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High Price Perception Bias In Purchasing Real Estate Properties

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This has got to be one of the strangest things I have ever heard in terms of buying real estate for someone to live in. Imagine you were buying a condo for someone where they researched a property that had two suites that were on sale. For the most part each suite were virtually identical minus some design differences such as the paint colour of the rooms.

Now imagine one place is selling for about $50,000 less than the other mainly because one owner is pricing it to sell. Apparently, there was a person who had a bias of sort where because of the price difference they were super skeptical that there must be something wrong with the suite. When they went into the cheaper one they immediately said there were no things like a shower and so he had an “Ah-Ha” moment on why it was cheaper. That wasn’t the case though as it did have a shower and again everything was virtually the same in terms of the layout and amenities.

Then as he went into the kitchen he was saying how the cheaper unit didn’t have as fancy of a looking cabinet. So that must be the reason why it was so much cheaper. The difference was literally a paint job and apparently even the real estate agent gave him a funny look where for a $50,000 difference you could probably replace so many things for that much money. But the guy was insistent still that he more expensive unit must be better and so he apparently told the person he was inspecting the property for that the more expensive one was a better buy.

I think it was clear that he had a price bias which in this case I would feel bad for the person who trusted him to seek out the best valued property. Imagine hiring someone like that in your company where they are making purchasing decisions everyday where they are probably inclined to pay for expensive product just because of the price tag thinking it is better. But this sure shows too on why some companies purposely price their products expensive and insist that retail partners can’t make it cheaper since many people have a perception bias for high priced items.


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