Tag Archives: greed and fear

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!

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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.

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