INFLUENCE: THE PSYCHOLOGY OF PERSUASION

"Consistency is easier than thought."

So says Robert Cialdini in his excellent book Influence:  The Psychology of Persuasion. 

According to Cialdini, people often adjust their thoughts to match decisions they have already made.  Understanding that most decisions are made before a sales presentation even takes place can radically alter (and improve) the effectiveness of how sales presentations are made. 

Understanding how "social proof", "social jujitsu" and the "principle of association" affect persuasive psychology can also dramatically improve the impact and effectiveness of your sales presentations.

Under the theory of social proof, consumers can be heavily influenced by the actions of others.  That's why claims about being "the number one brand" or being recommended by "4 out of 5 dentists surveyed" are so effective.

Social jujitsu is a theory that states if a few people inside of a group can be herded in the right direction, the rest of the group will follow.  This is why, in many opera houses and even Broadway theaters, proprietors hire "professional clappers" to applaud and cheer loudly at pre-determined moments to bring the rest of the audience along.

Finally, under the "principle of association", persuaders attempt to connect themselves with positive or popular events.  That's why radio stations will repeat their call letters before every hit song, and it explains why every concert, sporting event and college bowl game has a presenting sponsor.  

How can the Psychology of Influence make you a more effective salesperson?  

For me, the goal has always been to provide value.  By understanding what motivates people, I am better able to give more effective presentations.  In essence, I can give people more of what they want, and less of what they don't.

Similarly, understanding influence is a valuable skill when it comes to marketing more effectively, especially with listings.  Popular neighborhoods, school performance or community awards can all be leveraged in positive ways to help the salability of a home.     

A career in real estate is about so much more than homes and land.  It is first and foremost a marketing job, starting with yourself. 

Influence:  The Psychology of Persuasion is a terrific and timely read that will sharpen the sword of any committed sales professional.

FIVE STARS, AGAIN

Found out this week I have been named a "Five Star Professional" by 5280 Magazine once again in 2011.  For the second consecutive year, I have been ranked in the top 7% of agents in the metro Denver area, based on surveys sent to over 10,000 recent homebuyers and over 250 Colorado mortgage and title companies.

Just like last year, survey respondents were asked to evaulate their real estate professionals based on customer service, integrity, market knowledge, communication and negotiation skills, closing preparation, marketing skills, and overall satisfaction.

In less than six years, I have established myself as a top tier agent in Denver and I am so grateful to everyone for their support. I have worked exceptionally hard for more than 100 local home buyers and sellers since relocating to Colorado in 2005 after 11 years as a licensed broker in California.

My clients know firsthand that nobody works harder to educate and inform them than I do, and that my relationship-based philosophy is all about creating customers (and a steady referral stream) for life.

If you work hard, study hard, negotiate hard, live with integrity and have passion for what you do, you'll never have to worry about finding your next client. I believe with all of my heart that success is found by attracting new business, not chasing it.  And you become an attractor of business when you deliver value, expertise and integrity over and over again, and when you take time to build relationships which last beyond your transactions.

Thank you for naming me a Five Star Professional.  It is my honor to serve you.

JUNE MARKET UPDATE

With the inventory of homes for sale in the Denver metro area now down 16.5% from one year ago and down nearly 35% from three years ago, we are living in strange and confusing times.

Because the Denver Post continues to fail to adaquately explain the realities of today's market (including a pathetic article this week discussing the state of the market in May), I continue to find home buyers and sellers who have no understanding of how different this market is from just one year ago.

Below $250,000, there is hardly anything for sale (just 2.08 homes for sale to each home currently under contract) and lots of buyers are on the hunt.  But here's the catch - what buyers want above all else is value, and they simply won't pay retail prices for junk.  So you have swarms of buyers pursuing one type of house... the well-priced piece of real estate in good condition which is priced for the market of 2011, not the market of 2008. 

If you can list this type of home, you'll sell it in a week.  But the moment you get unrealistic about price, or if the condition isn't up to par with the competition, buyers move right on down the road to the next house in pursuit of that price/condition combination,

There are two reasons I can see why inventory is down so dramatically.  First, banks aren't foreclosing on as many homes, and the ones they are foreclosing on are generally at higher price points.  And second, sellers have finally figured out that if your home is in good condition and in a good area, it's no fun to sell it at 2011 prices.

At higher prices, there is going to continue to be distress ("deleveraging" as I call it) for some time.  While the absorption rate below $250,000 is just 3.45 months, at $1 million there is an 18 month supply of homes.  There is no price support for the high end of the market, and as people continue to hunker down and think smaller about housing, help is not on the way.

In between $250,000 and $1 million, there are pockets of opportunity, but they still call for caution.  I regularly remind clients not to count on the market bailing them out if they make a questionable purchase, and to do all pieces of diligence up front.  If you're smart about what you're buying and where you're buying it, there are excellent opportunities.

Buyers need to be realistic about the market and the moment we are living in.  Prices have come down in many areas (and continue to fall at the higher price points) and interest rates are in the 4's.  There's no new construction coming online (it simply isn't profitable to build at these prices) and the population continues to grow.  If you're buying a home today and looking at the big picture (and you plan to stay in it for a few years), the combination of discounted prices and absurdly low rates simply shouldn't be passed up. 

But it's a professionals' market, which calls for expertise and understanding.  Now more than ever, assembling the best possible team to help you with your purchase or sale should be your highest priority.

THE WOB IN THE MOB

Having spent a lot of time around real estate investors (and being one myself), there's always chatter about the next "hot" area, or how Light Rail is going to affect values over the next decade as spurs shoot out from Union Station into Golden, Lakewood, Arvada and DIA.

Investors are always trying to think two steps ahead of the market, and that's a good practice.  But for safety and value, nothing beats the "WOB in the MOB".

Simply put, the WOB in the MOB is the worst house on the block at the median price or below.  The reason this type of home has so much upside is because while improvements your neighbors make can help your value, there's very little that can happen that will undercut it.  And because you're buying the worst house on the block (in theory), you have the most ability to improve it and bring it up to the standard of the area around you.

Good investors want control of their investments, and WOB/MOB fits this model.  Buy it right, fix it up, and ride the coattails of your more well-to-do neighbors.

Of course, the opposite of this corollary also holds true.  To buy the biggest home on the block (especially at the higher end of the market) becomes the riskiest, most speculative type of purchase out there because, to a large extent, you are at the mercy of your neighbors.  If a house gets foreclosed on and the bank sells it for cheap... the biggest loser is YOU.  If someone lets their yard go and the character of the neighborhood is affected, the biggest loser is YOU. 

Without a doubt, the "McMansion" buyers of ten years ago today live in a world of regret and blown equity.  To buy an overpriced, non-conforming home in an area of less expensive homes has almost universally been disastrous, and today there are simply few buyers for these types of homes (and especially not at retail prices).

The real estate market of 2011 is all about caution, with buyers ranking perceived value above all else. 

Real estate investors know the WOB in the MOB model fits this paradigm, and they are profiting handsomely from this new reality.

FEEDING FRENZY

Don't believe the entry level of the market is tight?  Then try this...

I just ran a search of everything in Arvada priced between $100k and $170k that went under contract during the month of May.  There were 13 total homes that fit this profile, and they went under contract in an average of 9.6 days!

The reason you see Metrolist statistics quoting overall "days on market" at 109 is because that useless number includes short sales (many of which sit for months because most buyers don't enjoy torture) and because higher end homes are taking months, not weeks to sell. 

But for the entry level, demand is intense.

There is no "single" housing market in Denver - there are at least three distinct markets.  The entry level, the mid-level and the high end all hold very different realities for buyers and sellers.  If your agent can't tell you the difference, then you're not working with someone who understands what's happening on the ground. 

I recently picked up a client who had been working with another agent for nearly six months, looking for an entry level home below $150,000.  After dozens of showings and at least three failed offers, I told her there was another way.  "It's time," I said, "to stop looking at this as a marathon and start thinking of it as a sprint."

And by that, I meant it was time to quit lollygagging around looking at homes on Sunday afternoons and start treating it like a job, which means scanning the MLS for new listings several times a day, looking at houses after work and, if need be, writing contracts late at night.

The result - she went under contract on a beautiful home within two weeks, less than 24 hours after it hit the market.  She saw it first, wrote the contract quickly, and closed on it today.

That's how you make things happen in 2011.