Research clearly shows that the fear of loss is a far more emotive driver than the joy of winning.
Knowing this can help you significantly in your real estate life but also in every negotiation you come across that is underpinned by human psychological needs.
Researchers in a number of experiments have been able to prove that an individual would do far more to protect losing a thousand dollars than winning a thousand dollars. Fear of loss is a powerful force.
So in the world of real estate auctions this theory suggests, that a buyer would be driven more to avoid losing the home than the feeling of winning the home. One of the reasons auction is such a great method to sell property is that it truly magnifies fear of loss in a very transparent way. The buyer bidding watches his competitive bidder bid away taking from his hands the home that he and his wife have emotionally become connected to. This is the driver pushing that bidder to keep going over the original game plan limit.
So next time you see me at the tail end of an auction and hear me say “Sir I would hate to think that you’re sitting over dinner tonight thinking you lost this house to someone else over a one thousand dollar bid”, you might not be surprised to see me get another bid…