The area of study is labeled "neuroeconomics" and it brings to light some interesting concepts. A lot of people will take a pass on surefire profits in lieu of their imagined ones. Others will reject profits if they feel that another person is unfairly gaining more profits. Others still will even decide not to sell for fear that they may regret their decision. Fear of possible future regret can prove to be as powerful of a motivational force as the amount of money a person has in their pocket today.
Very little of this theorizing has been linked to the Real Estate market; however it is very easy to make a correlation.
A large amount of research has been conducted with regards to the concept of "loss aversion". This concept relates to real estate in the situation where people tend to deny the fact that their home' value declines as a result of a changing market. Under this concept, sellers will maintain their asking price even if the price is not in line with current pricing trends. A related situation is when a sellers hold on to a desire to earn the same amount of profit from the sale of their home as a neighbor or friend did when the market was much more aggressive, in turn causing the seller to feel very reluctant to sell at a lower price.
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