovations they have in mind would cost.
- The more energy we have invested in something, the more we think it is worth – This is especially true with items that require a huge investment of time, money and energy, like a home. When someone has spent a great deal of all three of those doing repairs and remodeling projects around the house, they will want to add that investment into the asking price. Unfortunately, it's very unlikely that a buyer would place any value on how much you put of yourself into the item. To them, it is just the cost of ownership. In fact, it is very possible that they could rip out the flooring you so lovingly put in over that three day weekend a couple of years ago, without even giving it a second thought.
As you can see, when you own something and have made it yours, through investing your time or energy, you can actually perceive the value of the stuff very differently than others would. This means that when sellers price items at what seems to be an unrealistically high price, they aren't just being greedy. They have honestly lost the ability to view it objectively.
This is the place where they need the help of an objective person. One who knows a lot about how much the item is actually worth. Of course, there will be times when the owner doesn't want any help bringing their expectations back down to earth and will continue to insist on the inflated value they've placed on it.
Whatever the case may be, when you encounter this situation, either with yourself or with others, simply understanding why they are behaving the way they are is half of the battle. Respect where they are at and honor their attachment to the item. Simply acknowledging how much it means to them and having compassion for their loss will help you find some common ground for negotiation.
Have you ever encountered this situation? Have you ever dealt with someone who couldn't understand that the price they were asking was not even close to being realistic? I would love to hear your thoughts in the comments.
By Melissa Kennedy-Melissa is a 9 year blog veteran and a freelance writer for RealEstateJobSiteBlog, along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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