If only we did not buy at the peak, or if we sold a few years ago! While many of us understand that local real estate values have declined 30% – 50% in abstract terms, doing the math on our own home often results in shock and disbelief.
Homeowners have a tendency anchor their estimate of their home’s worth to the price they paid. While the price you paid maybe very vivid in your mind, you may be better off disregarding that number. As Dan Ariely, author of Predictably Irrational notes, “the danger of anchoring is that it can cause regret, which usually isn’t very useful in decision-making…With investing, focusing on what’s already happened is generally a bad strategy. The decision at any point should be only about looking forward.”
When discussing the “High Price of Ownership”, Ariely’s experiments on behavioral economics show that ownership changes our perspective on the value of an asset. “The more work you put into something, the more ownership you begin to feel for it (think of assembling a piece of Ikea furniture). Once we take ownership of an idea, we probably fall in love with the idea more than we should. We value it for more than it’s worth. And quite often, we have trouble letting go of it because we can’t stand the idea of a loss.”
It is only natural to regret the loss of equity and unfortunate timing of the current market, but taking action today can protect your financial security and prevent the additional losses that are expected over the next few years. The main question should be: given the current state of the market, how can we maximize your outcome?
How can we improve the odds of selling your home for top dollar? To learn about our repeatable plan and home selling system, contact Team Bohannon at Coldwell Banker today (813) 979-4963.
