\nIn today’s show Michael Yardney asks the question \u2013 \u201cAre you too biased to be a successful property investor?\u201d\u00a0 What does that mean?
\nAs property investors we can sometimes be our own worst enemy. It\u2019s not because of the decisions we make, the opportunities we consider or the investments we miss out on, but rather, it\u2019s due to the way we\u00a0think<\/i>.
\n <\/p>\nTranscript<\/h4>\n
Kevin<\/b>:\u00a0 I have a real treat for you over the next few weeks. Michael Yardney is going to be joining me. We\u2019ll be talking about the psychology of success \u2013 what are some of the things that hold us up? As we go through this, there might be a few aha moments for you \u2013 there were for me when we were looking at the notes that Michael gave me.
\nGood day, Michael.
\nMichael<\/b>:\u00a0 Hi, Kevin.
\nKevin<\/b>:\u00a0 Good to be talking again, mate. Some of these things, we\u2019re sometimes our own worst enemy, aren\u2019t we?
\nMichael<\/b>:\u00a0 Yes, we are. That\u2019s one of the things that holds us back.
\nKevin<\/b>:\u00a0 Okay. Can we run through a few of the things that you\u2019ve observed?
\nMichael<\/b>:\u00a0 Sure, Kevin. It\u2019s actually not because of the decisions we make, the opportunities we consider as investments, or what we miss out on. It\u2019s actually just in what we think, how we think.
\nThat\u2019s because, as humans, we are subject to something psychologists call cognitive biases. That\u2019s what I\u2019d like to spend some time talking about in the series of four programs we\u2019re going to do together.
\nKevin, they\u2019re fancy words for how our brains sneakily convince us to make decisions that aren\u2019t necessarily in our best interest. These cognitive biases sometimes convince us to spend more, maybe to save less, to feel confident in our decisions \u2013 maybe more confident than we should be.
\nThe scary thing, for the most part, though, is we\u2019re powerless against them because they\u2019re subconscious, they\u2019re unconscious.
\nKevin<\/b>:\u00a0 Okay. All right. But sometimes having it explained to us makes us more aware of it?
\nMichael<\/b>:\u00a0 Well, you have to, to start with. I\u2019ve been able to study this because as I\u2019ve been dealing with some very successful property investors \u2013 and also some who are not as successful \u2013 I\u2019ve noticed that it\u2019s the mindset, it\u2019s the psychology, that is the biggest difference between those who outperform regularly in all areas of life and the average Australian.
\nOne of the big ones I come across in property is something psychologists like calling \u201cconfirmation bias.\u201d You see, people tend to search for information that confirms their views of the world, and then we get to ignore the bits that don\u2019t fit in.
\nIn an uncertain world, we love to be right, because it helps us make sense of things. But we do this automatically, usually without realizing, partly because it\u2019s easier to see where these new pieces fit into a picture puzzle we\u2019re currently working on rather than imagining a new picture.
\nKevin<\/b>:\u00a0 How do we counter that, Michael?
\nMichael<\/b>:\u00a0 What it really means, I think, is that if you believe in investing in a certain region, what you\u2019re going to keep doing is you\u2019re going to keep reading about the stuff that suits you. You tend to seek out news that will confirm what you think, and you actually don\u2019t pay attention to other things.
\nDuring the mining town area booms, everyone kept reading everything that could be said about that, just like you tend to about your football team or the political party you like, and you ignore the others.
\nYou asked a really good question, Kevin: how do we counter this? I would be suggesting you do this by reading things you\u2019re going to disagree with. It sounds counterintuitive, but I\u2019d be looking for reasons why your strategies could be wrong rather than why you could be right. That\u2019s one way to do it, Kevin.
\nKevin<\/b>:\u00a0 Certainly broadening your horizons really, isn\u2019t it?
\nMichael<\/b>:\u00a0 It is, isn\u2019t it? That\u2019s right.
\nKevin<\/b>:\u00a0 What\u2019s another one, Michael?
\nMichael<\/b>:\u00a0 Psychologists like to say that we\u2019ve got something called anchoring bias. We have a tendency to use anchors or reference points to make decisions or evaluations \u2013 something that could sometimes lead us astray. Can I give you an example?
\nKevin<\/b>:\u00a0 Please.
\nMichael<\/b>:\u00a0 If you\u2019re going to go car parking in the middle of town, you\u2019ll pay $6 per hour happily if you\u2019ve driven past a car park that actually says $10 per hour down the street. The first number we see, especially when it comes to prices about things, actually colors what comes after it.
\nThis is used often in negotiation. It\u2019s often used in negotiation with property. You\u2019ll notice it with estate agents, as well. High anchors influence you to spend more than you normally would.
\nKevin<\/b>:\u00a0 We call it conditioning, actually.
\nMichael<\/b>:\u00a0 It is in some ways, isn\u2019t it? Property marketers, estate agents, car salespeople, they use this principle all the time, Kevin. They start with a high asking price, and you feel good when you suddenly extract a discount from them.
\nThis is because the initial price set for that off-the-plan apartment is actually higher than they were ever going to expect anyway. But it makes you feel good. Whether you like the number or not, your mind is referring to that initial number, and you think, \u201cHey, I\u2019ve done a good job.\u201d
\nKevin<\/b>:\u00a0 It\u2019s rationalizing it, isn\u2019t it, to yourself?
\nMichael<\/b>:\u00a0 It is. This is the way our mind plays tricks with us.
\nKevin<\/b>:\u00a0 Oh yes \u2013 obvious. All right, mate, we\u2019re going to have to leave it there. We\u2019ll come back with more of these in the weeks to come.
\nWe\u2019re talking about the psychology of success with Michael Yardney. Thanks, Michael.
\nMichael<\/b>:\u00a0 My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"
In today’s show Michael Yardney asks the question \u2013 \u201cAre you too biased to be a successful property investor?\u201d\u00a0 What does that mean? As property investors we can sometimes be our own worst enemy. It\u2019s not because of the decisions we make, the opportunities…<\/p>\n","protected":false},"author":176692471,"featured_media":2451,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,25],"tags":[101],"class_list":["post-3415","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-sponsored-channels","tag-podcast"],"yoast_head":"\n