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You are here: Home / Blog / The Wisdom of the Crowd or Leaping Lemmings?

The Wisdom of the Crowd or Leaping Lemmings?

June 1, 2011 by Matt Fuller, GRI Leave a Comment

Follow the wisdom of the crowd and you’ll never go wrong, right?

Well, no, actually. It turns out that social chatter and influence pretty much destroys the wisdom of the crowd!

I mention this not just as a curious fun-fact but because of the intense scrutiny and amount of media the real estate market has gotten over the past several years. On the way up during the bubble experts had buyers convinced that all they needed to do was buy, buy, buy because property values were never going to go down again.

And now that the bubble has burst, the collective experts feel that you should stay far, far, far away from real estate as an investment because renting is almost always the better choice and the real estate market won’t recover for years, if ever.

Both stories make for emotionally compelling headlines that grab your attention as a reader and, as a result, sell plenty of advertising for their publishers. But just because plenty of people are spouting the same story, doesn’t make it true. When the individual knowledge present in a crowd is aggregated, it makes some remarkably powerful and accurate predictions. But this requires that each individual come to their decision individual of the rest of the crowd.

So as soon as we all start blogging, tweeting, and facebooking about our individual knowledge, we contaminate the crowd, for lack of a better term, and suddenly the wisdom of the crowd becomes groupthink.

Given the national meltdown that happened to real estate in the past few years, I understand that no one wants to look stupid… but regurgitating the “wisdom” of “the crowd” is pretty much a surefire way to guarantee that while your decision won’t stand out in the crowd and get you noticed as the dumb idiot, it will pretty much guarantee that you’ll be as dumb of an idiot as everyone else.

Do your own research. Rely on your own experts. Understand the local market that interests you. Understand your own specific financial objectives, resources, and constraints. Be aware of your own personal appetite for risk, and your own personal strengths and weaknesses.

If you want to look good in real estate, regardless of whether the market is up or down, you need to be true to yourself and your convictions.

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Whether you're dreaming of your first home or planning for your next, we promise that you'll get the full benefit of our top-notch negotiation skills, industry relationships and market knowledge when you partner with us. Modern representation, even in Victorians.

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