A couple of years ago I read an interesting book by Dr. Robert Cialdini. A Regents Professor at Arizona State University, Dr. Cialdini is a social psychologist..

I decided recently to re-read his book, “Influence: Science and Practice”. This work centers on influence triggers that help someone to say yes.

Like it or not we, in the real estate industry, are influence peddlers. We are trying to help people make good decisions. Yet many of us struggle with making decisions.

In particular we often hesitate when making big decisions. The assessment of buying or selling real estate is a major event. The process of choosing the best financing option is equally complex.

Even the process of who to work with can be difficult for homeowners. Which agent do I work with? How can I find a lender I trust?

Equally we have to make decisions within our business partner referral networks. Building these referral networks causes us to develop principles of influence.

What are the influence concepts that Dr. Cialdini identifies:

• Reciprocity
• Commitment and Consistency
• Social Proof
• Liking
• Authority
• Scarcity

Dr. Cialdini spent three years working with a variety of sales related organization in research for this book. He went through numerous sales trainings and shadowed sales practitioners evaluating the tolls used to influence people to saying yes.

The result of this research led him to identifying these six key influence tools. He points out that when we have the time and inclination to conduct a thorough analysis to reach a decision we will.

However, in today’s fast paced mode of living, we tend to use short cuts to make these decisions. Dr. Cialdini asserts the element of influence of: reciprocity, commitment and consistency, social proof, liking, authority and scarcity provide the shortcuts for decision making.

For those that are interested I am including a link to amazon where you can order the book, “Influence: Science and Practice”. You can also navigate to Dr. Cialdin’s web site by clicking Influenceatwork.com.

Stay tuned and come back as we provide more thoughts and opinions on each of these six factors of influence.

What are your thoughts on developing influence techniques as part of your sales process? Can you think of how you have utilized these principles?

Jay Williams

It seems the tea parties held this week are driving the left nuts. They just don’t know what to make of ordinary people taking time out of their day to register their disdain with politics as usual.

This was not about Republicans vs Democrats. What is misunderstood is there is a growing disgust for both parties.

Things must change all right. The change we need is to return to adhering to the Constitution.

Hope you enjoy this pictorial collage from our local tea party.

Feel free to post a picture of your tea party in the comment section.

Jay Williams

I must admit that when I first learned President Obama stated the “we do not see ourselves as a Christian nation” I was quite distressed. Why would he say this during Holy Week while in a predominately Muslim nation?

I kept asking myself, what was the point? The two conclusions my feeble mind deduced is he is either pandering or he is making a proclamation.

Pandering

Was he just pandering to the Muslims, Agnostics, Atheists, secularists, etc? This is certainly possible. He spent most of the week in Europe pandering by apologizing for American arrogance. His perception not mine!

If this was the case, again what was the point? Are the militant Muslims going to like us better? Are the radical atheists and secularists going to exhibit less vitriol towards Christianity?

The President is more naïve than even I think he is, if he believes making this statement will help us to all just get along.

Why would he feel the need to downplay his nation’s historical roots? This is a nation that was settled by those seeking religious freedom. And yes, almost all of those early settlers seeking religious freedom were some form of Christian sect.

Religious freedom is, or at least has been constitutionally protected in the United States! Although Christians in America are being increasingly tread upon.

We need not look to far and wide in many Muslim countries to understand there is an extreme lack of religious freedom and tolerance. In many of these countries they will persecute and perhaps kill you if you are another faith. Muslim sects will kill each other over their beliefs.

I know you secularists and atheists are jumping up and down saying centuries ago Christians have persecuted and killed non-believers and those of varying Christian sects. There is no denying that historical fact. But it has not been the case in the United States of America!

If President Obama was pandering what did he hope to accomplish? Share with me your thoughts.

Proclamation

My other thought is Obama was making a Presidential Proclamation. Declaring to all the world that the United States was not a Christian nation. This has no historical basis, and would serve as a departure.

Albeit, it is a departure that has been building for the past couple of generations. It reminds me of the Emancipation Proclamation. This nation struggled with the scourge of slavery for two or three generations. President Lincoln finally ended slavery with his proclamation.

President Lincoln’s proclamation was just and long overdue. If President Obama statement was a proclamation I feel tread upon!

I know, I know you secularist and atheists out there are again jumping up and down out there. You are screaming how it is just not true that most of the founding fathers were not Christians. But this is simply not true!

Let’s just lift a few quotes, as a representative sampling, from those that are considered deists or secularists:

John Adams:
“ The general principles upon which the Fathers achieved independence were the general principals of Christianity… I will avow that I believed and now believe that those general principles of Christianity are as eternal and immutable as the existence and attributes of God.”
• “[July 4th] ought to be commemorated as the day of deliverance by solemn acts of devotion to God Almighty.”
–John Adams in a letter written to Abigail on the day the Declaration was approved by Congress

Benjamin Franklin:
“ God governs in the affairs of man. And if a sparrow cannot fall to the ground without his notice, is it probable that an empire can rise without His aid? We have been assured in the Sacred Writings that except the Lord build the house, they labor in vain that build it. I firmly believe this. I also believe that, without His concurring aid, we shall succeed in this political building no better than the builders of Babel” –Constitutional Convention of 1787 | original manuscript of this speech

John Jay:
“ Providence has given to our people the choice of their rulers, and it is the duty, as well as the privilege and interest of our Christian nation to select and prefer Christians for their rulers.” Source: October 12, 1816. The Correspondence and Public Papers of John Jay,

Thomas Jefferson:

“ The doctrines of Jesus are simple, and tend to all the happiness of man.”

“Of all the systems of morality, ancient or modern which have come under my observation, none appears to me so pure as that of Jesus.”

"I am a real Christian, that is to say, a disciple of the doctrines of Jesus."

James Madison:

“We have staked the whole future of American civilization, not upon the power of government, far from it. We’ve staked the future of all our political institutions upon our capacity…to sustain ourselves according to the Ten Commandments of God.” [1778 to the General Assembly of the State of Virginia]`

Excerpt from Supreme Court Ruling Church of the Holy Trinity v. United States, 143 U.S. 457 (1892)

“But, beyond all these matters, no purpose of action against religion can be imputed to any legislation, state or national, because this is a religious people. This is historically true.”

For those you that still doubt Christianity in America let me invite you to this site from the Library of Congress. Click Here.

If this was a Presidential Proclamation then I reject it. I will not be tread upon. It’s time for the Christian community to rise up and not take it any more. What do you think?

Happy Easter, from a citizen that does consider this a Christian nation.

Jay Williams

It’s that time of year. The first Monday in April marks the men’s basketball NCAA National Championship Game.

This year will be one of great interest to me and the hometown hero’s of the University of North Carolina with take on the Spartans of Michigan State.

I have always considered March Madness to be the hardest college national championship to win. Many years as you come to this weekend your team is out of the tournament.

One and done. Teams are so evenly matched and any game can go any way. Win or go home!

I’ve lucky however. I live in North Carolina. Did you know there are only 14 schools that have ever won more than 1 national championship, yes that’s right. Three of those are from the state of North Carolina.

The Wolfpack of NC State have won 2, Duke has emerged victorious 3 times. The official record book only counts 4 National Championships to the Tarheels. But according to UNC they have won 5 as they count 1924 as a championship year. This was before the NCAA started keeping track in 1939.

One must give credit to Michigan State as being on of the 14 schools with multiple championships in 1979 and again in 2000.

But this blog is about the Tarheels of the University of North Carolina. Did you know?

• UNC can move into a tie with Indiana with 5 championships with a win Monday night
• The Tarheels have moved into a tie for third with Duke for number of  championship game appearances at 9
• Carolina is ranked # 1 in Final Four Appearances with 18
• The Heels have won the most NCAA tournament games, 102

This promises to be a good game between two basket ball schools with great tradition.

In case you missed the games Saturday or just want to watch the highlights, enjoy

If you are a Tarheel supporter weigh in with your comments-------OK, if you are a Spartan fan we would like to hear from you as well.

Go Heels!

Jay Williams

One of the major culprits of the current financial crisis, in my opinion, has been a complex and little understood accounting principle. This accounting principle is called “mark to market”.

I am no accountant and will be the first to admit I don’t fully understand this hideously complex financial accounting standard. So I have to think of it in terms I understand.

For the purpose of this prose let’s suppose you live in a sub-division. You bought your home for $250,000. Your current mortgage balance is $200,000. You are paying your mortgage payments on time and you have no intention of selling your home.

However, the terms of your mortgage is such that every three months the value of your home and your outstanding mortgage balance is subject to “mark to market” accounting.

During the most recent three months your neighbor had to relocate due to a job change and she sold her home for $200,000 or 80% of the prior market value. Your mortgage holder contacts you and says “Your home is worth 20% less than it was three months ago and under the terms of our agreement we need for you to reduce your mortgage balance by 20%.” By the way we need this $40,000 today. Somehow you make this payment and you now owe $160,000.

Another three months goes by and one of your neighbors has lost their job, went into foreclosure and the property was sold for $160,000 or 20% less than the last sale. Your mortgage holder comes to you requesting $32,000 and again yes you need to pay this today. You drain your resources and now you owe $128,000.

Over the next three month there were no sales in you neighborhood. Your mortgage holder makes some calls asking investors what they would pay for homes in your neighborhood. Due to the uncertainty they receive indications that investors would only pay $80,000 if they were to purchase today. You mortgage holder then contacts you and tells you we need for you to reduce your mortgage by another $64,000. You pick up the phone and call your Uncle Sam and scream help I need a bailout.

Do you think this is insane?

This is an oversimplification of what has been happening to the financial institutions with the huge holdings of mortgage backed securities. You don’t hear much about this in the media. It is much more fun to talk about evil lenders and irresponsible home owners.

Much of this financial crisis could have been averted and cost a whole lot less money if action had been taken on this financial accounting principle. But why did this happen in this cycle? The rules on this accounting principle were set by Congress just a few years ago; A legislative overreaction after the fall of Enron, WorldCom, etc.

The good news is this week the Financial Accounting Standards Board, this week, has announced some relaxing of these “mark to market” accounting rules.

Crisis leads to Congressional and regulatory over reach that yields huge unintended consequences down the road. What will we reap in the future? Only time will tell.

One imminently facing us on the horizon is the new appraisal requirement for the Market Conditions Addendum. Read my blog on this subject.

Comments are always welcome. I would like to hear your opinion.

Jay Williams

This week FHA issued a mortgagee letter to respond to declining markets. These changes go into effect for all FHA appraisals beginning April 1, 2009. This aligns the FHA appraisal requirements with FNMA which also requires new reporting as of April 1.

Appraisers are currently expected to note the trend of property values. Are property values increasing, stable of declining? They are to provide conclusions as to the supply of properties in the subject neighborhood. Is there a shortage, in-balance or over supply of homes for sale? Additionally appraisers are to provide data of the marketing time for properties for sale. Is it taking under three months, three to six months or over six months to sell the property?

All appraisals performed beginning April 1 must include the Fannie Mae for 1004/MC, the market conditions Addendum. This form addresses the following data points to determine the current market conditions:

• At least 2 comparable sales must be within 90 days of the appraisal date
• A  minimum of 2 active listings or pending sales in addition to the three closed comparables
• Bracketed listing using both dwelling size and sales price when possible
• Adjust active listings to reflect the list to sales price ratio
• Adjust pending sales to reflect contract sales price when possible
• Include original list price and any revised list prices
• Reconciliation of adjusted values of active or pending sales with adjusted values of closed comparable sales
• Absorption Rate Analysis
• Known or reported sales concessions on active and pending sales

As a real estate professional let me encourage you to learn about the market conditions addendum. I am including a link to Fannie Mae’s training for this.

Also included is another link to a video presentation for the explanation and training for this addendum. Click here to view the video presentation.

It strikes me that pricing your listings correctly may be more important than ever. Part of this analysis includes (a) the ratio of list price to sales price and (b) the tracking of include the original list price, any revised list prices, and total days on the market (DOM).

My opinion is this, do not contribute to you market area being deemed a declining market by allowing your sellers to over price their property to today’s market. This will have the effect of decreasing the ratio of list price to sales price as well as increasing the number of days on the market.

An additional opinion, if you are working with low ball buyers, let them know this is having a detrimental effect on the market. Paying a fair price is appropriate, but taking advantage of sellers is hurting everyone and is contributing to the housing difficulties. Maybe you should think of not representing those that continue to make low ball offer after low ball offer.

Real estate agents, I welcome your thoughts and comments on the impact this additional analysis by appraisers may have in your market.

Appraisers, please weigh in on this topic. I am interested in what you know and think.

Jay Williams

www.myhomeloanwithjay.com

As the news this week unfolded over the retention bonuses being paid to AIG executives I found myself becoming increasingly outraged. My outrage however, has not been directed over the bonuses being paid. This post is not about the merits of paying the bonuses.

No, rather my outrage is over:

• The government has known about these bonuses all along
• This week, they have lied through their teeth about not knowing
• That Congress would seek an unconstitutional measure to correct their incompetence 

The Bonuses Were Known

There is no way I believe the powers that be did not know about these retention bonuses before hand. These were pre-existing contracts. It is not uncommon for business to utilize end of year bonuses. Government agents are now on the board of AIG. For Congress and the Administration to feign this outrage as if they did not know is disingenuous. Let me say it again, these were pre-existing employment contracts! If they did not know, are we to think them incompetent? If they did know, are they playing us for fools? Maybe, I should temper my thoughts. After all, Congress passed a stimulus package they never read. Could it be they did not know?

Lying Through Their Teeth

Everyone is ducking for cover now that the payments of the retention bonuses have been completed. Geithner, says he did not know about the bonuses until March 10^th. BS! Is this possibly parsing of words and this really means that on March 10^th he learned the checks were being distributed? Please don’t lie to my face!

The worst, however, is Sen. Christopher Dodd. He has the gall to stand before us and tell us he did not know the language was inserted about exempting restrictions on bonuses if contracted before February 11, 2009. Senator Dodd is it too much to ask, if you are not going to read the entire bill you might at least read the amendment that has your name on it?

Fast forward! Then Dodd backtracks and admits he had conversations with the administration about inserting the language. A plea to the people of Connecticut PLEASE HELP THIS MAN FIND OTHER EMPLOYMENT!

Unconstitutional Measures

Now to continue the fakery of Congress’s outrage there are two bills being considered to tax the bonuses. One has already passed the house that will tax the bonuses at 90%. This is a bill of attainder and is unconstitutional! Article I, Section 9; No Bill of Attainder or ex post facto Law shall be passed. You can not single out a group for punishment.

While I am disgusted that our elected officials think us such idiots to believe they did not know in advance of this situation or that they would so blatantly lie to us this is not my biggest concern. My biggest concern is the move to tax the bonuses at a rate of 90%.

The figure of $250,000 has come up a number times during the Presidential campaign and since. This has now become the definition of rich. “Everyone making less than $250,000 will receive a tax cut” “Those making more than $250,000 will have their taxes increased”

Let me state for the record I have never made $250,000 or more a year, but I do not begrudge those that do. What I see as the end result of this unconstitutional attempt on AIG bonuses is the passage of exorbitantly high taxes on those making more than $250,000 per year. The only question is will this just be for certain groups or will it be for everyone in those income brackets and above?

Do we really want to choke off the entrepreneurial spirit? Do we really want to strip out the talent needed to run our corporations? Do we really want to see talented people leave the country? Do we really want to see corporations move off shore more than they already are? If you do, let Congress continue down this path.

Concerned? Yes!

Outraged? With out a doubt!

Jay Williams

www.myhomeloanwithjay.com

I confess that growing up I didn’t get the whole idea of St. Patrick’s Day. I suppose that growing up in the South and being Protestant probably had a lot to do with my apathy for this holiday.

I was vaguely aware that far off places like New York and Chicago had big celebrations, parades and such. I had some knowledge of snakes or potatoes I wasn’t sure which, nor did I know what it meant.

I knew that shamrocks looked like four leaf clover to me. My concept of leprechauns came primarily from the cereal, Lucky Charms.

I learned quickly, while in elementary school, that if you did not wear green on March 17 you would have a miserable day. One day of being pinched all day was enough reinforcement to pay attention to the calendar in March!

While I was at the University of Georgia I had several fraternity brothers that were from Savannah. St. Patrick’s Day was a big deal in Savannah. I did not even know that until my acquaintance with those guys.

Since that time I’ve learned that St’ Patrick’s Day was established to commemorate the death of Patrick on March 17, 460. Wow, that was a long time ago!

St. Patrick is the patron saint of Ireland. We spent six years in captivity and later escaped and went back to England. While back in England he spent 15 years preparing for the priesthood. He then returned to Ireland as a missionary.

There is the story of St. Patrick banishing snakes from Ireland. This is now considered a legend and it is thought that snakes never inhabited the island.

One thing I did not know is that that are approximately nine times more Irish living in the United States than currently live in Ireland. The Irish immigrated in large numbers to the United States during the potato famine of 1845. This must have been where as I child I thought St. Patrick’s Day had something to do with potatoes.

I recently learned that the traditional meal on St. Patrick’s Day, in the US, is corned beef and cabbage. I like corned beef and cabbage, so that is OK with me.

So that tells you how little I knew and the few things I learned about St. Patrick’s Day. However, that does not tell you how St’ Patrick’s Day came to have meaning for me.

March 17, 1979 was the day that brought meaning to this day for me!

That was the day in the small chapel of Northwood Temple in Fayetteville, NC I walked down the aisle with my bride. Now that was a day to remember and commemorate!

This year, March 17, 2009, marks our 30^th anniversary. For 30 years now, ole St. Patrick’s Day has held a special meaning for me. Not snakes, shamrocks, leprechaun’s green rivers, green beer, corned beef and cabbage or even potatoes. Just 30 years of a lifetime.

Happy Anniversary Sarah, I love you!

Jay Williams

www.myhomeloanwithjay.com

I recently completed a six part review the Homeowners Affordability and Stability Plan. In many of these posts, I mused about the Unintended Consequences that may be associated with elements of this plan.

As a disclaimer I must inform you this six part series was written between the time of the announcement of the plan and the March 4^th date of details being released. I will need to conduct further review now that details have been released. I took a break and wrote about other subjects last weekend and Good News I’ve been really busy with my day job, originating mortgages in Greenville, NC.

The Obama administration, in the Affordability, section of the plan advanced the concept that borrowers with loan to value exceeding 80% could not benefit from the current refinance environment. This left me scratching my head, because this was, in large part, untrue. Then the light went on, there will be unintended consequences!

In the conventional lending space changes aplenty are occurring for both pricing and loan program guidelines. Let me share with you just a few! This is by no means an all inclusive list. It would take too long to detail them all. In fact, I haven’t even absorbed them all. Good News, I’ve bee too busy booking loans ahead of the changes!

Well, I’m no longer scratching my head! What was untrue is becoming true. I haven’t even touched pricing changes and I think I will save that for another day.

I will share additional changes for soft markets. Any of you ever heard of the soft market policies? I thought so!

Mortgage clients, now more than ever, you will need to be working with a knowledgeable home loan professional!

Realtors and builders, if you are not firmly aligning your business model to include a true partnership with a trusted mortgage professional, then you can expect messy and difficult transactions.

So here we go, expect more Unintended Consequences!  Wait a minute are the consequences intentional? You be the judge!!!

As always, your comments are welcome.

Related Posts

Affordability

Stability

Stability 2

Loan Modification

Here Comes The Judge

Looking For Acorns

Reserves

Jay Williams

www.myhomeloanwithjay.com

The news media reports tell you that home values have experienced the largest declines in many, many years. Has this become an obstacle in your decision for purchasing a home?

I can understand your anxiety. Who wants to purchase a home when you believe it will immediately decline in value?

Understand this, real estate is local!! The new media reports national trends. Very rarely, if ever, do they dig deeper through the report.

Just a few days ago the Federal Housing Finance Agency published the latest Housing Price Report for the quarter ending December 31, 2008. Yes, this report disclosed that the purchase-only price index fell 3.4% in the fourth quarter. This is the largest quarterly decline in the 18 year history of this index. The all-transactions index, which includes appraised values deriving from refinance activity, fell 4.5% during 2008.

To view the entire Federal Housing Agency report click here.

What about your local area? How have home values performed in your location? Is anyone reporting to you this information?

Let me share with you the statistics in my location. Let me first share with the data for my state, North Carolina. The purchase only index reflects that home prices declined 3.66% in 2008. But did you know that over a 5 year period that home prices in North Carolina have increased 21.64%? Would you believe that since 1991 that home values in my state have increased 93.87%?. This is the data contained in the report.

Let me take you a bit deeper and give you information for my home location. In Greenville, NC home values declined 0.38% in 2008, but have increased 18.25% over the most recent 5 year period, according to the all transactions home price index.

Why don’t we look at this in terms of dollars rather than percentages? For every $100,000 in values home prices declined $380 in the last year. In Greenville, NC home values have increased $18,250 over the last 5 years per $100,000 in value.

Data I don’t have is what is occurring in the sub-division that you are interested in. Contact your real estate agent and request information by sub-division. What were homes selling for in your chosen sub-division a year ago, two years ago? What have homes been selling for recently? After all, all real estate is local.

The phrase, “this is a buyers market”, should tell you it is time to buy! With proper research you can find homes at a good value in neighborhoods that historically do well.

I will tell you this, if you are planning to buy with the intent to sell within the next two years, then this many not be the market for you. If you are planning to purchase a home and intend to continue to own that property for longer than 5 years, there may be no better time than now to purchase that home.

Remember, you are considering purchasing a home. A place to protect you from the cold and rain.

Just some quick advice:

• Meet with a trusted knowledgeable mortgage lender to determine both your pre-approval and comfort level for the price range of the home you are looking to buy

Engage a professional real estate agent to provide you with market data in your location. Have them provide you with sales information for the past couple of years for your desired neighborhoods.

Be patient, be selective and dig deep. You will be OK.

This is your moment. It is a buyers market!

Jay Williams

http://www.myhomeloanwithjay.com