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Do you suffer from sunk cost fallacy?

By
Services for Real Estate Pros with Marte Cliff Copywriting

Chances are, you either suffer from sunk cost fallacy right now, or you have at some time.

 

What the heck is it?

 

Sunk cost fallacy is a debilitating condition that causes you to throw good money after bad.

You know you have it when you…

Keep advertising a listing owned by people who:

• Refuse to clean the housedrop the sellers who refuse to clean house
• Refuse to list anywhere near fair market value
• Refuse to negotiate AT ALL when you bring an offer
• Refuse to leave and let the house be shown without interference
• Refuse to allow showings except at specified times

Keep driving all over the county with buyers who haven’t even bothered to become pre-approved for a loan.

You also know you have it when you keep paying for leads when none of that company’s leads have resulted in “real” clients for the past six months. You do so out of a misguided belief that if you just hold on a little longer, you’ll get a good return on the money already spent.

Sunk cost fallacy can also cause you to sabotage your own marketing efforts by continuing to use marketing materials that don’t produce results.

You know you have it if you keep mailing the same letter, postcard, brochure, or flier that hasn’t ever produced a lead.

It’s also evident when you go ahead and use a graphic design, a marketing letter, or even an entire website that you know isn’t up to par – just because you already paid for it.

This condition isn’t just for business – it can show up in more personal ways.

You have it when, for instance, you keep wearing a pair of shoes that hurt your feet, or a shirt whose color makes your face look sallow.

Sunk cost fallacy comes about when you’ve spent so much time and money on a client or a marketing method – or a pair of shoes – that you can’t stand to give up.

What is the cure for this expensive condition?

stop chasing the  money that got awayTake a close look at what you’re doing, and be realistic. If that client is probably never going to get to closing, or if you’re going to end up making minimum wage, bow out.Remember that people like that don’t just cost money. They’re a drain on your emotions and your mental state, and that can hurt you both at work and at home.

If that marketing method isn’t bringing you results after several months – make positive changes.

Have your marketing messages re-written, buy new and better prospecting letters, hire a new website developer, or spend the time to make the changes yourself.

If the leads you buy aren’t bringing you business, look first at how you’re marketing to them. If the same marketing produces leads from other sources, then you’ll know its the leads that aren’t good – so stop buying!

One more thing…

Sunk cost fallacy can apply to time as well as money. Be careful!

 

Clutter Image courtesy of Bill Longshaw at FreeDigitalPhotos.net
chasing money Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

This post first appeared at https://copybymarte.com/do-you-suffer-from-sunk-cost-fallacy/

Comments(28)

Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Michele Cadogan-Cell 917-861-9166 Our time is even more valuable than our money. We can get more money - we can't get more time.

Aug 10, 2019 08:34 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

S000 many people who are self employe don't get the whole time IS money thing !

Aug 11, 2019 12:32 AM
Barbara Todaro
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Marte Cliff some make an honest effort of killing their own businesses....

Aug 11, 2019 04:27 AM
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Marte, There is another name for that “ throwing good money after bad”!

Aug 11, 2019 06:05 AM
Wayne Martin
Wayne M Martin - Oswego, IL
Real Estate Broker - Retired

Good morning Marte. Never heard the phrase but can attest to the fact, been there, done that! Enjoy your day!

Aug 11, 2019 06:59 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Good morning, Marte... when I trained new agents I used to tell them that one of the hardest things to learn, but important to learn quickly, was not to throw good money after bad and to know how to quickly fire the wrong clients and stop wasting time, which is ultimately wasting money.

Aug 11, 2019 07:47 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Marte:

That is new terminology to me but the premise behind it is not. This us a good reminder for us to always be questionning what we are spending money on and is it getting us the return we want and expect.

Jeff

Aug 11, 2019 11:34 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great post!  I certainly can see why Kathy chose to highlight it this week!

Aug 12, 2019 07:09 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Sally K. & David L. Hanson - Yes, just like so many don't realize time is life. How many times have you heard someone say they're just "Killing time?"

Barbara Todaro I'm sure that isn't their intent, but yes, they certainly do.

Tom Bailey Yes. We all know we shouldn't do it, and yet...

Aug 12, 2019 07:29 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Wayne Martin I expect we've all done it at some time or another.

Nina Hollander You did those agents a great service by trying to teach that concept. It's a tough one, especially for new agents who think they really "need" every client that comes their way.

Aug 12, 2019 07:31 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jeff Dowler, CRS If we don't pay attention to where we spend our money - or our time - it will drain away without providing any return on investment.

Aug 12, 2019 07:32 AM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Hey Marte - Kathy sent me over here as I missed this one!  OMG agents need to learn this new 'term' right off the bat our of real estate school and save themselves awhole bundle of cash and stress!

Aug 12, 2019 01:47 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Anna Banana Kruchten CRB, CRS 602-380-4886 Yes - new agents are hit with so much "advice" about how to market themselves. They can spend a bundle without realizing any benefit at all.

Aug 12, 2019 09:23 PM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

It's so important to examine where those advertising costs and similar $ are going vs each client! 

Aug 20, 2019 09:28 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Jan Green Spending money is easy - making sure those dollars work for you takes a bit more thought.

Aug 21, 2019 10:22 AM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Managing expectations requires discipline, marketing time-lines and taking immediate action to minimize opportunity costs without emotions. The challenge is knowing when to take action but could be determined by an automatic factoring process to terminate your losses. We've all been there yet learn to adapt, regardless of our experience except some take longer to take action. Timely reminder to beta test your campaigns before launching. 

Sep 22, 2019 04:09 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Thanks Kimo Jarrett - we do need to pay attention!

Sep 23, 2019 11:06 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I'm so glad i followed the link from your current article to this one.  I was introduced to this concept by the son of a potential seller.  He was trying to get dad on board with a realistic list price instead of adding in all the money he had spent improving the property to the price he had paid for it.  The latter was how he was coming to his list price.

Nov 21, 2020 09:53 AM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

 I have to admit you went right to the heart of the problem and thank you for doing so 

Happy Saturday afternoon Marte Cliff 

Nov 21, 2020 03:36 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Chris Ann Cleland There really is truth behind the old saying "Don't throw good money after bad." It can happen - easily.

Thanks Paul S. Henderson, REALTOR®, CRS - I appreciate you reading it!

Nov 22, 2020 10:03 AM