As a real estate salesperson I find the psychology of decision-making fascinating. On a somewhat unrelated note, I am also a sucker for old game shows from the ’70s and ’80s. As a young child I dreamed of engaging in witty banter with Peter Tomarken and avoiding “Whammies” on Press Your Luck, longed for the opportunity to stop the Cliff Hangers’ Yodeler from going over the mountain on Price is Right, and yearned to shop for ridiculously overpriced merchandise in the Showcase on the Wheel of Fortune.
Well, the other night I was flipping through channels and landed on the TV Land Network and a rerun of Let’s Make a Deal from the deep ’70s (if Monty Hall’s suit was any indication). A couple dressed in matching chicken costumes had just been chosen from the audience to play a game with a $9000 top prize. Keep in mind, $9,000 was big money in those days – especially for human poultry with pockets full of clothes pins, paper clips and loose change. But, I digress…
The game was pretty simple. They were tasked with correctly pricing four common supermarket items and, each time they did, a zero was added to the end of their winnings ($9 went to $90 and so on). In addition, they were also awarded the product they were pricing! However, in a common but nonetheless riveting game show twist, moving on to the next supermarket item meant risking all of the money and prizes they had earned up to that point.
If you are still with me, you are undoubtedly invested in the outcome of this story, so I will go into further detail of the game…
The items they were pricing were Chiclets, Ramen noodles, Chapstick brand vaseline and a tool set of some kind. The first three items (Chiclets, noodles and vaseline) had to be correctly priced within 30 cents of the “retail” value. Since the first three items were relatively easy to price, risking $9, $90 and some gum was a no-brainer. The contestants quickly and skillfully earned $900 and were faced with the decision to risk their well-earned cash and prizes for the chance at $9000 – and that’s where it got really interesting.
Monty drew their attention to the much more expensive final item – the tool kit – and informed them they had to price it within $1. The difficulty of going 4 for 4 and walking away with the big prize started to set in. The sweaty, feathered adults started to crack. They hemmed and hawed, giggled, cried, hemmed and hawed again, turned to the gallery for advice, and hugged Monty Hall – you know, all of the usual stuff to kill time and build suspense. But then Monty threw a wrench in the slow-moving gears and introduced another choice. Yep, you guessed it, Door #3. Darn you Monty, you cruel, heartless puppeteer!!
So, what do you think they did?
Well, after a few minutes more of anxiety-filled gyrations and a commercial break, with $900 in hand and one move away from a $9000 jackpot (nearly $35K in today’s money), the contestants abandoned the game they’d been playing with such skill and success and chose Door #3.
Why?! What was so attractive about this 3rd choice? Did they know something I didn’t know? And, most importantly to the point of this entire article, should we be surprised at this decision?
The reality is, given the psychology behind this type of decision-making, the choice these chickens (literal and figurative) made is not surprising. For many of us, the pressure to make the “right” decision causes a tremendous amount of fear and anxiety in the moment, and the risk of failure by making the “wrong” decision is too much to handle. The unknown option allows us to avoid potential failure and gives us the justification to abandon course and choose the unknown option instead. It is chance vs. choice and, believe it or not, when faced with a difficult decision many people secretly prefer chance over choice.
So, what does this have to do with real estate you ask? Good question. Just like a game show, purchasing a home involves risk – and certainly produces anxiety. Purchasers worry about making the “right” decision when it comes to committing to a deal. They are legitimately concerned about price, property, location, timing, interest rate and product, down payment, and the overall investment (just to name a few), and do not want to get it “wrong”. Not to mention, the stakes are much higher than a few bucks and some chapstick. Some buyers shy away from a “highest and best” for fear they won’t win, while others avoid a decision altogether by choosing to rent for one more year (Door #3?) in hopes that the market will be more favorable when they resume their search.
My point is this; go after your intended goal and take the risk. Don’t settle for Door #3 just to avoid potential failure, especially when Door #3 is an unknown and you’ve put substantial time, effort and preparation into the “game” you are already “playing”. And – most importantly – don’t underestimate the benefit of a coach / cheerleader / expert in your corner who can offer guidance and advice to keep you focused and motivated. A competent real estate professional can be that coach. They have “been there” before and know the difference between a decision based on fact and a decision based in fear.
Epilogue: The Cock-A-Doodle-Don’ts on Let’s Make A Deal ended up “winning” a live sheep behind Door #3, costing them the $900 they’d earned and the potential for $9000. I think they would have thought twice about continuing the game and pricing the tool set if they had a little sound advice and encouragement…
My name is Eirik Davey-Gislason and I work in real estate in New York City. This blog is an opportunity for me to educate everyone who has a horror story or is on the verge of one. By sharing, preparing and advising my audience on what to expect, what is normal, what is right, and what is wrong, I hope to do my part to expose the wrong-doers and shape the future of this dysfunctional thing we call NYC Real Estate.