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Disposition and Emotional Decision-Making Pitfalls

13 minPRO
5/6

Key Takeaways

  • Price based on market comps, not project costs—the market does not care about your renovation expenses.
  • The sunk cost fallacy, endowment effect, and loss aversion are the three most dangerous emotional biases.
  • Set a predetermined pricing timeline and know your break-even point before listing.
  • Evaluate offers on price, terms, and buyer quality—the highest offer is not always the best offer.
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Test Your Knowledge

1.What is the sunk cost fallacy in flip disposition?

2.On what three dimensions should flippers evaluate every purchase offer?

3.Why might a lower cash offer be worth more than a higher financed offer?

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