Investment approach
Behavioural biases in property investment
Seller price, an attractive view or money already spent can distort a decision. A formal process reduces bias.
Property activates emotion and narrative. A prestigious street or asking price becomes an anchor, and the investor starts collecting confirming evidence.
Singh’s review covers anchoring, overconfidence, herding, trend extrapolation and sunk-cost effects. Experience does not remove them and can improve the story used to defend a choice.
Practical controls
Before viewing, define budget, CAPEX, timing, documents and rejection criteria. Separate facts, assumptions and impressions. Prepare an investment memo and request independent review.
Run a premortem covering permits, works, timing, demand and finance. Put those causes through the downside scenario and calculator. Seller and contractor numbers are inputs, not proof.
Source
A process does not remove risk; it makes assumptions visible.
Questions and answers
Does experience eliminate bias?
No. It can also reinforce the chosen story.
What is a premortem?
Imagining failure before the decision and identifying signals.
Why set rejection criteria early?
To resist emotion and sunk-cost pressure.
