By Vicky Vandever, CPM

We have all heard about the psychology of selling, but we seldom have it explained to the point of relevance in our lives.  Prospect theory, as discussed in “Introducing Psychology” by Daniel Schacter, Daniel Gilbert and Daniel Wenger, is a helpful vehicle to understanding the psychology of leasing. Prospect theory proposes that people choose to take on risk when evaluating potential losses and avoid risk when evaluating potential gains. 

Losses in apartment choice could be rent amount, amenity loss, a drastic change in square footage, and loss of a bathroom or den.  According to prospect theory the shopper will go to lengths to avoid these changes. 

I feel that changes in these areas make our prospect feel unsafe in unfamiliar circumstances.  It is the job of the leasing personnel to reassure the prospect as to his ability to afford the rent and to look at the new amenity package as an opportunity instead of a threat.  They should be reassured to find that they will fit in.  A larger or smaller apartment fits their needs, a perspective which they may not have considered.

Gains in apartment choice could be a superior amenity package, a location in a more desirable neighborhood, a larger apartment with more architectural interest or a change in rent amount. These changes do not prompt major avoidance and do not make the prospect feel unsafe.  A few reassuring words from the on-site staff can make world of difference in the perception of these items as anything but deserved value. Also introducing the prospect to a resident with the same interests helps foster the feeling of home.

The theory also talks about giving greater weight to a sure thing.  A sure thing in apartment leasing would be seeing the actual apartment which is ready for move in.  It could also be filling out the application and signing a lease to reserve that apartment and take the pressure of the apartment search completely off. 

In comparing choices, the prospective resident will compare them to a reference point.  This reference point could be current rent, location, favorite possession fit and amenity fit.  If the property under consideration does not meet the reference points in a positive way, the prospect may choose to go elsewhere.

Questions about how the prospect feels about a particular feature of the property will give insight in this area. The Leasing person should be open and skilled in this area.

Lastly, people choose the option they believe gives them the best value.  If the leasing representative has discovered that the amenity package could encourage the prospect to make plans to become physically fit, this would make the property more valuable to him.  If she can place his furniture in such a way as to be comfortable, that would represent value to him.  If the leasing representative can show him how the location closer to work will save him time every day that would be a positive value. 

Leasing representatives need to hone their value proposition, so they can give each prospect what he needs to make a decision in favor of the property.