Mike Browning

Tag: Loss Aversion

  • Quit Making it Where You’re Almost Certain to Lose

    Quit Making it Where You’re Almost Certain to Lose

    Some Risk Is the Price of Admission. Learn to deal with it.

    Trying to remove every downside usually creates a bigger one.

    People spend half their lives trying to “not lose” in the future. And in the process, they lose right now.

    Extended warranties are the perfect example.

    You just agreed to buy a car or a laptop or a $2,000 TV. Or whatever. The deal is done.

    Then instantly they pivot to telling you how fragile it all is.

    “Repairs are expensive.”
    “These electronics just don’t last like they used to.”
    “Most people choose the protection plan.”
    And of course:
    “It’s a no-brainer.”

    A no-brainer for them.

    Warranties are one of the biggest profit centers in the auto business and high ticket retail. They don’t make much on the actual sale.

    But that finance office?

    That’s where the margins live.

    They train those people to sell fear with a smile, and a few of them are incredible at it.

    When I bought my wife’s car, the finance director put on a master class. She made it sound like only an idiot would say no. Then she started low-key shaming me when I held firm.

    Told me I was the first person who had ever turned her down — obvious nonsense — so I said that makes me either the smartest person she’s met or the dumbest.

    She doubled down, telling me all the ways I’d suffer when the car broke.

    I finally grabbed her business card and told her if she ended up being right, I’d call and congratulate her.

    My wife loved that.

    The whole pitch is built on loss aversion.

    In our minds, the pain of losing is about twice as strong as the pleasure of gaining. So people pay a big premium today to avoid a possible big bill tomorrow.

    Never mind that the warranty may not even cover everything later.

    And that’s assuming they don’t try to wriggle out of it altogether.

    (Furniture stores, by the way, are experts at this. Don’t ask how I know.)

    People view each warranty as a one-off decision. But you have to look at this over a lifetime.

    If you refuse every extended warranty you’re ever offered, yes — at some point you’ll pay full price for a repair or a replacement. But stack up all the money you saved by saying no a hundred times before that?

    You’re way ahead.

    You can’t eliminate risk.

    Not in purchases.
    Not in life.
    Not in business.

    All you can do is decide whether the downside is known and acceptable. If it is, then buying “insurance” for every small thing doesn’t make sense.

    Real estate isn’t much different.

    You can’t predict what rates will do, and you can’t predict where the market will be in two years.

    You make the best decision with the information you have, and you get expert help so you aren’t flying blind.

    (Hello)

    Trying to wait for perfect certainty is just another version of the extended warranty pitch — paying a premium today to avoid a maybe tomorrow.

    If you’re thinking about selling land, your job isn’t to eliminate all risk.

    It’s to understand it, weigh it, and make the smartest call you can.

    Get More Like This In Your Inbox Here!

    PS- You’re probably not ready to buy or sell real estate today. But I’ve found the best time to start preparing for any big decision is well before you’re actually ready to do anything.

    I offer a free, no obligation opinion of value on any non-residential property. Including real comps, utility and access info, market trends, and any nearby sales activity that matters.

    It’s a concise report that gives you a basic idea where you stand today, and helps you get your head around what you might be looking at when it is time to move.

    By looking at the info today and discussing it with a trusted professional, you can make a clear headed decision and not be talked into something not in your interests. And you can worry less.

    Is it a crazy idea to want less anxiety in your life?

    Click Below:

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  • You Don’t Know If You’re Early or Late Until It’s Over

    You Don’t Know If You’re Early or Late Until It’s Over

    Timing feels obvious only in hindsight.

    If you’ve been around real estate long enough, you’ve probably had this experience:

    I’ll see a property hit the market — or worse, see what it sold for — and realize I looked at it years ago when it was 10–25% of today’s price.

    Or I’ll see something sold in the past — personally or for a client — and the new number makes me shake my head.

    I joke sometimes that my only mistake back then was doing due diligence. Should’ve just bought everything and waited.

    And never sold.

    But that’s not real life. We all have finite capital. There are opportunity costs, trade-offs, other priorities, and other deals.

    No one knows the exact moment when a market bottoms out or tops out.

    If they tell you they do, they are either lying or deluded.

    It’s the same with stocks, if you’re into that. Everyone has a story about selling too early.

    Strangely, we rarely congratulate ourselves for selling before something tanked.

    We just act like that part doesn’t count because our brains are wired with loss aversion. Losses (or missed gains) tend to hurt about twice as much as gains (or missed losses). So we obsess over what we did “wrong.”

    Hindsight is perfect. In the moment?

    Timing always feels uncertain.

    When things look expensive, you tell yourself you should wait. When things look cheap, you’re afraid they’re cheap for a reason.

    Meanwhile, the only people who get anywhere are the ones who move forward despite not knowing.

    You make the best decision you can with the information you have at the time.

    You accept you might be early.
    You accept you might be late.
    But you keep going.

    The market (and life) rewards persistence more than perfection.

    So whether it’s land, business, stocks, or life in general — don’t expect a signal before the moment arrives.

    You won’t know until later whether it was the exact right time.

    All you can do is make the best decision you can, given where you are, and keep moving.

    Subscribe for more here.

    PS — You’re probably not ready to buy or sell real estate right now, and that’s fine.

    But if you own land or non-residential property, it never hurts to know what it’s actually worth today.

    I offer a free, no-obligation analysis on any non-residential tract — no pressure, no sales pitch, and no guessing.

    Just current data, comps, trends, and a straight answer.

    Would it be a terrible idea to at least know where you stand?

    Click below to get started.

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  • Don’t Argue About the Wrong Money

    Don’t Argue About the Wrong Money

    You lose if you make them feel like they lost

    People tend to be loss averse. Losing money hurts about twice as much as gaining the same amount feels good.

    If you lose $1,000 in the stock market, you’d need to make $2,000 back just to “feel even.”

    It sounds irrational, but it’s probably by design. If we treated gains and losses the same, we’d take way more risks — and a lot fewer of us would live long enough to regret them.

    Rational or not, it pays to understand loss aversion when buying or selling real estate.

    The more we think about this stuff beforehand, the better our chances of making smart decisions instead of letting our lizard brains run the show.

    One thing to remember: the idea of who pays what in transaction costs is mostly semantic.

    If you order a survey or an HOA certificate during escrow, someone’s on the hook for it even if the deal doesn’t close, so we want to be clear about that upfront. But if the deal does close, it doesn’t matter nearly as much.

    The buyer brings money to the table, costs get paid, and the seller walks away with what’s left. From a legal perspective, it matters whether the money comes off the top before it reaches the seller or after.

    From a bottom-line perspective? Same result.

    You can frame it however you want mentally.

    You can say the buyer pays everything because it’s their funds, or you can say the seller pays and picture it carved out of their pile before they walk out the door.

    Picture it so the other guy is paying if it makes you feel better.

    But remember this, the other side probably isn’t thinking this way. While you’re focused on the bottom line, they’re keeping score — and not in a rational way. Every transaction cost you try to push on them, they’ll subconsciously need to “get back” double somewhere else to feel okay about the deal. And if you try to stick them with a $2,000 expense, it typically bothers them more than if you just negotiated the price $2,000 higher.

    This is why those “land acquisition” outfits always brag about paying all closing costs in their letters. It removes one more source of resistance and makes their lowball offers easier to swallow.

    So what do we do?

    First, focus on your bottom line. Don’t get distracted by line items above it.

    Second, use this psychology to your advantage. Adjusting price usually carries the least resistance. If you’re selling, buyers expect you to counter higher anyway. If the bottom line’s too low, bump the price and let them “win” on some expenses instead.

    They’ll feel like they’re getting something, even if the math says otherwise.

    From a rational perspective, it’s all the same. But people aren’t rational.

    I know I’m giving away part of the playbook here — and that’s intentional. Most agents don’t understand these psychological levers, and if yours doesn’t, you’re the one leaving money on the table.

    And no, I didn’t tell you everything. To see the rest, you’ve got to see it in action — no extra charge for the negotiating knowledge.

    Just don’t skip the most important part: knowing your numbers ahead of time. That’s what puts you in control and tells you when to move.

    Is it a bad time to start finding out?

    Got a lot you might want to sell?
    Get a FREE, no obligation report on what it could sell for today.
    Get Your Lot Valuation

    Own land instead?
    Get a report for that here:
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