Tag Archives: fear and greed

More About Fear than Greed on Halloween

UnknownIt’s Halloween in Santa Cruz. Get your game-faces on. Button up your costumed alter-egos. Here on the reservation, we embrace this night with particular passion.

Tonight, we’re going to conjure up our demons instead of stuffing them down. We’re going to summon our deepest fears while we howl at the moon and dance with delirious abandon. Hopefully, we’ll be able to scare ourselves silly enough to purge all the fear we’ve been binging on this past year.

I’m heading to the big, scary Real Estate Halloween Party that most of you probably don’t even know about. Think Burning Man – but just for Realtors and real estate-related professionals. It always ends at midnight when they crank up the David Byrne song and torch a giant effigy of a suburban stucco tract house.

It started five years ago, back in the dark days of the Great Recession when it felt like real estate was going to hell and fear was running rampant through the marketplace. I’ll never forget that first one…

It took place on a spooky dystopian cul-de-sac in in the middle of nowhere. Filled with foreclosures and boarded-up windows and darkened doorways that resembled the missing teeth and vacant stares of carved-up, hollowed-out pumpkins. Huge cobwebs hung like Spanish moss from For Sale signs leaning at odd angles. Buzzards circled homes in default – marking them as easy prey for all the land sharks prowling the neighborhood.

Everyone was partying like it was 1999. Crazy conga lines of buyers and sellers were snaking through the streets accompanied by wild strains of apocalypso music. Loan brokers in Alan Greenspan masks were handing out Nestle Credit Crunch candybars. Others were handing out wads of Real Estate BubbleGum.

Someone disguised as Naked Greed was streaking through the crowd chased by another character dressed in a skimpy Real Estate Rally Thong. There were Monster Houses milling around everywhere while a roaming Greek chorus of gremlins called “The What-Ifs” was eagerly whispering fearful thoughts into people’s ears with high-pitched, banshee-like voices.

Escrow officers were wandering around in wigs made to look like their hair was on fire. Many of them wore paper-chains fashioned out of loan documents issued by the Government Office of Cosmic Redundancy. One even came decked out as a mummified HUD statement. I saw a couple of Blind Appraisers searching for comps. Groups of Swarming Termites. Sellers dressed up like Statues of St Joseph. Looky-Loos masquerading as InterestedPartiers. Home Inspectors finding everything wrong.

Underwriters were morphing into Undertakers trying to bury the market, declaring that the word mortgage really did originate from the French words for “death tax.” Prophets of Doom and Gloom roamed the cul-de-sac chased by herds of Zombie Buyers even while the growing Legion of Unsolds hid inside their houses. The American Dream was dressed in a black robe and carried a scythe.

The Grinch That Stole the Economy was lugging a bag full of treats labeled Credit Default Swaps while someone else dressed like a Doctor, was running around trying to find a Market Pulse. A few people came as Toxic Assets and the Gordon Gekko mask made a big comeback. Freddie Kruger also made a special guest appearance promoting his new movie – “Nightmare on Main Street.” But he was almost eclipsed by a giant swathe of darkness calling itself the Shadow Inventory.

Wow. What a party. Say what you want about real estate…we do fear well. There are always plenty of lost souls out there wandering around with grave faces on. Gives me goose bumps just to think about it.

Avoid Dance of the Void

How does the quote go?    “ Stare into the void long enough, the void starts staring back.”    Nietzsche, I think.   The patron philosopher of Real Estate. The guy who also said:   “ That which does not kill us makes us stronger.”   No doubt at a time when the uber market was less than robust.

So, in the interest of avoiding the void and plunging deeper than the DOW,  let’s  avert our gaze.  Stop staring so fixedly at the abysmal state of real estate’s big picture.  Do the next best thing – distract ourselves with little stuff.

How about if I recount the shadow inventory of insidious, nagging little fears we Realtors lug around on a daily basis?  That’s right. Don’t let our smooth sales personas fool you. Beneath them, most of us are just quivering masses of euro-like uncertainty. Champion producers of the same paper equity that turned out not to be gold bars in a safety deposit box afterall.

Real Estate – how do I fear thee?  Let me count the ways:

I’m afraid of leaving a zero off a list price.  Happened once. Adverstised a place in Pasatiempo for $140,000 instead of $1,400,000. Ooops.  The phone rang in my ears for days. Suddenly everyone wanted a dream home.

I’m afraid to use my supra lockbox key.   Why?  I know that the battery only lasts for 10,000 lockbox openings.  Died once while I was trying to show a big property to a HNWI (High Net Worth Individual.) Could happen again if one of those HNWIs ever comes around.

I’m afraid of Rottweilers  for obvious reasons. But I’m more afraid of mistakenly letting Fluffy the Lapdog escape  through a sliding glass door left unattended.  Happened once.  A mad dash to freedom tragically turned into coyote bait.

I’m afraid of  people’s  eerie doll and owl collections. But I’m more afraid of a chance encounter with a home full of scary clown paintings. And yes,  I’m afraid of the powerful off-gasses of potpourri.  Specially when used to cover up the far more pervasive presence of 3 month old kitty-litter.

I’m afraid I’ll hear little feet in the soffit areas above the kitchen cabinets.  But I’m more afraid of the sound of dampwood termites chomping behind a shower wall.  (Yes, sometimes you can actually hear them.) Not to mention gopher holes that can take out whole sections of private road.  Oh, and I’m afraid of crickets too.  No, the other kind – the one’s on the roof near the chimney where  it always leaks when it rains,

I’m afraid of the “family expert”  when they provide the down payment to the first time buyers I’m chauffeuring around to those starter shacks .  Waiting to exercise their veto power no matter what the house “majority” decides.

I’m afraid that next “blocked” phone call will be the same client calling for the eighth time today.  Or worse, another cold caller pitching me a website  to replace that miserable excuse that I call a website.

I’m afraid of the neighbor’s chainsaw.  I have recurring nightmares about the Open House Chainsaw Massacre.  Or was that the Open House Leaf Blower Massacre I was dreaming about right before my alarm went off this morning?

I’m afraid of the escrow from hell.  And the homeowners management company from hell.   And dog poop.  And the hysterical effects that a historical designation might have on a Victorian.

I’m afraid of running out of gas.  Of not being able to turn around in a tight driveway.   Of getting lost.  Of pot holes and pot houses.   Leach fields.   Out of town appraisers.  Tar and Gravel.   Lava rock  lawns.   Avocado appliances.  Forgetting a clients name.   Working a calculator in a pinch.  Losing an escrow deposit check.    And T 111 siding.   Did I say out of town appraisers?

I’m afraid of setting off the alarm.  Now knowing a gate code.  Going to the wrong house.  I’m afraid rates will go down after I lock. Or go up before I lock. I’m afraid of being stuck inside of  Boulder Creek with the Capitola blues again.  And an endless funnel full of champagne tastes and beer budgets.

I’m afraid of a full priced offer coming in on the first day  knowing my client will think they listed too low.  And I’m afraid of one more seller saying they are going to put their property on next spring when the market is better. But not as much as I’m afraid of one more buyer saying they are going to wait until next spring when the market is worse.

I’m afraid my head will explode if it gets too busy but not as much as I’m afraid my head will implode if it gets too slow.


How Low Can We Go?

And the dips just keep on coming…

Turns out this isn’t the Catfish Recovery afterall. One of the creative metaphors swimming around out there. Refers to a real estate market sustaining itself in the murky depths at the bottom of a stagnant pond.

Nah. This is the Baskin and Robbins Recovery.   The one of Double Dips and Great Recessions 2.0.   Do they make triple dip cones?  I scream, you scream, we all scream for …. Neapolitan anyone?

I’m just hoping we don’t go for the Chubby Checker Recovery.   Remember the Limbo Rock? Chubby chuckling  “How low can you go? ”  in demonic undertones.  Participants lined up for St. Vitus gyrations set to an Apocalypso beat.  Trying to  underachieve the continuously lowered bar of their own expectations.   “Great to dance to Dick.  I give it a 9.0 on the Richter Scale.”

Anyway, this is one of those times when real estate throws  “location, location, location” out the window.  Before the window closes .  When’s the last time you heard someone use that sage piece of advice ?  Who cares where you are buying, if you aren’t buying in the first place

The popular corollary to  “location, location, location” has always been: “I’d rather have the worst house on the best block instead of the best house on the worst block.”

Problem is that they all feel like the worst house on the worst block when the shadow inventory of scary “things to come”  looms  larger in the boogeyman-infested closet of our vivid imagination.   Walked through one of those bank-owned distress properties lately?   That awful fishy smell is also a metaphor for the market we’re in.

Ah, the bad good old days before our unrelenting greed got us into trouble.

A rapidly appreciating market cures all ills.  At least for awhile. Tough to make a mistake in a market shooting through the roof.  The choices are simple because the results are either going to be great or less great.

Second story addition?   Go for it.  Spent too much on the remodel?  No problem.  A little appreciation over time covers it.  More termite damage than you anticipated? Last month’s rise makes up the difference.  Flat out bought the wrong place?  Voila!  Just sell it for a profit tomorrow and go pick yourself out a new one in the grand scheme of musical houses.

It’s all good. Or so it seemed…at the TIME.

That’s right. TIME.    The 4th dimension is the operative gambit here.  It’s when that’s most important at this point on the space-time continuum. Not where.  And most people don’t have a clue when to say when –  not knowing whether the market is coming or going.

Instead of shooting through the roof it feels like the market is somehow shooting us all through the foot.  If not here? Where?  If not not now??? See what I mean.

So we are retiring Location x 3. Putting it out to pasture.  Giving it a gold watch and moving it down the list of popular coinages in the realm of real estate.  Looking for a worthy replacement to trot out in its stead to assume the mantle of conventional wisdom.

How about Fear and Greed?  The simple juxtaposition of two seemingly opposite (although both negative) aspects of human nature.  Qualifies as one of the longest running threads in real estate. In almost continuous use since Adam Smith first began strumming our neurons with his “invisible hand” of the marketplace.

But I’m going to simplify things even further since we’re in such a pinch.  Let’s just say that Greed is the FEAR of not having enough.   Make that little alteration in the alliteration and we are simply left with FEAR.  Naked FEAR.  FEAR as the sum of all FEARS.  FEAR that FEARS nothing but itself.   FEAR with a sprig of loathing thrown in like parsley on the side.  FEAR in the time of cholera – or the great flux, as some might say.

There’s a mindfulness meditation certain Buddhist schools practice. In this impasse they might recommend sitting in your real estate office or in your listing or in your car in front of some new place for sale, simply repeating:  “Feeling Fearful. Feeling Fearful.  Feeling Fearful. ”
A worthy mantra. By definition, you can’t repeat a mantra too many times.  That’s the whole point. You’re supposed to keep repeating it over and over again.  Say it loud. Say it often. Say it like you mean it.

Through acceptance rather than denial comes transformation.   Ok. We’re human. We’re feeling fearful.   No judgment.  Just acknowledgement.    Holding it in gives fear life and longevity. When you begin to name that which isn’t supposed to be named, you-know-what’s grip weakens. And we are free to move on.


Greed or Fear Up the Yin Yang?

Another mad rush of a week in real estate.  The hits just keep on coming don’t they? Here in the thickness of the open space we occupy.  Where the silence is often deafening. Where so many things seem caught up in the fastness of their own slowness. Sometimes it’s hard to tell.  Do we have too much to do and too little time? Or is it more like Willy Wonka said: “so much time and so little to do”?

I go back and forth. Hour by hour. Day by day. The internal debate rages on – riding a wavering frequency modulated by the interplay between my own fluctuating biorhythms and those of the global village as a whole.  Getting better? Not getting better? Glass half full?  Eighty percent empty? The market loves me? The market loves me not?

But I think perhaps the California Association of Realtors is finally on to something.

I’m talking about their new Home Protection Payment Program.  In simple terms,  the HPPP allows a Seller to fund an insurance policy that covers up to  $1,500 of a Buyer’s monthly mortgage payment if that unfortunate soul loses their job in the first year after close of escrow.  This service has been available for about a month now but CAR is going to roll it out big time right after the first of the year.

Another gimmick?  Sure. Anything designed to sell people something qualifies as a gimmick. What’s important is that this is a whole new breed of gimmick.

Think about it.  Here we are in the middle of what ought to be the most robust Buyers Market in history.  Buyers have had every conceivable advantage going for them for quite a while. Precipitous price drops. Interest rates not seen since the 50’s.  Sellers capitulating right and left. Rebates and incentives up the yin yang. Tax credits. Extensions of tax credits.  Extensions of extensions of tax credits.

But why are so many Buyers missing in action? Specially when everyone keeps chanting the mantra of mo’ – mo’ opportunity, mo’ return,  mo’ juicy money.  Apparently very few are feeling messaged by the message. This whole recovery thing has been plagued by screw ups. One long series of failed attempts to get Buyers back into the game.

Why?  Because we’ve been going about it the wrong way. We’ve been acting like One Trick Ponies trotting out the same old MO’s (modus operandi) dressed in different clothes.
It’s time to stop appealing to people’s greed.  It’s not working.  Consumers’ erogenous zones are exhausted.  Played out.  Numb from all hyper-activity they got groped with for way too long.

Instead of finding new and bigger and better ways to stimulate the greed glands of the marketplace, we have to do an about-face and move towards the other end of the spectrum.  We have to start finding more effective ways to deincentivize  people’s fear.

Greed and fear. Fear and Greed.  Self-proclaimed real estate pundits have always mouthed those two words together like they were twins separated at birth.  Time to forget greed for awhile.  Flip the coin. Walk to the other side of the talk.

We don’t need one more litany of all the reasons Buyers should buy a home.  We need to pare down the list of reasons Buyers fear buying a home.  We shouldn’t keep harping on what Buyers have to gain.  Rather, we should be reducing their nagging suspicions about what they have to lose. We don’t need to inflate their endorphin levels. We need to diminish the adrenalin rush fueling the fright and flight mechanisms that send them scurrying for cover.  Less emphasis on carpe-ing the dinero and more attention aimed at shrinking all those inflamed what-ifs that torture the psyche and hold us hostage.

So CAR is on the right track.  An insurance program for one of the biggest what-ifs: “What if I lose my job?!!!!”  Way better than an $8,000 tax credit.  But this is only the beginning.  I’m thinking CAR can take it to another level.  Steal a page from Lloyds of London which has insured just about everything under the sun at one time or another.

If Lloyds can insure a food critic’s taste buds, Bruce Springsteen’s gravelly voice and Jennifer Lopez’ famous ass for a whopping billion dollars, not to mention issuing more than 400,000 policies insuring against alien abductions, werewolf attacks and vampire bites, why should real estate stop with simple job loss.  Let’s get all our fears out on the table and really insure that we’ve got everyone’s butt covered!


Fear Never Sleeps

C’mon fellow Realtors.  Fess up.  Who doesn’t relapse into moments of fond reverie for those thrilling days of yesteryear ?   When greed was good. Money was no object. Liars loans were handed out like Halloween candy. And transactions flowed like manna from heaven.  Even if our  “mantra of more”  was really just the soundtrack behind Wall Street’s thorough mugging of Main Street.

I catch glimpses of my inner-Gekko staring sideways at me in the mirror sometimes.  He whispers naughty things in my ear.  He wants me to get up in front of that crowd of Buyers sitting on the sidelines and exhort them all  to get off their butts. Step up.  Grab those low interest rates spread out on the buffet table.

Wouldn’t a little bit of greed (for lack of a better word) do us all a lot of good in this impasse? Money can’t wake up if fear never sleeps.  As a further act of insidious manipulation, I could summon the pop-wisdom of Deep Pockets Chopra and urge Buyers to “Embrace Uncertainty.”

But apparently, they aren’t ready to “buy in.” They are afflicted with Intention Deficit Disorder. They seem to want to play the part of Buyers without actually having to consummate the act – no matter how low rates and prices limbo down.  For now, they are content to reside safely in the bosom of their own fear.

How can you  truly avoid risk? Easy.  Call your worst fears something else.  Rationalize them. Evade them.  Circumvent them in advance.  Make sure you always leave the back door open so that nothing can continue to happen. It’s called hedging. And today’s Buyers have designed some incredibly creative hedges for all that fearful baggage they are dragging around.

Here’s a short list:

BENEATH THE MEANS TIDE:  Get pre-qualified. Then decide to buy $100k below that, just to be “safe.” Don’t worry, you won’t find the champagne you want on the beer budget you’ve given yourself.

DOWN-SIZE ME:  Decide to leave a smaller footprint.  3 bedrooms, 2 baths.1100 sq ft and 3 kids.  Keep trying houses on for size with your mental shoehorn in hand. You may want to save the planet but you can only sacrifice so much sanity.

LIVE FOREVER:  A great ploy.  Decide you are going to live the rest of your life in whatever home you buy.  Then it has to cover all contingencies until the day you die.  Relax. You’ll never find it.

THE IDEAL DEAL:  Make a list of 100 priorities.  Perfection for $600k. Single-level,  3 bedrooms plus office. Total privacy. Move-in condition. Huge lot. Great views.  You can stall forever because it ain’t there.

THE WORLD IS MY OYSTER: From Bonny Doon to Rio Del Mar, rural to city, total fixer to small remodel,  make your search parameters so wide that neither you or your Agent will ever zero in on something that fits your fuzzy lack of specifics.

BAIT YOUR SWITCH: Insist on finding your perfect replacement property first. Then put your house on the market.  Make a low contingent offer. The odds are in your favor that nothing will happen.

SHORT STUFF: Get into a short sale. That will make you feel like a real Buyer. You can get out anytime.  It could take months to get a first response letter from the lienholder(s).  No pressure to perform here.

NON-COMPETE CLAUSE: Vow not to participate in any multiple offer situations  that arise – “on principle.”  Take them as a personal offense to a Buyer in a Buyers Market. That way, if anything really good comes on, you are already out of the running.

WAITING GAME GAMBIT: Sit and wait for price reductions.  Wait. Wait. Wait.  Not doing something can easily be construed being “active” in today’s and tomorrow’s market.

THE LOW BLOW: Wait until a big juicy price reduction arrives and then offer them $100k less the next day.  They are sure to reject your offer.

The CHINA SYNDROME:  Arm yourself with every economic factoid your analysis-paralysis can muster. When the right house arrives,  simply cite your concerns with currency pressures from the Yuan and blow the deal out of the water.

GROUND MEAT:   Just in case you actually find yourself in escrow, you better have an exit strategy.  There is always some excuse to get out of any transaction but it can be embarrassing to make an excuse that everyone knows is an excuse.  Better just to grind on inspection issues. Big. Small. Doesn’t matter. Just keep grinding until  the Seller says good bye instead of good buy.


All We Have to Fear…Is the Wrong Kind of Fear

I haven’t been a very positive role model lately, have I?  More of a brooding cynic than a buoyant cheerleader for the market.  Maybe I’m just contrarian by nature. Or maybe the medication I’m taking to curb my Oppositional Defiance Disorder (ODD) has stopped working.  Or maybe I’m a hopeless misanthrope and will never feel entirely comfortable joining the rest of the herd on anything.  Whatever the lame excuse…mea culpa…I’m sorry.

I promise to get more in touch with my irrational exuberance. Stoke my own upbeat, unbridled belief in a brighter future. I’m going fluff my aura and get with the program before they revoke my license, strip my Realtor lapel pin, confiscate all my sales awards and throw me off the real estate bandwagon for good. I pledge to hold weekly pep rallies and start pumping up the volume on all that positive real estate news out there –  even if I have to manufacture some  of it myself.

Is it shameless boosterism to inflate my own optimism for the greater good?  Am I guilty of selling smoke and mirrors if my underlying motives are pure? So what if I happen to commit a few small sins of omission or manipulate a few aggregate statistics while trying to foist a little blue sky on people who desperately need it?  There’s a lot at stake. Like a whole slew of lost shares in the American Dream that are up for grabs. And the fragile recovery of an economy that could use an infusion of down home spending.

So, here we go folks! Step right up. I’m here to tell you that today is your lucky day!  But then, all you brilliant investors, smart-money savants and cutting-edge entrepreneurs already knew that, didn’t you?  How could real estate get any better than it is right here, right now?

How perfect is this storm?  Let me count the ways:  Low prices. (Remember when there wasn’t a house out there livable under $700k?)   Low interest rates. (Close to historic, hovering just above 5%.)  Lot’s of juicy distress sales to sink your teeth and your claws into.(Somewhere around 70% of properties in escrow are short sales or REOs.)   And…even if you missed the Federal Tax Credit for first time buyers, the debt-strapped State of California has generously stepped up to offer its own set of steak knives with almost every purchase.

How cool is that? Getting paid to buy something? Better than green stamps or bonus miles! Shoppers, if there ever was a blue light special happening in middle of a housing market, this is it!  Heed the call. Stampede your way towards the home improvement aisles of Santa Cruz County before all the best deals are gone!  Stragglers are going to kick themselves, if they miss this golden opportunity.

Bear with me. I’m a little dense but I think I’ve got this shameless boosterism thing figured out.  We just have to find a way to recycle our negative fears into more positive and productive fears.   Perhaps we could issue a series of “fear of default swaps” and encourage people to bet against the worst case scenarios that they seem to have such a huge appetite for.  Instead of letting them buy into the fear of losing everything, in a way that keeps them paralyzed on the sidelines, we can hedge that position with a much healthier fear  –  one that makes people feel absolutely petrified they are going to miss out on the gobs of money there is to be made if they get up off their asses and start moving again.

It’s simple: We just need to appeal to the greedier side of people’s fear.  We need to provide more of the hair of the dog that bit them in the first place – before the bubble burst.  I feel a Gordon Gekko moment coming on. Ready? …”Greed is Good!”  Now that felt scary-good didn’t it?

So here’s one thing we can do.  Take some of those Buyers worrying themselves sick that prices will fall further if they actually buy something and convince them that the market has already hit bottom and that prices are going up fast. Their fear of buying will be transformed into the fear of not getting a house fast enough.

We can quote the right statistics in just the right way. “Sales in March were up 16% from March of last year. This was the 19th consecutive month that the demand for sales increased from the same month in the previous year!” Who cares what that actually means? Who cares how low the numbers actually were 19 months ago? The market must be booming. It’s good news. And it’s time to buy!