Why you're overpaying for that apartment, according to psychologists
By Virginia K. Smith |October 10, 2014 - 11:59AM
Apartment hunting is an emotional roller coaster for most of us, and even with our best efforts, classic broker tricks have a way of getting inside our heads (and more pertinently, inside our wallets). Per New York Magazine, a lot of the most common buyer foibles—blowing the budget in a bidding war, overspendingjust to get things over with—have a basis in larger psychological phenomena.
For instance, after months of searching, you may be paying too much attention to "sunk costs"—in this case, the countless hours (and emotional energy) you've put into finding a new place to live—and spending more than you can afford in an effort to recoup that time. But stick to your guns: you won't be able to get those hours of your life back (hence the term "sunk" cost), and if you pay tens of thousands of dollars over asking, youwon't be able to get that back either.
Other things that can lead to pulling the trigger too quickly: the "need for closure" (i.e. the desire to put an end to uncertainty by making a decision, even if it's the wrong one) andsomething called "loss aversion regret avoidance," based on the fear that you'll never find a better apartment. This is a particular risk in a tight market like New York's, but try to keep in mind that there will be other options out there. After all, apartment FOMO is nothing compared to buyer's remorse.
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