Burt M. Polson - Commercial Real Estate Broker

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What's it worth to you? -- The emotional soup of real estate

Photo credit: nerovivo/Source/CC BY-SA

Taking a snapshot of our real estate market you could almost imagine yourself back in 2006. In our area we are again experiencing multiple offers, most over the asking price, too few properties to chose from and sellers and landlords able to handpick only the best buyers and tenants.

What causes surges in the prices paid for commercial and residential real estate? What justifies rent increases that it effectively makes it unaffordable for most? Why do we find there is a lack of available properties to purchase, lease or rent?

Sometimes it is what someone is willing to pay. 

The real estate economy we are currently experiencing is multifaceted. By no means am I belittling the issues we are confronted with as a city, state and nation.

We truly have a supply and demand tug-of-war sustaining the marketplace currently under way. From office space in San Francisco being gobbled up by tech companies to a revitalization of the Oakland apartment market making owners and developers ultra-wealthy.

What part do emotions play in the pursuit of that perfect location for your new business, the “trophy” investment property for your portfolio or the perfect house that will become your home? 

How do our emotions, past experiences, those around us and media sources play a role in our decisions causing our hearts to race and pupils dilate when we find that perfect property?

There is a cognitive process our thoughts take to yield us a result. We are aware of only eleven percent of our thoughts, the other eight-nine percent are subconscious.

Our thoughts create a certain feeling, those feelings cause us to take an action and the action leads to a result--needless to say, both positive or negative results. Because all our thoughts must take this path our feelings and emotions play a big part in our decisions whether we want them to or not. Plus, remember eighty-nine percent of our thoughts we are not even aware!

You experience this daily. For example, you see a product on sale marked half-off. Even if the price was doubled beforehand you had to purchase. Our real estate market is just the same.

“There is no inventory,” “prices are going to continue to rise,” “you will not have an opportunity like this again” are words that echo in our minds as well as all around us.

I see it often: paying too much for a property, accepting terms of a lease than are a tremendous disadvantage to the tenant, buying too much property, or buying too little that is soon out-grown.

Taking the time for the cognitive process to work itself through and understand the emotional side of your decision is the prudent path to take. It is easy to get caught up “in the deal.” Oftentimes, it is good to work backwards in the process and ask yourself what do you really want?

An ACRES Real Estate Services, Inc. Company