A short intro to the game of power
Note: The comments that follow were THEN...and this is NOW. Because of changing market conditions, sellers have less power and buyers have more but the "laws" below do not change with markets. The same PRACTICES need to be utilized (see" letter to sellers" and "letter to buyers.")
In my 27 years in the business (a broker for 25), the current market is truly the craziest, i.e., the most out-of-balance ... and we all know in whose favor the scales tip: that would be THE SELLERS. However, despite having the cards stacked heavily in their favor, many sellers fail to take advantage of the hands they have been dealt. (See below -"Lee's Semi-Immutable Laws.")
BUYERS, of course, are operating at a temporary disadvantage in today's lopsided market. However, they can greatly increase their advantage in any market/game by knowing and playing by the rules. For both sellers and buyers it is necessary to realize that MOST players out there have no clue of what you are about to read; if they did, you would not have the competitive edge you will have by putting these rules to use.
Unfortunately, most realtors don't have anymore of a clue than anyone else. Lacking a framework for what we do, most of us just look to see what others are doing and thinking, and then do and think that!
Regardless of who's on top in the marketplace at any given time-and it will ALWAYS change-we are all involved in a game of POWER. Like any game, there are rules/laws by which the game operates; he or she who plays by the rules wins, and those who don't, don't. Period.
My definition of "power" is: One's long-term or short-term ability to get what one wants and needs-in this place, at this time, in this game we call real estate (and you could apply it to the game of life as well!).
LEE'S SEMI-IMMUTABLE LAWS (OF POWER, BUSINESS, REAL ESTATE, LIFE):
A
Radically Different Way to Evaluate One's Power as a Buyer, Seller, or
Realtor
by
Lee Bender, PhD
Broker
1.
Power is the ability to get what you need.
2. Power runs the world, especially the business world. The most effective
people are those who have the most power (not the most money).
3. The purpose of any business transaction is to increase the power of
whoever is running the business.
4. Factors that INCREASE your power:
(a) information and knowledge (that's why Sellers should have their own inspections!)
(b) strong networking (good mortgage brokers, escrow officers, employees, assistants, etc.)
(c) decreasing your costs (eliminating weak links in the chain-monetary or not)
(d) increasing value (making it easier for the customer, for example)
(e) quick response time (problems grow as large as the time you give to them, until they are resolved and we can stop thinking about them)
5. Factors that DECREASE your power:
(a) ignorance (e.g., leaving it to the Buyers get the only inspection reports)
(b) weak networking (lack of contacts)
(c) increasing your costs (e.g., a realtor's office not having a real person answering the phone)
(d) decreasing value (e.g., getting less money for the Seller, not getting bids accepted for the Buyer, not having practices in place to maintain/increase value, or letting randomness prevail)
(e) excess passage of time between the discovery of a problem and its solution (too many things can and will go wrong).
If we are going to operate powerfully in this game/business/life, we need
to recognize certain inherent tendencies of humans ... if indeed "knowledge
is power"!
1. Humans are close relatives of other primates (monkeys, chimps, etc.), and we share with them a tendency to imitate, copy, conform, model. We look to others to see how we should behave. Trouble is, if we do what others do, we will have the same results in our lives that they have; if we want anything more/better we have to think for ourselves.
2. Human behavior is controlled by "lower" brain centers, not the parts that facilitate rational thought. Deep inside the brain stem-on top of the spinal cord-sits the center of our emotions; it's called the limbic system. An enormous body of research has shown that humans are motivated primarily by those emotions: fear, lust, greed, and so on. A famous psychologist once said that all human behavior is motivated by fear; many years later I attended a seminar on negotiating in which the instructor emphasized that all INVESTING was fear-based as well!
3. People's attitudes/opinions, etc., are determined by their PRIOR ACTIONS. Another way of saying this is that we don't feel or think first and then act; rather, we act and then we feel and think that which is compatible with OUR actions. A large body of experimental research supports this principle; I cannot think of one single other thing that describes as much of human behavior, in my experience as a realtor. One simple example:
|
Buyers
who put up large initial deposits are less likely to back out than
buyers who put up small initial deposits, even though they all have
the same right
to back out of a deal. |
An assertion we can make, based on the above, is this: If we can get a person to do something-that he would not otherwise do-because it is what everyone else does-and because there will be negative consequences ... we can totally change a person's opinion or feeling about something! For example:
|
When
a buyer is required to "read and approve" a seller's disclosures,
inspection reports, etc., PRIOR TO submitting an offer on a property,
that buyer is far less likely to develop objections to buying the
property. By virtue of the very act of "signing off on"
the property's defects, that buyer is IN the deal.
|
If you don't believe me, just try providing any relevant disclosure to a buyer AFTER the sale is made and see how he/she REACTS to the slightest problem ... and the longer the problem has existed prior to its disclosure, the worse its impact! (See Lee's Law # 3.)
All successful leaders,
salespeople, teachers and managers know these principles intuitively-for
example, fear of terrorism instilled in enough of the voting public sure
worked for George Bush! In fact, many or most of the people who voted
for him were acting against their own best interests-financially and socially.
Humans do NOT behave rationally. It's almost laughable when opponents
of the current administration continually point out to us all the "reasons"
why we should vote for their party-and they wonder why these rational
explanations seem to have so little impact. Ha!