Having just covered the last part of the “OODA Loop” series yesterday (on how to make better decisions faster) I thought I’d list some of the most common biases that we humans have. This distort your view of the world and the information you consume, and so it’s important to consciously know what they are so you can compensate for them and make better decisions – and therefore more progress towards your goal. In my past life I was trained to be highly aware of these. I’ll start with the ones I think are the most common/harmful to your Property journey.

Anchoring Bias: The tendency to rely heavily on the first piece of information encountered (the “anchor”) when making decisions. This is probably the most common, and worst one. For example, if you have a really bad experience on your first property, you’ll probably throw up your arms and declare that “property is terrible” when this clearly isn’t the case.

Negativity Bias: Hot on the heels of Anchoring Bias is the tendency to give more weight to negative experiences or information than to positive ones. This is borne out of our survival instinct – it was better to give undue consideration to negative experiences (being surprised by that Saber-toothed Tiger) than the land of milk and honey that you could see just a little further beyond. It’s a default position. In the modern world, where dangers are rarely lethal, this holds you back.

Bandwagon (Sheep) Effect: The tendency to adopt certain behaviours, styles, or attitudes simply because others are doing so. Remind anyone of being back in your childhood classroom? You may think you’ve left this kind of behaviour behind, but most of us haven’t. How many office meetings or webinar chatrooms have you seen where these effect plays out. It’s particularly harmful if you’re letting your actions be dictated by others because they likely do not share your end-goal, starting point, knowledge/skills or bias-set.

Confirmation Bias: The tendency to focus on evidence that supports one’s beliefs while ignoring evidence that contradicts them. Although it’s illogical to do this, the truth is that it’s simply easier to just “know what you know” than to have an open mind and consider something new. And lots of people prefer the easy option – and may defend it quite vigorously. But then, lots of people used to think that the world was flat didn’t they? The number of people that believed it, or their conviction in that belief, or citing of evidence that only supported them didn’t make them right did it? But then, at least humanity has evolved and we now don’t have anybody today with incandescent Confirmation Biases and a belief in a flat Earth…

Stereotyping: Overgeneralising about a group of people based on limited or inaccurate information. This can lead to discounting different perspectives and ultimately missing out on opportunities. For example, the LHA Strategy in property means taking on tenants that most Landlords would seldom consider – but it can lead to generating 2 to 3 times more profit from a single BTL property (2 single people sharing). Or leasing out your property to someone who will pay for all repairs and damage. Did you just miss an opportunity because of stereotyping?

Availability Heuristic: Overestimating the importance of the information that is most readily available, often due to recent, repeated exposure or memorable events. This is how marketing and pricing works! The frequency with which you see information does not dictate it’s accuracy – only it’s availability.

Optimism Bias: The belief that oneself is less likely to experience negative events and more likely to experience positive events compared to others. In other words that you are naturally “lucky” or “unlucky”. Ok, not trying to be a Debbie-downer on this one -there is a balance – but both beliefs can be destructive. “Luck” is where “preparation meets opportunity” (Seneca). Those that are “lucky” tend to be the ones that prepare and take opportunities, those that are “unlucky” the opposite.

Self-Serving Bias: The tendency of people to attribute positive events to their own character but however attribute negative events to external factors. Done something pretty bad before? It was probably just because of the situation that you were in, and not because of how you were as a person wasn’t it?… Done something good? No doubt due to your unerring good character and spirit – well done. Sure… well the good news is that if you are honest with yourself about why things happened, then you can learn and change your character – the first step is removing your self-serving bias by being honest. Your future does not have to be defined by your past.

Hindsight Bias: The inclination to see events as having been predictable after they have already occurred. “It was so obvious that the 2008 property crash was going to happen… all the signs were there…”

To make your “own mind up” you must first be aware of exactly what biases are (or could be) in your mind – and logically make compensations for these. This will lead to better decisions that will get you better results in Property. As a first step, simply try to come to every situation and decision with an open-mind, awareness of potential biases and give everyone a chance – remembering that we are by default still pessimistic creatures in general, as this served our survival in the past.

Married2Property Partners are a property company that aims to create social good through property.

These articles are written by Darren de Wal based on his 12 years of experience as an active Property Investor, and 16 years getting to a senior leadership position as an Officer in the Royal Air Force. They are for the benefit of those with a general interest in Property, as well as those wishing to start out investing themselves.