Sunday, September 27, 2015

What is Confirmation Bias and How Can I Use it to Price My Home?

Basically, confirmation bias is to interpret something in such a way that it confirms your beliefs. 

For example, in Real Estate one can begin to find evidence to support one's own hypothesis on the price of a home. If, let's say, a home was priced slightly higher than all the others, a buyer may begin to search for reasons as to why it must be priced higher. The buyer can begin to focus on all the positive aspects of the home, because after all, it's the higher priced home in the area. 

Confirmation bias can work well for a seller, but the 'pricing of a home' is not something that can be taken lightly. If the price of the home is too high, it will stick out like a sore thumb on the market, especially if there is no justification for the higher price. The home will simply be seen as overpriced, and the longer it sits on the market, the lower its perceived value will become. The longer the For Sale sign is seen on the front lawn, buyers may begin to wonder why no one has snatched that home right up, "Something must be wrong with it." 

If a home is priced just right, and by just right, I mean that sweet spot that a professional knows to hit, that home will get snatched up quickly and its perceived value will be even stronger throughout the entire transaction. After all, the buyer will be happy to have the home at a great price. (Remember, they will be finding the evidence to support it through confirmation bias.)

It takes a true professional to hit that sweet spot when pricing a listing. A mediocre Real Estate Agent that has 'basic knowledge' of an area is not enough these days. The true professional Real Estate Agent needs to be proficient in pricing every home in the neighborhood. Also, a true professional Real Estate Agent excels in marketing and the psychology of reaching a buyer to the core.

By listing the home at a slightly higher price (while hitting that sweet spot) you're bringing a focus onto the most desirable features of your home through confirmation bias which can help close the deal. 

I'd love to hear from you! 

Find me on Twitter @Lili_Tufel or call me (305) 306-7677.

Lincoln Road Mall in Miami Beach, Florida