Not selling is the same as buying

[cbr shadow]

When I see someone hang on to an item that they could sell for say $100, I like to say "If you had $100 and didn't have that item, would you spend the $100 on it?".  This idea is really hard for a lot of people to understand.
A friend of mine found an old vintage stereo in a dumpster.  He took it home and it worked great without any issues, and even looked perfect.  It was a cool radio and worked well so he decided to keep it to use it.  I noticed that on Ebay these were fetching over $500 so I told him he should sell it.  He ended up not selling it, but agreed that he would never pay $500 for a similar stereo.  What gives?  There's no sentimental value for the dumpster radio. 
I've seen this happen a lot.  I'm starting to think that people just have a weird view of the value of money, or just dont understand it.  Not selling an item for a certain value is the same as saying "I would buy this item for that value".
Do you agree?

[sherr]

I think it's almost the same, but not quite. There is the additional trouble of listing and shipping the item you have and then going to get a replacement item (if it's something you need replaced) that you have to take into account, so that makes up at least some difference.

You also run into a harder to quantify but still real question of whether you are happy enough with whatever it is that you don't want to bother. If I'm going to buy a stereo I would do research to find out which ones are the best fit for me, which ones are the best value, and where I can get them for cheap. If I dumpster dive and find one for free that is Good Enough (tm), then I'll likely just use that and not spend any more time thinking about it. It may not be the most optimal solution; I might be able to do a bunch of research sell, that one, and buy another for cheaper and have a net gain on the transaction, but if the difference is small enough it wouldn't really be worth the effort. I guess that goes back to the paragraph above. But on the other hand I might not have known that it would be a net gain until after the research, and the Good Enough (tm) standard would probably have made me disinclined to do the research in the first place.

So while your friend is not necessarily making the most rational decision, it is not necessarily completely irrational either. A bird in the hand may really be worth two in the bush.

[brewer12345]

Google "endowment bias."  The fascinating field of behavioral finance has studied this and many other quirks of human financial behavior.

[lizzigee]

An alternative view - Do we over-think things sometimes?  Your friend has a free stereo that looks good, works well and he uses it.  Sure he could sell it, but then he would either have no stereo, or would have to buy a replacement.  Now I'm aware that a stereo is not one of the basic  needs of life, but not everything is about money.  If he enjoys it and it has cost him nothing, then is this not mustachian?  Enjoyment of life without unnecessary spending  is a big part of my take on the MMM approach to life. (Unless he has a debt emergency then his attitude is just stupid and he deserves a facepunch)

[Jamesqf]

I think it's almost the same, but not quite. There is the additional trouble of listing and shipping the item you have and then going to get a replacement item (if it's something you need replaced) that you have to take into account, so that makes up at least some difference.

Quite a bit of difference, at least to me.  The few bucks I could get for most things just aren't worth the bother.

Then there's the uncertainty.  I may not be using an item right now and could sell it for $X, but there's some finite chance I might want/need one in the future, and would have to buy it at say $2X.  Suppose we take this to an extreme: I don't use my skis in the summer: should I sell them in April (at a low price) even though there's a >99% chance I'll be skiing next winter?  And then buy new skis in October, at much more than I got for the old ones?

[Devils Advocate]

I don't use my skis in the summer: should I sell them in April (at a low price) even though there's a >99% chance I'll be skiing next winter?  And then buy new skis in October, at much more than I got for the old ones?

No

But you COULD do the opposite, sell the skis in October and buy the cheap ones in April.

Not worth the hassle IMO

[August West]

I googled "endowment bias", ended up on the wikipedia entry for endowment effect:  http://en.wikipedia.org/wiki/Endowment_effect

The entire contents of my garage just flashed before my eyes.......yes I would re-purchase most of the tools and sports equipment eventually.  The rest?  not so much.

I agree that there is a hassle factor selling something, but it diminishes as the cash value of the item increases.  I doubt I will bother selling a punch bowl that might fetch $5 unless I was just trying to clear out the space or if we never used it.  But a rarely used kitchen appliance that could fetch $50?  bye-bye. 

[sheepstache]

If you read Predictably Irrational, I think he calls it "ownership bias."  There's a really interesting example of people who get Duke basketball tickets through a (sort-of) lottery and therefore you would think they value the tickets equally.  But the person who gets tickets envisions how meaningful and wonderful the experience of seeing the basketball game will be while the person who didn't get tickets thinks, sure, they would like to see the basketball game but they also would like to spend the money on other things.  So the sellers have in mind a price that's like an order of magnitude more than the maximum the buyers say they would pay.  I guess you could look at it another way and say the buyers have an ownership bias towards the money in their bank account and endow it with all sorts of wonderful qualities in terms of what other things they could spend it on.

That's an interesting way of looking at ownership as the same as spending.  It's like talking about opportunity cost in the case of, like, not working being the same as turning money down.  However, I would have a semi-sentimental attachment to something that I found by luck and then put work into fixing up.  Also, I'm not a minimalist and I enjoy owning things.  If you read about hoarding, you find that among the normal populating there's actually a wide range of how many possessions people like to own.  Assuming that my number of possessions at the time hasn't veered into what I would consider too many, I would enjoy just owning something because apparently I am a five-year-old and like having something that is Mine and it doesn't matter if it's a $500 radio or a pretty rock from the side of the road.  Otherwise, how could we explain people who build collections with no thought to their monetary value?

[Jamesqf]

...and it doesn't matter if it's a $500 radio or a pretty rock from the side of the road.

True.  I have pretty rocks from all over the place, that get used as bookends, paper weights, or just plain ornaments.

[BlueMR2]

Quite a bit of difference, at least to me.  The few bucks I could get for most things just aren't worth the bother.

This is the biggest issue for me.  Most of the stuff I have that I'd like to sell, simply doesn't make $$$ sense to sell.  It's used, so people won't pay much to begin with.  Then by the time shipping costs are added on, I'm going to have to sell it so cheap that I just don't make any money doing it.  I often *give* things away instead as it's easier.

[Use it up, wear it out...]

This is the biggest issue for me.  Most of the stuff I have that I'd like to sell, simply doesn't make $$$ sense to sell.  It's used, so people won't pay much to begin with.  Then by the time shipping costs are added on, I'm going to have to sell it so cheap that I just don't make any money doing it.  I often *give* things away instead as it's easier.

+1

We use freecycle a lot for this stuff - people show up and take the stuff away.