“The sellers aren’t being reasonable about the price!”
If you’ve said that before, welcome to the club. I’ve said it dozens of times too.
But here’s the thing — there’s a reason they act that way. And it even has a name: The Endowment Effect.
Hi, my name is Jo Mangum, and I deliver clear and candid wisdom for agents who want to grow
Coined by psychologist Richard Thaler, the Endowment Effect describes how humans tend to overvalue what they own simply because it’s theirs. In other words: our stuff always feels more valuable than it really is.
When sellers cling to a price that ignores market data, it’s rarely about greed — it’s about loss. Selling a home means letting go, and loss stirs emotion. That discomfort shows up as inflated pricing.
How to Move Past It
The best way I’ve found to handle this is to talk about it directly.
Here’s a script I often use:
“You see, I have a dilemma — and it’s not uncommon. I have it with every seller.”
“The dilemma is: do I tell the seller what they want to hear… or do I tell them the truth about the market?”
“Most sellers say they want the truth. But when they hear it, it doesn’t sound very good — so they decide not to believe it. That’s not bad behavior, that’s human behavior. In fact, it has a name. It’s called the Endowment Effect.”
Then I illustrate the gap in perception:
“Through the seller’s eyes, their home looks like this.”
(show an image of the Biltmore House)
“Through the buyer’s eyes, it looks more like this.”
(show an image of a modest home)
That visual lands every time.
Why It Matters
The Endowment Effect shows up in three big ways when sellers make pricing decisions:
- Nostalgia kicks in.
They start remembering birthdays, first steps, and family dinners — and suddenly, the house feels priceless. - They assume others see it the same way.
Because they love the house, they expect buyers will too. - They focus on loss, not gain.
Instead of seeing a move forward, they feel what they’re giving up — and that sense of loss can push the price higher.
Your Move
The takeaway?
Educate your sellers about these emotions before you dive into pricing. Talk about it in the third person — “many sellers feel…” instead of “you feel…” — to reduce defensiveness and keep the conversation objective.
Once they understand the psychology, they’re far more likely to accept the data.
Because pricing isn’t just math — it’s mindset.
