PATHOLOGICAL OPTIMISM

In a recent post I quoted a a writer who used the powerful phrase "pathological optimism."

What does this mean?

Rather, what is the definition or meaning of " pathological optimism?" Let's begin with the word optimism because we all know it's meaning, right?

Webster (1996 Edition ) defines the word as: 1. "The belief that good ultimately prevails over evil," and 2. "the tendency to take the most hopeful view of a matter."

If we dig back a little we find that in the 1940's Webster's New International Dictionary, Second Edition," the word stems from F. optimisme, the best: akin to "ops" meaning:wealth , power ( See opulent : having a large estate or property, wealthy, rich, affluent.)"

If we dig even a little deeper and look at the Dictionary of Etymology we find that the English word optimism was first used in 1766. This doesn't help at all!

Boiled down to it's bare bone I view the word as meaning "hopeful" coming from the word "hope" which according to Webster 1940"s means, Desire, accompanied with expectation"

Now let look at the word "pathological" which means "any abnormal variation of a sound condition"

What has this got to do with real estate?

In the past many, many months, I have met many sellers, of "investment grade property" who firmly maintain unrealistic asking prices! ( according to the mathematical and accepted analysis called the Income Approach to Value.)

Now it's crystal clear: these potential sellers have a case of "abnormal desire with unreasonable expectation"

So what? Well as I look back I see that 95% of these properties remain unsold and 5 % are and have been "under agreement" for a rather abnormal time.

The potential, qualified investor buyers, in my opinion, in these cases, were correct and the sellers now have rapidly depreciating assets on their hands."

The next question is, " What is the cure, or antidote, for "pathological optimism?

I think it's the same that also known to cure "greed and / or stupidity." Correct me if I'm wrong.

Bill McInerney

PS
And when I see active listings on the MLS market for some 300, 500 to 886 days, I suspect that some agents may have the same condition.