Real Estate Decisions Impacted by Psychology
An article on the website Smart Property Investment talks about the positive and negative biases investors have; those which do not let them apply their rationale before making investing decisions.
Impact of psychology on real estate decisions
The article contests that there are certain kinds of information and theories which skew decision-making. Yet investors’ inclination towards those information are such that they seek evidence to support their theories and this impacts their real estate decisions.
Ignoring trend and stats
The effect of our psyche on our wealth cannot be argued. Won’t we agree to our overdependence on recent trends and statistics and our negligent attitude towards historical data. This is just one instance of psychological influence on real estate decision making. Also, we are culprits of giving personal experiences more weight than the brute power of data. Stories drive us harder than stats and this can be a serious pitfall in the property market.
You can read the original article here.
We seek evidence to support our theories
It is inherent in humans to look for evidence to underpin their theories. For example, if you begin to love a neighbourhood, you will be bent towards finding upcoming local council initiatives or highway projects in order to justify your decision. However, such behaviour deters a rational enquiry because it is based on our prejudice. Won’t we feign blindness on finding that there aren’t any initiatives from the local council lined up?
This is precisely why you need a seasoned buyer’s agent. He/she is a professional who keeps emotions and associated prejudices out of the way and makes best real estate decisions for you (and rationally at that).
