Have you ever noticed how hard it is to get a number out of your head once it’s there?
Especially when it comes to money.
There’s actually a term for this in psychology called anchoring. Basically, once we hear a number, we tend to use it as a starting point for what we think something is worth. Even when that number might not be all that accurate.
I see this happen in real estate all the time.
- A homeowner remembers what their neighbour’s house sold for two years ago and assumes their home should be worth at least that much.
- A seller thinks about what they paid for their house, adds up the money they’ve put into renovations, and comes up with a number they feel their home should be worth.
- Or a buyer misses out on a house that sold for $650,000 and suddenly starts comparing every other house to that one.
Here’s the challenge.
None of those numbers necessarily tell us what a home is worth in today’s market.
What the market actually knows
I’ve worked with sellers who have a number in their mind that they’re really hoping to get. And I completely understand that. For most people, their home is their biggest financial investment. There’s a lot of emotion attached to it, not to mention the memories they’ve made there.
But the market doesn’t know what you paid for your home. It doesn’t know how much you spent finishing the basement or replacing the kitchen. And it certainly doesn’t know what you need to get out of the sale to make your next move work.
The market simply tells us what buyers are willing to pay for that particular home, in that particular location, at that particular time.
That doesn’t mean improvements don’t add value. They absolutely can. But what something costs and what someone is willing to pay for it aren’t always the same thing.
Recognizing the number you’re attached to
One of the things I’ve come to understand as a real estate agent is that my job isn’t just to help people figure out the right price. Sometimes it’s helping them recognize the number they’ve already become attached to.
And honestly, I think we all do this in different areas of life. Whether it’s buying a car, negotiating a salary, or selling a home, we can get so focused on a number that we forget to ask whether it’s actually realistic.
The goal isn’t to get the number we have in our head. It’s to make the best decision based on the information we have today.
And sometimes those are two very different things.
If you’re thinking about selling and want an honest look at what your home is worth in today’s market, we’re happy to walk you through it, with no pressure. Start with a free home evaluation, or call or text 705-559-6116.
About the author: Todd Cook is a Sales Representative with McAuley Real Estate Group, a team at Bowes & Cocks Limited, Brokerage in Peterborough, Ontario, serving Peterborough, the Kawarthas & Durham. Related reading: What It Costs to Sell a Home in Peterborough.
