It’s human nature – we put a greater value on things that we already own.  This is a well known theory called the “endowment effect” developed by an American economist, Richard Thaler, in 1980. One classic study is done with mugs where Group A, with no mugs, is asked how much they would pay for a mug.  The typical answer is $4.  Group B is given mugs and then asked how much someone would have to pay for you to part with it.  The average response is $8.

I see this happening frequently with sellers when it comes to pricing their homes. 

 Even though they are shown similar houses sold for less and the competing homes are priced lower, sellers still want to price their house higher.  The negative consequences of the endowment effect is that homes take longer to sell, the price ends up “chasing” the market and sellers eventually end up selling for a lower amount than if the house had been initially priced correctly.

Bottom line – sellers should be aware of how the endowment effect impacts their decision-making on price.  Don’t go by what you “think” it is worth.  Make decisions based on what is actually selling in the market.  Give me a call if you need a REALTOR® to help you price your way to a successful sale!  Donna Forest, 603-526-4116, email:  donna@donnaforest.com, web site:  www.donnaforest.com