Market Dynamics

A brief intro to the discourse of” power”

“Power” is what makes the world go ’round! Not love, not money, etc…Each one of us has our own specific wants, as well as the more general needs of humans, and, to the extent that these needs and wants are satisfied, we have “power.” In ANY business, there is a plan and the overall purpose of that plan is to increase the power of that business’ owner!

In the REAL ESTATE business, each realtor has his own goals, but these are always dependant upon  theCLIENTS’ satisfaction with that realtor’s services. Naturally,  a client is not satisfied unless he accomplishes HIS plan, such as buying a home, accumulating equity, sheltering his family, and so on.

Given that relationship between the CLIENT and the REALTOR, it behooves both of them to understand the rules of the Power Game–which must be followed in order to “win.” (I hesitate to use the word “win,” because it implies that someone else “loses”! In truth, all involved can “win.”) It is my contention that very few clients OR realtors understand how all this works, much less know how to use it!

In the letters that follow, I have laid out what I consider to be the “rules of power;” and then have more specific advice for buyers and sellers individually! If you are my client, or if you are thinking about becoming my client, I strongly encourage you to peruse my assertions, and ask yourself if you agree/disagree/have other ideas!

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:
    1. information and knowledge (that’s why Sellers should have their own inspections!)
    2. strong networking (good mortgage brokers, escrow officers, employees, assistants, etc.)
    3. decreasing your costs (eliminating weak links in the chain-monetary or not)
    4. increasing value (making it easier for the customer, for example)
    5. 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:
    1. ignorance (e.g., leaving it to the Buyers get the only inspection reports)
    2. weak networking (lack of contacts)
    3. increasing your costs (e.g., a realtor’s office not having a real person answering the phone)
    4. 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)
    5. excess passage of time between the discovery of a problem and its solution (too many things can and will go wrong).

MORE ABOUT HUMAN BEHAVIOR …

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 mostly 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.)