Breaking Confirmation Bias in Real Estate Investing
- Rich Arzaga
- 2 days ago
- 3 min read
Why investors need to hear the whole story—not just the success stories
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by Rich Arzaga, CFP®, CCIM, The Real Estate Whisperer®
Real estate investors naturally gravitate toward posts, videos, and conversations that celebrate winning deals and financial success. In behavioral finance terms, this is classic confirmation bias—the tendency to seek out and prioritize information that supports what we already believe, while discounting or avoiding anything that contradicts those beliefs.
“Confirmation bias is our brain’s shortcut for feeling ‘right,’ even when the full picture tells a more complicated story.”
As a financial advisor who regularly serves people with rental and investment property, I hear this bias almost daily. Most investors emphasize the wins. The exceptions, more often than not, are landlords who have lived through a severe event—mass vacancies, structural failures, lawsuits, or a crushing capital loss. Those experiences tend to reshape perspective quickly.
That’s why when I see reporting that highlights the struggles within investment real estate—not just the victories—I tend to hold those articles high, like Rafiki lifting Simba in The Lion King, not for drama, but as a clear signal: real estate has a second side worth understanding.
“Sometimes the most valuable stories in real estate are the ones investors avoid reading.”
Recently, an article caught my attention about a 135-room flag hotel in an affluent San Francisco Bay Area suburb. (“Flag” meaning it is leased to a major hotel brand, but not owned by them.) It sold for $12 million—on its face, an impressive number—until you read that the final price was 38% below the county’s assessed value earlier in the year.
The article also pointed to micro-economic pressures affecting the valuation and referenced other hotel assets experiencing similar declines. None of this means investors should avoid hotels altogether. In fact, the adage “buy when there’s blood in the streets” exists for a reason.
But price drops alone are not a strategy.
A few weeks earlier, I created a post about a small, resilient developer in California who continues building apartment complexes in one of the most business-unfriendly states—while other developers retreat. The contrast between these two stories is intentional: real estate is not one market. It is many markets operating simultaneously.
“When most people say ‘real estate,’ they’re really just thinking about the neighborhood they live in — but the category is far bigger, more fractured, and more interesting than that.”
Real estate varies dramatically by region, asset type, size, investor motivation, tenant base, regulatory climate, and economic conditions. It’s like a large family of in-laws—some are brilliant and helpful, others are best admired from a distance.
My own 20-plus years as a real estate investor reflect this diversity. Early mistakes came when I had less capital at risk and more to learn. Later, as I strengthened my foundation and surrounded myself with better thinkers, commercial property became the most productive asset class I ever owned. It wasn’t flawless—but it was fruitful.
Here are the key takeaways:
1. Investors should be less emotional about the asset class.
Excitement is not a strategy. Practicality—cash flow, risk, tax impact, and alignment with broader financial goals—is.
2. A struggling property type in one region can be thriving just a county away.
That Bay Area hotel selling at a 38% discount? A new owner with stronger operations or lower basis might lower rates, steal occupancy, and stabilize quickly.
3. One investor’s loss can be another investor’s opportunity.
Real estate is cyclical, local, and sensitive to investor skill. Declines do not automatically mean “bad asset.”
4. Long-term investors with balanced perspectives tend to make better decisions.
Real estate rewards those who study the market, improve their skills, and build strong relationships.
“The more balanced your perspective, the better your chances of avoiding poor decisions—and capitalizing on the opportunities others miss.”
Confirmation bias will always tempt investors to seek only the good news. But the real wisdom comes from seeing—and valuing—the full picture.
Written by Rich Arzaga, CFP®, CCIM, Founder, The Real Estate Whisperer® Financial Planning. Helping clients and advisors integrate real estate into holistic financial plans.
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