How sellers can leverage The Endowment Effect In a Competitive Market

As you might know, I used to work as a research scientist for the Army, studying behavior after traumatic brain injury. After this role, I was in the sales and consulting space for human and animal behavior.

In psychology & behavioral economics, the Endowment Effect describes how people tend to value items that they own more highly than they would if they did not belong to them.

This explains why some listings are overpriced or why a seller thinks the hard work he put into the sunroom remodel should yield dollar for dollar when the market tells us differently.

When it comes to selling your home in a competitive market (or any market for that matter), here are 3 ways you as a seller, can leverage the Endowment Effect so that the buyers feel it too.

1 – Remove YOU from your home. This means taking down the family gallery wall before the listing photos are taken. Remove that beat up leather recliner (think Chandler’s Barka Lounger on Friends). Even though you love it, the buyers want to picture THEIR furniture in your home so let’s make it easy for them to do that.

The goal here is for the buyers to picture it as THEIR home as they’re walking through.

2 – Stage the lifestyle of your home. If you have a bonfire pit in the backyard, place a few adirondack chairs around it. If you have a TV room, turn on a good movie for showings. If there is a spot with a great view, highlight it and leave out a few bottles of water with a note telling the buyers to stop and enjoy it! If it’s a chilly day and you have a cozy fireplace, make sure you turn it on.

3 – Leave out a note or list of some of your favorite local spots. This could be as simple as “Beth’s Burgers” are the best and a 5 minute walk away! We like to get them to go and eat them in the TV room with Yellowstone on in the background. Make it FEEL like home before it’s ever their home!

The ultimate goal: Show your pride of ownership when you put your house on the market. Make the buyers think: Wow, they must love it here! Because that is going to give them a little slice of that endowment effect through the process.