The Only Thing We Have to Fear, is Ourselves

In my late twenties, as a trader on the floor of the options exchange, I was a “Master of the Universe”.  That’s a very common affliction down there.  Apparently, when you put a bunch of young, fearless, risk-takers together and give them the power to move markets around the world, you end up with a bit of a monster.  At one point I attended a symposium with my fellow traders; each of us secure in our status as Cowboy and Superman rolled into one very special gift for the world.  We listened to the latest market analysis systems and celebrated our shared royalty.  Amidst all the revelry was a speaker who didn’t have a financial background; he was more of a self-help, motivational kind of guy. (Believe me, the last thing that group needed was motivation!)  I remember not paying much attention to him – you know, being a “Master of the Universe” and all – but I wish I had.  He wasn’t there to motivate us, he was there to help us – to keep us from losing ourselves… an effort made mostly in vain.

Within days of the symposium all was blissfully forgotten; let’s face it, what could these talking heads possibly teach a “Master of the Universe?”  All, I should say, but this bit of wisdom from the self-help guru – the one who was so out of place.  This stuck with me and I damned him for it:

If you want to know who you really are, listen to that quiet voice you hear while driving home after a meeting, late at night and tired, with no one else in the car and the radio off.  That voice is who you really are… and the fears that voice brings forth are what you really fear.

Over time I was pretty sure I understood what he meant… but I didn’t.

I was thinking about this the other day.  I had just finished with a group of agents in my POPs Program, where we had been favorably comparing the stress AND the fun of being an options trader with that of being a real estate agent.  While driving home afterward, I was listening to that little voice and it hit me: I realized that my innermost fears are not really fears at all.

They’re a reflection – deep down inside – of my belief about what I do and do not deserve.

So, for instance, if you find that during those quietest of moments, when you listen to the little voice, you are fearful of never having enough money, it’s because deep down inside there’s a part of you that doesn’t believe you deserve wealth.  In the same way if you fear unhappiness or things that make you unhappy,  it’s because somewhere in there you don’t believe you deserve happiness.  Our quietest, deepest fears are really sign-posts to our belief systems… and this is great news!

Understanding this, we can rid ourselves of these fears.  Just the act of listening and understanding what fear is goes a long way toward that goal: “Fear flees from the light of understanding.”  But we can do more; we can take an easy, positive step by simply writing a statement of affirmation and reading it every morning.  Read it with conviction and without fail.  Never underestimate the power of consistency. Water running over a rock appears to have little affect, but water running over a rock over time, is the Grand Canyon! So, if your fear concerns scarcity and you realize that a part of you believes you don’t deserve wealth, simply write a statement of affirmation: “I am a successful and good person deserving of wealth.”  Read this every morning with conviction (that’s the real trick here) and sooner than you think you will overwrite the belief.  It is just that simple.  (Of course, there’s a good chance those fears will be replaced by some new and different fears… but that’s a story for another post!)

In the field of real estate, your beliefs about yourself are just as important to your ultimate success as your knowledge and expertise.  Listen to that little voice and face your fears.  Not only will this open the door to a flourishing career, it will lead to a greater understanding of who you are… and why each of us is truly a “Master of the Universe.”

Filed under: LIFE THAT POPs, REALTORS

In Honor of President’s Day

From Samuel Adams’ speech in Philadelphia, 01 August 1776

If ye love wealth better than liberty, the tranquility of servitude than the animated contest of freedom — go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that you were our countrymen!

Filed under: Uncategorized

A Scary Thought on the (Non-Existent?) Shadow Inventory

The shadow inventory has been a topic of interest with almost every agent I talk to lately.  Most believe it is large and few understand why it isn’t in the marketplace rather than held by the banks.  Russell Shaw recently wrote about the shadow inventory being gibberish.   It is an interesting article and one I recommend reading.

I rarely disagree with Mr. Shaw, and rather than do so now I’ll simply suggest that we are talking past one another.  As I read it, he is suggesting that this inventory doesn’t exist because it is, for the most part, out there already; just not listed as REO.  He makes it quite clear, however, that he is not talking about foreclosures still to come. (Apologies to Russell for over-simplifying.)  This is where we begin to part ways.  I submit that the shadow inventory must necessarily include not only actual REOs (or REOs not listed as REOs), but the entire picture.

More to the point, if we look at all the homes that have been foreclosed on, are in foreclosure and should be in foreclosure, we are left scratching our heads and find ourselves back to the same question: why aren’t the banks taking these homes in, putting them on the market, and selling them?   (I’m talking here especially about those homes where people have stopped making their payments and continue to live for 6, 12, even more months.)

MORTGAGES IN DEFAULT
Here’s a graph courtesy of the New York Times:

Sources: Federal Reserve Board and Mortgage Bankers Association, via Haver Analytics

That is an awful lot of mortgages in foreclosure; but add to that that lower line – of mortgages in default and not yet in foreclosure – and the numbers are staggering (again, think of people staying on a year after they’ve stopped making payments).  So no matter what we call it, the question remains: What are the banks doing? Why aren’t these mortgages foreclosed?  Why isn’t this inventory on the market?

I know all real estate is local and there are plenty of areas around this country where the last thing agents want to see is more inventory.  But here in San Diego this question of  Shadow Inventory is burning a hole in people’s brains.  We are down to less than two months inventory and the effective inventory (discounting homes that are not financeable due to cracked slabs, missing kitchens, etc.) is closer to one month.  The average buyer is writing over fifteen offers before buying a home or simply walking away in frustration.  We are clamoring for this inventory; why isn’t it out there?

A THEORY
Here’s a theory I’ve been sharing over the past two months with the agents I talk to: the banks have a financial incentive NOT to sell these homes for the same reason they have a financial incentive NOT to lend money.  Let me ask you: if you could borrow money right now from the Fed at roughly 0%, and through carry trades create a very low risk return of 3%, would you do it?  Of course you would; that would certainly be more prudent than putting the money out there in relatively risky mortgages?  More important to our discussion of Shadow Inventory:  you can borrow that money at 0% so long as your balance sheet and reserves are in order. When you have a non-performing asset (like a mortgage not being paid) you can carry that for quite a while.  But, if you sell that home in foreclosure you book the loss.  I don’t know about you, but if I were a bank I would happily carry a non-performing asset and continue to borrow money at 0%.

CONCLUSION
When the Fed begins to raise rates -expected to be late 2nd quarter or early 3rd – the banks will thank them for the ride and begin clearing their books of these non-performing assets in a hurry.  If we follow this theory to its inevitable conclusion, we are looking at a scenario wherein inventory is going up (and home prices are dropping) while at the same time rates are rising.  Falling home prices and rising interest rates. Not the summer I want… and I hope to hell I am as wrong as I have ever been.

Filed under: BUYERS, INVESTORS, LENDERS, REALTORS, SELLERS

The End of the Neo-Pros, the Beginning of Real Nastiness… or Both?

The worm is turning. Now for the real question: is it too late? Are we left with ugly but self-interested politicians, who run for the middle – or elitist Neo-Pros, who take Chicago politics to a new level? 2010′s going to be a bumpy ride…

More here.

Filed under: POLITICAL & ECONOMIC FOLLY

When Can I Touch and Who Should I Contact?

Yesterday in a marketing Mastermind Group with a half dozen agents, a bit of confusion arose over two of the primary principles I use when developing their marketing campaigns. The question was new to me, which usually means there are more agents out there with the same question.

Earlier, we had discussed the parameters of an effective drip campaign on those we already know: friends, family, past clients, past prospects, and so on. I call this group your S.O.I.L (Source of Income List) because we want to grow a very robust referral business from it. Gary Keller, in his outstanding book Millionaire Real Estate Agent, refers to this group as METs and suggests you touch them or drip on them 33x per year. I have “adopted” this philosophy wholesale and – as with most of the concepts in that book – find it applicable to agents no matter where they work.

A little later, I mentioned that statistically speaking, 80% of all business happens after the fifth contact. This is not real estate specific. It’s more of a universal rule borrowed from the direct marketing world. (You may notice I do a lot of “borrowing” and “adopting”… most great marketing is based on ideas stolen from another industry or product. Take a look around outside the world of real estate. You’ll be amazed how many great ideas you find.) While discussing this idea, one of the agents asked why we need to touch our sphere 33x when most of the business is going to happen after the fifth contact. Great question because it illuminates one of the basic misunderstandings in marketing.

When you drip on your sphere – touch them regularly – you are practicing Epiphany Marketing. This is very similar to branding but, in my opinion, more effective. It’s designed to generate referrals and is on the very edge of what we can accurately call “marketing”. On the other hand a true, honest-to-God marketing campaign revolves around a specific concept (hopefully a USP) and is designed to carry people along a well-lit path until they inevitably reach the decision to BUY. It should go without saying if they reach this decision to buy the product or service but don’t use you, there’s some tweaking needed in your campaign… but that’s another post entirely.

The differences in the objective as well as the process between these two campaigns should now be obvious. Epiphany Marketing is designed to buy mind share by offering information that’s useful and interesting. An out and out marketing campaign, on the other hand, attempts to buy mind focus and decision by offering specific benefits amid repeated calls to action. The former is dominated by a 33 touch system of useful drips. To enjoy an 80% conversion on the latter, however, we need to contact the same target audience at least 5 times. The confusion brought up by the agent yesterday is cleared simply by remembering the difference between touches and contacts.

Filed under: LENDERS, MARKETING, REALTORS

What’s in a name? That Which We Call a “Job” Summit, by Any Other Name…

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

“The question is,” said Humpty Dumpty, “which is to be master — that’s all.”

Through The Looking Glass – Chapter VI

Lewis Carroll

Small business accounts for over 65% of all new jobs. If you wanted to create new jobs (I mean, if that was your actual goal and not just a cover story) you might decide to sit down with people who represent small business interests. The guest list for an actual, according to Hoyle, “Job Summit” then, might look like this:

• The Chamber of Commerce
• The National Federation of Independent Business
• The National Association of Manufactures
• and so on…

If, on the other hand, your actual goal was to consolidate power and become the de facto benefactor of jobs, you might want to sit down with the people who kill small business on a regular basis. To keep things simple, you should probably limit yourself to those with whom you are already sleeping. The guest list might look like this:

• The Service Employees International Union (S.E.I.U.)
• The American Federation of Teachers
• The United Steel Workers Union
• Policy wonks with absolutely no real world business experience
• And of course, Paul Krugman (an economist/columnist so far to the left he can’t ever be right)

Which list do you think showed up for the White House “Job” Summit?

To paraphrase Lewis Carroll (and, quite possibly, President Obama?):
“It is a job summit damn it! It is because I say it is. The question is, which is to be master: you… or me. That is all.”

Filed under: POLITICAL & ECONOMIC FOLLY

Embarrassing Confessions & Marketing Muscle Memory

Two quick confessions:

I can’t throw a baseball.
I’m pretty sure I just scared a potential client away.

I used to be able to throw a baseball. I played little league and pony league with some success. There weren’t any pro scouts putting radar guns on me or anything, but I played right up until high school and I was regularly elected to the all-star team. (Although looking back, it probably helped that I was much bigger than all the other kids and threatened to show them my Bruce-Lee-super-fist-of-temporary-death if they didn’t vote for me… Nah, I’m sure it was my prowess inside the foul lines.)

Anyway, in high school I discovered my true calling: shot-put. After that, I didn’t have occasion to pick up another baseball until my boys started playing just a year or two ago. That’s when I discovered that I now had all the throwing grace and accuracy of a little girl. You see, by my estimate I probably threw the shot – over the course of my competitive career – 15-20,000 times. That pretty much wiped out any skill I ever had for throwing a baseball. On the other hand, it created a near perfect shot-put technique that I can still demonstrate even now… as I enter my peak “mid 40s” athletic years. (These are a lot like my peak “mid 20s” athletic years, only everything is now done while carrying around the extra weight of a small child. It’s actually quite impressive if you think about it…) Think about it or not, I can still summon dynamic and purposeful form because of a powerful adaptation called muscle memory.

Earlier this week, as I was parking my truck, I noticed a car stopped in the middle of the street. The driver was craning her neck to jot down information from an agent’s For Sale sign. She then pulled up two houses and stopped again to take down information from another agent’s For Sale sign. By this time I was walking down the sidewalk; I veered in toward the middle of the street and approached her on the drivers’ side. “Hi,” I said, trying like hell to flash my I’m a big, cuddly polar bear smile rather than my (way too similar) I’m a big, psychotic black bear smile. Pointing back toward the two signs she had just copied down I continued, “I work with both of those agents and they’re very good. My name is Sean and I’m the best damn lender in San Diego.” Then I stuck out my business card. I had to reach pretty far through her open window because at this point she had recoiled almost to the passenger’s seat. I’m guessing I frightened her.

Will she call me for a loan? Very doubtful, but then I never expected her to call me. That’s not why I did it in the first place. This was an opportunity to perform rep #7,487. Every chance we get – as agents, as lenders, as vendors… as salesmen and women – we must practice our marketing form. We must ingrain our Marketing Memory. You may lose the ability to throw a baseball, you might even scare away a prospective client. But eventually, you’ll end up with a near perfect marketing technique and be on your way to world class producer.

Filed under: LENDERS, MARKETING, REALTORS , MARKETING, Success

Join the DOER Revolution

The $8000 first time home buyer tax credit is a mistake.  Congress should have enacted the original idea: a $15,000 tax credit.  This goes for the repeat home buyer tax credit as well.  As a matter of fact, I would like to have seen both tax credits even higher.  If you’ll maintain an open mind for the next few minutes, I hope to show you how embracing these tax credits actually creates a “win-win” situation that benefits you and this great nation.

The inherent spirit of humankind is individualistic, creative and inclined toward action.  The heart of man is inexorably drawn toward freedom: freedom to live, freedom to express and freedom to choose.  No matter what short-term damage is effected by an oppressor or institutionalized by a government, men and women will devise ways to rebuild and overcome.  Even in countries where the idea of freedom has been systematically driven out by force, we witness people taking action toward freedom.  It is a natural state that can be delayed, but not denied.  We are DOERs.  This country, the United States of America, is the poster child for taking action toward freedom.  We are a nation made up of DOERs.

So what does this have to do with the tax credit?  It empowers us with a “win-win” opportunity.  The immoral bribes to home buyers, the unconstitutional mandate for health insurance, the socialistic bail-outs, even the very destruction wrought by stimulus packages:  embrace them all!  These are all opportunities to make that “win-win” choice.  Embrace the home buyer’s credit and ACT on it!  Be a DOER.  It’s the DOERs who create the success of our society.  A nation of DOERs – of independent, entrepreneurial, action-based DOERs – will always bring about the necessary changes to save this republic.  If you desire your own success, then you desire to become a DOER.

More specifically: every action you take to help another person receive the tax credit strengthens you as a DOER while at the same time weakening the architects – the very architecture – that imposes itself upon a free people with that tax credit.  Eventually, the system cannot bear its own weight; the center cannot hold.  In taking action to embrace the tax credit you not only strengthen your potential for long-term success  by being a DOER, but you effect the implosion of the progressive state.  In other words, you hasten the collapse of an economic enemy by using its own tools of destruction and in the action of using those tools, in being a DOER, you reinforce and strengthen the very reason such a system cannot stand in the first place.  It’s a “Win-Win” proposition.

One last thought: there are those who fear taking action because they don’t know what will happen after the crash.  That’s actually a  surprisingly insignificant concern.  We don’t control outcomes and so we cannot know them.  Rather, we take action based on our knowledge of who we are, what we believe and what we desire.  We are a nation of DOERs.  If you believe that, than you have no reason to fear your desires or the brave new world after the collapse.  A more legitimate fear might instead be: “what happens to me after the collapse if I am not a DOER in a society being restored by DOERs?”

Embrace the government hand-outs and credits and stimulus spending.  Encourage an immediacy so apocalyptic that no one has time to read the laws they enact.  Take action and be a DOER… Join the revolution.

Filed under: LENDERS, LIFE THAT POPs, POLITICAL & ECONOMIC FOLLY, REALTORS , Doer, Home Buyer Tax Credit

The #1 Obstacle to Success

What keeps us from our goals?  Whether it be work, personal, health, money; what is the number one obstacle to achieving our potential?  Assuming our goals are attractive to us and within our ability, shouldn’t we reasonable expect to achieve a majority of them?  Yet most of the people I talk to say they’re not living up to their potential… yet.  But they will, once they get around a few obstacles:  once the economy improves and rates come down; just as soon as the boss recognizes that butt kisser for the incompetent he really is; after all the Holiday parties with the pies and cookies and egg nog.  You get the idea.  But the truth is, none of that stuff “out there” is the real obstacle.  That’s because there’s nothing “out there” nearly so scary or powerful or destructive to our success as we are to ourselves.  Most of us carry around a few self-doubts, maybe even a few “I can’ts.”  If asked, I bet you could list five things you don’t like about yoursef without even really thinking about it.  It’s as if we’ve gone on a date with ourselves and halfway through dinner decided we’re not good enough for the other person… and the other person is us!

Knowledge is power and knowing that we are our own biggest obstacle is very powerful. Yes, you have to have goals.  Yes, you have to create a plan for achieving them.  But I guarantee that plan will be much more successful if its very first step, is to fall back in love… with yourself.  Sound a little corny?  Maybe easier said than done?  Fear not: I’m going to leave you with a small, powerful two-word phrase for that all-important first step.  Not long ago I was talking to my 7 year old son and I was congratulating him on figuring something out for himself.  He immediately threw his arms into the air and said “Yeah Me!”  No pretense.  No guilt.  Only genuine admiration.  Imagine that: “Yeah Me!”

Go ahead, try it yourself.  Stop reading for a moment, put your arms in the air and say “Yeah Me!”  Come on… say it with feeling – really mean it.  “Yeah Me!”  Does it feel a little funny?  Make you feel a bit awkward; a little self-conscious?  That’s not unexpected; remember, we’re the same people who decided we weren’t good enough while on a date with ourselves!  Try this: for the rest of the day say “Yeah Me!” every chance you get.  Say it at least 100 times and mean it every time you say it.    Hold a vision of yourself, goals firmly in hand, during that brief moment it takes to say “Yeah Me.”  Most importantly, don’t stop doing it all day long.  You see the moment it stops feeling funny, is the moment you discover how successful you can really become.

“Yeah Me!”

Filed under: LENDERS, LIFE THAT POPs, REALTORS , Success

Is Goldman Sachs Over-Paid for Doing “God’s Work?”

I guess I haven’t reached that point in my life yet when I’m so jaded (or is it cynical) that nothing will surprise me.  I say this after reading an interesting little article in the London TimesOnline.  They had the chance to interview Lloyd Blankfein, the Chairman and CEO of Goldman Sachs.  It seems he’s convinced – or at least he’s convinced he can convince us – that Goldman serves “a social purpose.”  As a matter of fact, Mr. Blankfein is so enamored with the self-importance of Goldman that he proudly proclaims he’s “Doing God’s Work.” Wow…

Just to refresh our memory:

• Goldman received $10 Billion in Tarp Money
• Goldman received $12.9 Billion of government money through AIG
• Goldman received $20.9 Billion in FDIC debt guarantees
• Goldman, restructured as a “bank holding company” borrows at the Fed Window (at basically no cost)

Oh, and one more thing: Goldman will be paying $21.9 Billion in bonuses for 2009.  I don’t begrudge them bonuses, after all: they’ve had a helluva year.  Although some of that might be due to their oligarchical position within the federal government.  It would be nice – every once in a while – if Goldman would send a little thank you nod our way; maybe a quick wave or even a wink.  I guess I’m saying that when you’re screwing me this bad, a little dinner wouldn’t hurt.

John Lennon stirred up quite a spot of bother when he said: “We’re more popular than Jesus now.”  Have to admit though, that seems like such a trifle compared to the CEO of Goldman Sachs.  I mean, who cares if you’re more popular than Jesus?  Mr. Blankfein is angling to BE Jesus.

Filed under: POLITICAL & ECONOMIC FOLLY , Goldman Sachs, Wall Street