For Sale, By the Owner's Ego

Feelings Often Play as Big A Role as Logic in Setting Prices, Research Finds
By Kirstin Downey
Washington Post Staff Writer
Saturday, November 4, 2006; F01

Sam LeBlanc tried to cushion the blow when he gave his wife, Karyn, the bad news. He told her to take a breath and think it over, because he knew that what he was telling her would hurt.

Her condominium isn't worth nearly as much as she thought.

"I was a little crushed," Karyn recalled.

People may think they make cold, hard decisions in financial transactions such as buying and selling a house. Increasingly, though, research shows that emotions play as big a role as intellect.

For Karyn, for example, the condo she bought in the District's Palisades neighborhood in 2002 was the first big, independent purchase she had ever made. She proudly added many special touches, including a closet organizing system she thought would be the envy of any woman. But she and Sam got married, had a baby and decided to sell the condo. Over the past few months, Sam did a lot of market research and decided they should ask $269,000.

The number came as a blow to Karyn, because she knew similar units, including some she thinks weren't as nice, sold last year for $280,000.

"You want to believe it's worth a lot more because you've invested your time and energy on it," Karyn said.

Evidence is mounting that people set prices, particularly for housing, as much on ego and self-image as on an objective review of the market.

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