Book Review: ‘Better Than Normal: How What Makes You Different Can Make You Exceptional’

Tara-Nicholle Nelson
Inman News®

Book Review
Title: "Better Than Normal: How What Makes You Different Can Make You Exceptional"
Author: Dr. Dale Archer
Publisher: Crown Archetype, 2012: 256 pages; $25

Recently, I asked some people in my circle what they most want to change in their lives. One young real estate agent expressed the following:

"I tend to think people see me as weak when I am strong, dumb when I am smart, hard when I am soft (or vice versa). I find myself thinking that people see me as a ‘little girl’ in the big world of business, so I fear I am not always taken seriously."

We had a one-on-one exchange in which we talked about our respective experiences with the temptation to act like someone or something else in an effort to be taken more seriously. I’d certainly gone through that as a very young attorney and real estate broker. And part of what I told her was this:

"Acting older got me taken seriously, when I was very young. But once I was, I gradually began to grow more and more comfortable being myself, being real about what I love to do (and not so much) and what I’m particularly great at (and less so), and it turned out that that got me way further in business and in life. It helped me connect with and move people in a way I couldn’t when I felt pressured to play a role."

And this same battle with who we are takes place outside of the workplace as well. I’ve even seen real estate buyers and sellers across the spectrum. Some plain old catered to their own learning styles and decision-making quirks to great effect. And others chose to pose as having more negotiating savvy or a better understanding of the process than they really did, and paid the price.

In his new book, "Better Than Normal: How What Makes You Different Can Make You Exceptional," Dr. Dale Archer, a board-certified psychiatrist, makes the case that owning and leaning into your quirks — rather than resisting or trying to "cure" them — can be a strategy for achieving excellence in every realm of your life. Here are a few of Archer’s suggestions for taking advantage of our natural personality traits and harnessing them to the best possible effect, in every area of our lives:

1. Stop stigmatizing your normal human qualities. Archer argues that the traits that have been given psychomedical diagnostic labels, such as obsessive-compulsive disorder, attention deficit disorder (ADD) and bipolar disorder, exist in every one of us, to a greater or lesser degree. He points out that these diagnoses used to be applied only to cases in which people were severely debilitated by their extremes of these traits, and expresses his concern with the trend for pathologizing, diagnosing and medicating people who may have some dominant traits that cause them some challenges, but fail to truly reach the level of a mental health disorder.

Archer makes the case that instead of looking at these traits as either present or not, on or off, we should understand where our own personalities tend to fall along these spectrums and figure out whether there might actually be some advantages to our dominant traits that we can harness to live our best lives.

2. Turn your trait around. Or at least turn around how you think of it. Archer offers a framework for understanding eight dominant traits that are frequently incorrectly pathologized from the angle of the opportunities and strengths each trait creates. For each, he offers a way to rethink and redefine the trait, being careful to caution that people at the extreme of each trait’s spectrum may actually have a legitimate mental health problem that requires treatment. He then provides a list of ascendant, possibly overlooked strengths the trait often accompanies, and provides some life guidelines for selecting a career and managing your personal life optimally if you have the dominant trait.

For example, people halfway on the spectrum that ends in attention deficit hyperactivity disorder (ADHD) are highly energetic, playful, nonconformists who think independently and have adventurous spirits, in Archer’s taxonomy. By the same token, people who have mood and focus swings of a lesser degree but on the same spectrum as bipolar disorder are sometimes called hypomanic; if harnessed and managed appropriately, this trait can translate to a high-energy life.

3. Design your life around your dominant traits. Archer’s most useful insight in "Better Than Normal" is that harnessing the strengths of our sometimes-troubling dominant traits may require us to do more than just looking at them differently. For each trait spectrum, Archer offers recommendations for how to make relationship, lifestyle and career choices that will work well with your dominant traits.

To wit, people who have dominant traits on the ADHD continuum may find them to be a liability in rigorous hierarchies or corporate jobs, and more of a strength in entrepreneurial or self-directed career paths. On the other hand, people with traits on the generalized anxiety disorder continuum can harness their traits to be impeccable at complex planning and troubleshooting, perform well under pressure, and meet the deadlines of a fast-paced, high-stakes career.

People with hypomanic swings — from energetic to restful — may do well if they can focus their energy bursts into productive careers as writers and inventors.

Some might find this book to oversimplify complex mental health issues, but I found Archer’s approach to be educated and respectful of legitimate disorders while calling out the medical establishment and our cultural zeitgeist of overdiagnosis and overmedication. Many readers will find themselves described in one or more of Archer’s dominant trait categories, and will find his rethinking of what they might have always seen as their weaknesses to be an empowering and refreshing new approach to improving their lives.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Mood of the Market

Tara-Nicholle Nelson
Inman News®

If someone were to chart it, I’d guess that the bell curve that represents how happy American homeowners have been over the last 10 years would be just about as volatile as the one that represents home values.

Actually, the emotional roller coaster might even be a carbon copy of the path of home prices from peak to trough, as the joy and exuberance most owners express about their homes at any given moment is directly proportional to what it’s worth at the time.

But there are two germane, essential truths: (1) Happiness is the ultimate objective of the intentional life, of which homeownership is a part; and (2) Home values, like the value of any asset, go up and down.

So, wouldn’t it be great if we could decouple our experience of happiness with our homes from their values, freeing ourselves up to simply enjoy them and be happy no matter what’s going on in the market? What if we can make our experience of homeownership recession-resistant, even if we can’t recession-proof the market itself?

Well, I know some such happy homeowners — people who remained free of the angst and teeth-gnashing that seemed to become the near-universal sentiment among homeowners during the housing recession. And they also remained free of the euphoric rush and frenzied decision failures of homeowners at the top of the market.

Here are a few of the traits and behaviors that I’ve noticed in these happy homeowners:

1. Smart, proactive money managers. This does not mean these people are day traders or sit around the computer tracking every cent they spend. What it does mean is that these people are assertive about their financial planning, understand their income and expenses, save and invest for the present and the future, and live well within their means. This empowers them to weather occasional financial storms like illnesses, layoffs, and market downturns without excessive panic and fear about what their home is worth at any moment in time.

I once heard a happy homeowner express his belief that there should never be a need to tap into an emergency fund, because so-called "emergencies" like car repairs and roof leaks are just inevitabilities of life. So, instead of having an emergency fund set aside, he has structured his income and savings and expenses so that he saves upwards of 20 percent of what he makes every month, no matter what, and is always in a state of financial preparedness for the curve balls that life can throw.

2. Optimistic about their long-term future — and that of the market. I’ve been fascinated lately to see all the talk of how much better mutual funds perform over the long term if they are simply invested in every stock on an exchange and parked there for decades, versus being actively traded by even the most expert of Wall Street wizards.

I find that so compelling because it mirrors my experience of real estate: One of my first clients was a 70-year-old man whose home I sold for $550,000; he told me he had paid less than $20,000 for it 30 years earlier.

Homeowners who have an optimism that the value of their home will increase over the very, very long term tend to be less hung up on and stressed out by the cyclical ups and downs in the real estate market.

3. Conservative mortgage holders. These folks often put a lot of money down, make extra payments, invest in improvements that bring up the value of their home, or make some combination of these and other relatively conservative mortgage moves. They might refinance if interest rates drop so low the costs of refinancing pale by comparison with the savings. But these folks are generally inclined against taking short-term or aggressively adjustable loans, and they tend to disfavor frequent refinancing or excessive borrowing against their homes.

As a result, even if they didn’t put a huge down payment on the home at the time they bought it, they do tend to get and stay in a relatively strong equity position compared to their peers.

4. Relatively stable and committed to their homes for the long term. People who own homes that work well for them and their families — and will work well for years and years to come — tend to be less emotionally yanked around by market vagaries.

Homebuyers take note: Happy homeowners tend to be people whose homes have ample space, are in good condition, and are in neighborhoods where they feel safe and comfortable; if you can position yourself well with respect to as many of these criteria out of the gate by being smart about the home you choose, you’ll be that much closer to membership in this select club.

These people are aware of what’s going on in the market; they’re just not obsessed with it, because they don’t plan to move in any event.

Often times, a happy homeowner’s commitments to his home mirrors a commitment to his job or career or line of business, if he’s self-employed, which allows him to take the stance that as long as he can make the payment, he’s planning to stay put for a very, very long time. And that, in turn allows him to opt out of the "freak out"-engendering fixation on real estate headlines and market data that in a down market causes so many unhappy homeowners to make panicked, poor real estate decisions.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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REThink Real Estate

Tara-Nicholle Nelson
Inman News®

Q: Is it a good or bad idea to have the same real estate agent as my seller’s agent and my buyer’s agent?

A: It depends. There are some efficiencies that weigh in your favor, if you do work with the same agent to sell your existing home and buy your future one, namely:

1. Relationship efficiencies. It’s a lot of work finding an agent that is a good fit for you, in terms of their knowledge, their geographic areas of expertise, their connections with the vendors you need to get your transaction done and their interpersonal communication style. Many buyers and sellers spend a good number of hours collecting referrals, reading blogs, meeting agents at open houses and interviewing agents before they make a decision about which one to work with.

If you work with the same agent on your "buy" and your "sell," you eliminate having to do all these things twice. (And as a side benefit, you’re also very likely to acquire VIP status with that agent, quick-like.)

2. Financial efficiencies. If your agent is uber-competent, strategic and well-versed in all things mortgage, you can actually gain a major advantage by virtue of having him work on both transactions — and by letting him know that you’ll be entrusting both to him upfront.

This empowers the agent to spot and trouble-shoot potential timing issues that may have implications for your mortgage on the buy side, and minimizes the number of cooks in that kitchen compared to bringing another agent in for one transaction.

Additionally, some agents who are handling two transactions for you in a short period of time might be willing to give you some financial rewards for your repeat business. This might come in the form of a lower commission on the listing side, some closing cost or repair credits out of their commission on the buying side, or even helping pay for things they would otherwise ask you to do, like covering some of the costs of staging or preparing your home for sale.

On the other hand, there are at least a couple of reasons you might want to consider working with different agents on your buy and your sell:

3. Some of the best agents may specialize in buying or selling, not both. This is especially true if the agent who is selling your home is a listing specialist, as some of those agents have invested much time, money and effort in setting up an effective marketing machine for getting homes sold, but might not have the time to drive you around every weekend or spend hours and hours on the house hunt with you. In fact, many listing specialists have buyer’s agents on their staffs for just that purpose.

Don’t get me wrong — there are plenty of agents who assist both buyers and sellers, and do both well. But if your agent clearly focuses on one and doesn’t do much of the other, in today’s market, you’d be better off simply asking him to refer you to someone who specializes in the area he doesn’t.

Same goes for if you’re buying or selling in really different geographic areas; sometimes, it can be ideal to have an agent who specializes in the neighborhoods, on both your buy and your sell. And if you’re selling in one town and buying across the river and through the woods, it might be difficult to find one agent who can give you the neighborhood expertise you’re looking for on both transactions.

4. If you don’t like or trust your agent, having a second agent might serve as a check and balance. Of course, my advice is that if you don’t really like and trust your agent, you should probably pick a new one whose advice you can and do trust. But if there’s any reason you feel less than confident in your agent’s ability or advice, or even in his ability to have the bandwidth to handle both of your transactions, it might make sense to at least explore the idea of working with another agent on the other transaction.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Mood of the Market

Tara-Nicholle Nelson
Inman News®

The market is heating up. No, really.

Coast to coast, a much higher percentage of listings are (a) selling, period (b) selling, fast and (c) selling at or above the asking price than they have during any spring in recent memory. Don’t take my word for it — from Chicago to Orange County, Calif., local papers have picked up and started to report on the phenomenon.

Yet and still, today’s buyers hold in recent memory the real estate mountaintop and the depths of the recession; some have been waiting out the market for years, hoping for a deal, but unwilling to buy into a declining market. Others actually lost homes to foreclosure at the beginning of the housing recession and are on the comeback trail. And competition from short sale and foreclosure listings is still abundant.

Long story short, the days when every home on the market got multiple offers are still a thing of the past. By and large, the listings I see receiving multiple offers and selling for over asking on today’s market have the following ingredients (a recipe sellers can replicate if they’d like to set the stage to receive multiple offers, too):

1. Pristine and staged. The homes that I’ve seen get multiple offers in my own market recently are immaculately clean — not a whiff of anything within noseshot, so to speak — and dressed to the nines. Their photos look like something out of a home decor catalog or design magazine — like no one lives there, even if someone does. Their owners have often spent months in advance cleaning, decluttering, organizing, primping and otherwise sprucing their homes for sale with the intention of blowing the competition out of the water.

I won’t purport to capture the art of staging in a sentence, but prepacking is a good visual to hold in mind as you prepare your home. (And anecdotally, I will say that it strikes me that a large proportion of multiple-offer homes have actually been professionally staged. I’d urge a seller who wants multiple offers to explore whether there’s some level of staging service or even staging advice that is worth the investment, before dismissing it as too expensive out of hand.)

2. Low prices. The homes that get multiple offers are not priced at the top of their markets. In fact, I know that many of their listing agents and owners specifically aimed to list these homes slightly below what they believed to be the true fair market value of the property at the time they listed it. Why? What seems like it might be risky is actually a time-proven strategy for cranking up the number of buyers who come view the property.

When buyers see a beautiful home listing online for less than they’d expect for the area, they show up in droves, eager to get a great home for a great value. And the math from there is simple — it takes more showings to drive more offers.

Once these value hunters are at the place and fall in love with it, they often become willing to offer more than the asking price if they need to, to secure it in the face of competing offers, knowing that it was priced well to start with.

3. Ample exposure to the market. Part of the effect of a low list price is that it creates an auction atmosphere, the environment that churns up bidding wars. The other half of the auction equation is ensuring that the home has ample exposure to the market, both in terms of time for buyers to come see and fall in love with the place and in terms of marketing the property aggressively to reach as many prospective buyer/bidders as possible.

Ample exposure can be achieved in several ways. Professional photography. An aggressive online marketing campaign — most experienced local listing agents will happily brief prospective seller clients on what they do in this vein. One ample exposure method I’ve seen become a standard practice in my area is to create and publish an offer timeline. In my town, it’s now almost universal for listing agents to list the home a day or two prior to the broker’s open house, hold it open for brokers once, hold two general Sunday open houses and then take offers the Tuesday following the second Sunday open house.

By publishing this timeline as part of the listing, buyers are assured that they will have time to see the place and get their ducks in a row in order to compete for it. And sellers are assured that they will not forgo the great offer that might come tomorrow by virtue of taking a good one that comes in the day after they put the home on the market.

Now, sometimes, aggressive buyers force a seller’s hand, making an offer immediately upon seeing the property, despite a preset offer timeline. In those cases, the listing agent can call up all the other agents who have expressed an interest in the place and offer them the opportunity to get in the game. For this reason, and for any other important updates or changes that might come along, it’s essential that buyers and their brokers let the listing agent know if they plan to make an offer, even early in the published offer timeline.

4. Showable on demand. Hard-to-show homes just don’t sell, when there’s lots of competition. When buyers’ brokers put their home tours together, if a particular listing requires too much notice (i.e., 48 hours) or too many calls and callbacks for appointment-setting, they’re very likely just to turn to one of the other dozens of homes that’s easy to show. Anything that diminishes the chances your home will be shown diminishes the chances your home will receive multiple offers.

To get multiple offers on today’s market, in fact, a seller’s home must be showable on demand. If you require an appointment, you should keep advance notice requirements as low as possible — an hour or less is ideal. Even better is to be accommodating and let brokers show your home at their leisure — ideally, stepping out or running to the market when they come by. Allowing your broker to put a lockbox on the place and let it be shown at all times while you’re at work or out and about on the weekends will require that you keep the place in tiptop shape, 24/7, but it will also be well worth it.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Book Review: ‘The Seven Pearls of Financial Wisdom: A Woman’s Guide to Enjoying Wealth and Power’

Tara-Nicholle Nelson
Inman News®

Book Review
Title: "The Seven Pearls of Financial Wisdom: A Woman’s Guide to Enjoying Wealth and Power"
Author: Carol Pepper and Camilla Webster
Publisher: St. Martin’s Press, 2012; 352 pages; $25.99

A number of notable personal finance experts have made attempts to share their knowledge, insights and experiences on money matters with women-friendly money books and courses. However, many of these are relatively narrowly focused on subjects like budgeting, investing, getting out of debt, real estate, or building a career or business.

Now there’s a new entree into this genre by former Rockefeller money manager Carol Pepper and Forbes journalist Camilla Webster: "The Seven Pearls of Financial Wisdom: A Woman’s guide to Enjoying Wealth and Power."

I read a lot of finance, self-help and other books from similar genres, and spend much of my time exploring and creating multimedia resources in the same areas. Against that backdrop, "Seven Pearls" at first glance came off as overly simple, and lacking, mmm, pizzazz. What you won’t find in this book is a bunch of charts and graphs and links and bullets and short-attention-span gimmicks or cutesy phrases and acronyms. The paragraphs can run long, and the voice is less girlfriend-ey and more straight shooter.

What you will find in "Seven Pearls," however, is 300 pages of straightforward, substantive, visionary, step-by-step guidelines for creating a truly prosperous life, including clear advice for managing your money, business, career, family and romantic relationships, and professional advisers toward that end.

Pepper and Webster don’t coddle or infantilize readers, nor do they assume that the average reader is mired in financial desperation or struggle just to believe they deserve to flourish. In fact, many women may not be emotionally ready to receive and execute on the advice it contains. Some will need to take a course like Conscious Bookkeeping or work through a book like Karen McCall’s "Financial Recovery" or Julia Cameron’s "The Prosperous Heart" before they can truly appreciate and act on the simple but serious wisdom contained in "Pearls."

Pearls provides Pepper and Webster’s opinionated, yet ego-free, guidance on a wide-ranging, but interconnected, set of topics including:

• developing a set of investment guidelines for your portfolio.
• starting and managing a business.
• finding, vetting and selecting the right spouse.
• raising wise children.
• managing your wellness with DNA testing.

What I know from working with many women who want to use real estate to build their net worth and family futures is that what causes some to hesitate to take responsibility for growing their finances is the fear of the unknown territory of prosperity — the fear that they will fail on the nuts and bolts of managing the more complex taxes, legal structures, adviser teams, business plans, financial statements and such that they might face if they do find financial success.

"Seven Pearls" neatly obliterates such fears and concerns, providing a nuts-and-bolts outline and action plan for women who do earn a good income — and those who plan to in the future.

Pepper and Webster provide hundreds of pearls of financial wisdom in seven areas of their lives, carving out a vision for a prosperous life by doing some touching, some deep dives and lots of clear, actionable recommendations in the areas of:

1. Wealth building: business, career, investments and retirement planning, including how to manage your own emotions to avoid common (and costly) business, tax and investment mistakes, and select and manage your team of advisers.

2. Romance and marriage: managing the costs incurred while dating; financial red flags that prospective mates might raise; and how to handle the financial negotiations and disclosures that are necessary to minimize the too-common financial causes of marital strife.

3. Power: In this section, the authors coach women around many of the powerless beliefs and behaviors that happen so often even among educated career women — like refusing to speak up for oneself or failing to — and direct them to the image, social media and organizational tools for building and deploying their own powerful, personal brands, including everything from Twitter to seats on corporate boards.

Motherhood, crisis and loss, retirement and legacy building are also given intensive treatment in "Seven Pearls." For reader-friendliness, each chapter starts off with a set of questions that surface the problems that will be addressed within.

Many women now make more money than their husbands or prospective mates, yet many of these same women lack more than a basic understanding of financial tools. "Seven Pearls" is the first women’s finance book I’ve seen that is tailored to take readers far beyond money crises and beyond the basics (though it does offer some crisis guidance and much advice for avoiding crises in the first place).

Rather, the authors effectively usher readers into a life season of wisely, assertively and knowledgeably using an advanced set of tools for managing their prosperity, their relationships and their futures, without fear, intimidation or unnecessary complexities.

In "Seven Pearls," Pepper and Webster offer successful women the logistics and structure on which they can construct a fully prosperous life, minus the fluff.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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REThink Real Estate

Tara-Nicholle Nelson
Inman News®

Q: We are renting a house and we set up a trampoline in our backyard. The owner wants to remove it because of liability issues if there’s an accident. Is that reasonable, or is there something we can do about this, like place a sign on the trampoline? –Marleen

A: It’s noteworthy that you find yourself in the precisely opposite situation of most tenants who have an issue with their landlord about a hazardous condition. Most often, tenants complain that there is a dangerous situation on the property, and that their landlord refuses to fix it and eliminate the hazard. Though laws do vary by state, landlords do often find themselves held liable for the physical and monetary damages incurred by virtue of hazardous conditions on the properties they own.

In the final analysis, your landlord’s insistence that the trampoline be removed is actually quite reasonable. Here are three factors I want you to consider as you try to wrap your head around this.

1. Trampolines are very dangerous. I suspect you may think your landlord is overreacting, and that you might not realize just how dangerous trampolines actually are. To get a sense for where your landlord is coming from, simply Google the words "trampoline" and "liability." You’ll soon see that not only are trampoline injuries a very common cause of severe injuries to adults and children alike, they are also the source of a full-blown body of law around homeowners being responsible to cover the costs and other damages related to those injuries.

In fact, just last month, New York Yankees pitcher Joba Chamberlain suffered a career-pausing ankle dislocation, you guessed it, while jumping on a trampoline.

2. Your landlord has the legal responsibility to prevent hazardous conditions. Not only is it highly likely your landlord would become embroiled in a legal case that arises from the injuries a visitor to your home might incur on the trampoline, it’s also highly likely that because your landlord is aware that you have installed the trampoline he’d end up being held liable. And that’s just the beginning; many homeowners insurance and hazard insurance policies are actually voided by the installation of a trampoline on the home.

Your landlord needs to be able to maintain the home in insurable condition, and needs to make sure that an insurance policy is on the property and remains in force. This protects your landlord, but also may protect you in the event that you were to be injured or harmed as a result of a fire or some other insured-against event of that nature, which I hope never happens at your home. If having a trampoline in the backyard voids the insurance policy, which it likely does, that in and of itself renders your landlord’s demands reasonable.

3. There’s one way you can have 100 percent control over your backyard and what you put in it. Putting a sign up on a trampoline doesn’t minimize the possibility of people getting injured, and it doesn’t necessarily impact the specter of liability for your landlord, either. Possibly, having every single person who ever jumps on it sign a waiver might minimize the liability concern, but enforcing that and ensuring that the signer is competent and the form will stand up in court is completely infeasible.

When you rent someone else’s home, they absolutely have the right to impose some basic health, safety and other conditions on the rental, like a ban on waterbeds and large dogs.

The one way you can get ultimate control over your home and how you customize it is this: Buy your own home. Problem is, as a homeowner, you need an insurance policy, too, especially if you have a mortgage. Your mortgage company will require that you either (a) obtain and maintain a policy or (b) they will put a very, very expensive policy on the property.

So, if and when you do buy your own home, I’d urge you to work with your insurance representative to fully understand the impact of having a trampoline in your backyard, before you do that.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Book Review: ‘Situations Matter: Understanding How Context Transforms Your World’

Tara-Nicholle Nelson
Inman News®

Book Review
Title: "Situations Matter: Understanding How Context Transforms Your World"
Author: Sam Sommers
Publisher: Riverhead Books, 2012; 304 pages; $14.91 at amazon.com

Do you consider yourself a rugged individualist, like John Wayne or Ayn Rand? Well, get over yourself.

In his new book, "Situations Matter," Tufts University professor Sam Sommers makes a very strong argument that our personalities aren’t nearly as stable or as strong as we think, and that the people, places and things that make up the context — the situations — we’re engrossed in exert much more powerful influences on our choices, our relationships and our behavior than you might think.

In "Situations Matter," Sommers drills down into what he calls the "robust power of situations" with the declared aim of making you, if not a better person, certainly a more effective one, especially if you work in "people" fields, like sales, marketing and management, or if you ever (like Sommers) find yourself trying to prod a hotel voucher out of a harassed customer service agent at a Newark, N.J., airline counter.

Here are a couple of Sommers’ most profound insights on the critical importance of context. I give them with the caveat that this book is stuffed to the brim with such smarts, so if you find these gems interesting or are in a profession that requires you to interface with or understand other people, you’re likely to find this book to be a game-changer and perspective-shifter.

1. "WYSIWYG" is the exception, not the rule, for understanding human behavior. Throughout "Situations Matter," Sommers proves the point that What You See Is rarely, rarely What You Get when it comes to explaining what causes people to act as they do, join up with others, remain isolated, tip poorly, confess to crimes they did not commit, come off as smart, come off as incompetent, and even fail to help others who appear to clearly need it.

Much more often than not, researchers have shown that the primary drivers of these behaviors are not our inherent brilliance, deep-down incompetence, core stinginess or plain old rottenness. Rather, contextual factors like whether you’re running late or whether you’re in a crowd of others and, so, feel anonymous, have enormous impact on our actions in a given situation.

The more we can begin to appreciate and account for (a) the fact that a person’s bad behavior in one moment does not necessarily warrant writing them off as a numbskull, and (b) the actual situational factors at play that might be influencing decisions and behaviors, the more effective we can be at shaping those factors and, to be frank, getting what we want.

2. Conformity is both friend and foe. The human inclination to go with the flow, following social norms and rules, is most markedly our friend when it comes to things like traffic safety. Turns out, though, that the pressure to avoid violating norms is so strong an influence on human behavior that it’s also the dear friend of marketers who want to get people to buy things and much more nefarious others (think: Jim Jones’ Guyana horror and the Heaven’s Gate mass suicide) who want to coerce people to do bizarre, self-destructive things.

In both these nightmarish scenarios, investigators reported finding extensive evidence of identical dress, communal living, renouncing birth names, and other strategies cult leaders use to create mindless conformity in the months and years leading up to the ultimate conformist act.

Sommers says that those who want to create behavior change in others should take note, seeding their own tip jars with a couple of bucks, for example. And those who want to interrupt conformity in their families or communities, say, to stop candy grubbing at Halloween, should do anything they can to emphasize the individual identities of their subjects (Hint: Ask the costumed munchkins their names and what street they live on).

Or you can do what Sommers did long ago to stopping conformity in its tracks, in his own tiny little way: Next time you’re at the football game, don’t do the wave.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Mood of the Market

Tara-Nicholle Nelson
Inman News®

Real estate appraisal reports are almost always accompanied by a set of assumptions: statements or conditions that the appraiser assumed to be true for purposes of drawing some of the conclusions necessary to create an estimate of the home’s value. Interestingly, though, many appraisal reports give their basic set of assumptions the subtitle "Limiting Conditions." This implies that the assumptions may limit the validity of the appraisal findings in the event the assumptions turn out to be invalid.

For example, appraisers commonly assume that the land on which a home is built is not contaminated; if it turns out later that it is, all bets are off in terms of the property’s value.

The same goes for our decision-making in real estate and in life, generally, for that matter. We get so accustomed to our thought shortcuts and assumed beliefs about a subject that they can actually limit the integrity of our thought processes and decisions — especially if we fail to notice, question or ditch assumptions that are flat-out false or have become invalid over time.

The housing recession has changed the facts of the market, and has changed our minds about real estate. Those changes warrant a deep rethink of some widely held real estate assumptions, old and new. Here are a handful of the real estate assumptions that we should all reconsider:

1. Renting is cheaper than buying. The days when this one was a given are long gone in some places, and in some cases. In some places, the housing recession delivered a sound spanking to home prices. But it had the opposite impact on rental rates almost everywhere else. On top of all the would-be buyers who had to keep renting because they couldn’t qualify for mortgages over the past few years, there was also an influx of former homeowners who had lost their homes to foreclosure into the rental market.

Higher rents and lower sale prices mean that, in many areas, renting costs just as much or more than buying or owning a home. Real estate website Trulia’s recent Rent vs. Buy Index found this to be the case in 98 percent of America’s 20 largest cities, taking into consideration both the added expenses and tax advantages of owning vs. buying (the exceptions were areas like San Francisco and Manhattan, the markets that were the most recession-resistant).

If you’re operating on this assumption and it has kept you in the rental market, you might want to actually do some online house hunting, meet with a local real estate agent and a mortgage broker, and run your own numbers to see if your assumption might actually point to homeownership as the more affordable option for you.

2. Buying is better than renting. For various reasons throughout the last century, the American dream evolved to include homeownership virtually without question. But on today’s market, it is absolutely not the case that everyone who can afford to buy a home should.

If your own personal finances are immature or you’re living paycheck to paycheck, or if you are in a career or relationship situation that may cause you to have to move in the near term (less than five years or thereabouts), it might be advisable to rent instead of buy a home. You’ll lose out on the tax and other financial advantages of owning, but you won’t find yourself unable to make your mortgage if you have a bad month, and you will avoid being stuck in an upside-down home you can’t sell.

Of course, these guidelines apply mostly to your primary residence. With the increased mobility younger generations seek, I have already started to see a trend of young people with strong incomes taking advantage of low prices and interest rates to buy income and vacation properties that they can rent out and possibly retire to before they settle down enough to buy their own residence.

3. Sellers are greedy. OK, so some sellers are probably greedy. But so are some buyers, for that matter. The reality is that sellers are protective of their biggest financial asset and the place where they have often spent some of the precious moments of their families’ lives, and are not willing to give their homes away at a bargain-basement price.

The deeper reality is that sellers often have mortgages they must pay off from the proceeds of sale or face a short sale or even a foreclosure. Even those that are not upside down or in mortgage distress may have money invested in the property that they want to try to get back out, or may be looking to the proceeds of the sale to fund their family’s next move.

For some sellers, this translates into an unrealistic fantasy about what their home is worth. For many others, though, the reality of their financial investment and involvement with their home simply underpins their willingness to invest in preparing and staging their home for sale — and an unwillingness to take the first lowball offer that comes their way.

4. Buyers are cheap. Many buyers are certainly frugal, and especially so when it comes to trying to squeeze the absolute most bang from their hard-earned, hard-saved homebuying bucks. That said, buyers absolutely will pay for properties and locations that press the emotional buttons that activate the vision of the lifestyles they crave for themselves, their families and their futures.

Speaking of emotional priorities buyers will pay for, they will also pay for the certainty of securing their dream home and eliminating threats to it, whether those threats come in the form of competing offers or feet-dragging, short-sale staffers at the seller’s bank.

That’s why, even on today’s slow-to-grow real estate market, homes that are in great condition, in great neighborhoods, and in great and thriving cities are getting multiple, over-asking-price offers. And this is especially true for "regular" equity sales, in which buyers are manifesting their willingness to pay a premium for the luxury of not having to do a deal with the seller’s bank.

5. Buyers can name their price on today’s market. We’ve all heard the pundits crowing and read the headlines blaring about the buyer’s market that many buyers have begun to believe the hype. Unfortunately, many buyers will have to house hunt for months, make several lowball offers and lose several dream homes before they understand the truths discussed in the points above — namely that no seller will give their home away for less than what it’s worth, and that great properties will be subject to great competition even on today’s market.

Smart buyers are the ones who work with their local agent to understand the recent neighborhood sales and other market and personal factors to make an educated, reasonable offer based on the fair market value of the property — an offer that neither throws money at the seller nor unreasonably lowballs them, wasting everyone’s time.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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REThink Real Estate

Tara-Nicholle Nelson
Inman News®

Q: If I buy a home that previously sold for more than $400,000, but I pay only around $200,000, doesn’t that mean I have instant equity? –Malik A.

A: In a word? No.

Here’s the deal, Malik: In real estate, we think of equity as the difference between what your home is worth and what you owe on it. It’s the amount of your home’s value that you actually own, after any mortgage or other debts that are secured by the property.

Historically, the way homeowners hoped to build equity in their homes was primarily by paying off their mortgages. However, over the last decade or so, this evolved so that many homeowners expected their primary means of building equity would be by the stratospheric appreciation in home values. If homes simply kept growing in value, then equity would continue to build, as a matter of course.

Given these definitions, technically, the phrase "instant equity" should refer to the difference between what your home is worth at the time of closing and your mortgage balances — i.e., what you owe on it. For most buyers, that would mean their instant equity was the amount they had put down on the home.

However, people typically use the phrase "instant equity" to mean that you’ve bought a home that is worth more than you paid for it (not what you owe on it). It is this use of the phrase I suspect you’re getting at.

The fact that the home sold for more than $400,000 at some time in the past (a time I’ll guess was near the top of the market six years or so ago) is entirely irrelevant to your equity position on it now. You might indeed be closing this transaction with instant equity, but if so, that would be because the property is currently worth more than the $200,000 purchase price, not because of what it was worth in a time that is long gone — a mystical fairyland in which banks lent mortgage money without checking on borrowers’ ability to repay it, which ultimately led to a dramatic climb in home prices.

Some would say that whether or not you have instant equity, the fact that the property once sold for $400,000 shows that (a) a buyer was once willing to pay that, and (b) that the property could climb to that price again. These facts are both true, strictly speaking, but do not in any way help you determine whether this particular property is the windfall opportunity that you seem to think it might be.

Here’s why: A home’s value at any given time is what a willing and qualified buyer would be willing and able to pay for it at that time. Today’s market dynamics are simply not comparable to those of yesteryear, so you cannot assume that a buyer on today’s market would pay a top-of-market price for the place.

A buyer could not and would not pay $400,000 on today’s market for that home; if he needed a mortgage to fund the purchase, the bank and appraiser would simply not allow him to do so. And if he were a cash buyer, it just wouldn’t make sense for him to pay such a price, presuming that he could buy another, similar home in the area (I presume) for closer to $200,000 than $400,000.

The only way for you to know whether you have instant equity in this home, and how much, is to figure out what you believe the property is worth on today’s market, and calculate the difference between whichever of the following you find to be the most relevant for your purposes: (a) the amount of loan indebtedness you have on the property or (b) the amount you paid for the property.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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Book Review: ‘Risk Intelligence: How to Live With Uncertainty’

Tara-Nicholle Nelson
Inman News®

Book Review
Title: "Risk Intelligence: How to Live With Uncertainty"
Author: Dylan Evans
Publisher: Free Press, 2012; 288 pages; $20.80

Depending on your perspective, you might perceive the world as a risky place or a safe one — or as one full of adventures and possibilities. According to Dylan Evans, author of "Risk Intelligence: How to Live with Uncertainty," our ability to evaluate probabilities also varies widely from person to person.

Evans calls our individual powers in this arena our risk intelligence, and developed an online RQ test and other research that revealed that RQ and IQ are completely different animals, as well as surfacing the troubling reality that relatively few people have strong RQs — even among those whose jobs are to give expert assessments of risk in their field.

In "Risk Intelligence," Evans highlights a key set of thought flaws that frequently foil most of us when we make efforts to understand and predict the risks we face; some of the most critical include:

1. Imagination inflation. This is Evans’ casual nickname for something scientists call the availability heuristic: our illogical tendency to estimate the chances that something will happen in the future based on how easily we remember something similar in the past — even if the memory is from a film, a TV show or other fictional account!

In one study, for example, subjects were asked to rate the chances that various unlikely things had happened during their childhood, like breaking a window with their hand. Weeks later, some were asked to picture these things happening in their minds’ eyes, and others were not asked to imagine them; then all were asked again how confident they were that these events had taken place during their youth.

Those who were not asked to imagine them were 20 percent more confident that the events had happened, based solely on the suggestion of the questions; those who were asked to actually imagine them were a full 30 percent more confident that they had experienced the events. (Think about what this would mean for criminal juries — yikes!)

Evans says that this imagination inflation causes us to overestimate the probability of dramatic risks and to underestimate risks that are harder to visualize; he suggests that we must be cautious about falling prey to either of these extremes.

2. Worst case-ing the joint. Evans defines worst-case thinking as the logic-ruining tendency to "transform low-probability events into complete certainties whenever the events are particularly scary." He points out that it stops us from considering the benefits piece of the cost-benefit analysis that is a necessary part of every decision in life and, like imagination inflation, allows vivid imagery and fear-driven decision-making to crowd out rational thought.

3. Overconfidence. On the other end of the confidence spectrum, many a behavioral economist has pointed out the decision-destroying implications of being overconfident in your investment prowess, which I suppose is another way of saying overestimating your RQ for picking investments and timing the economic markets, real estate included.

Evans posits that overconfidence is not only exceedingly common, but a whole-life issue when it comes to assessing risk — not just a financial one — placing RQ right on a "golden mean lying halfway between overconfidence and underconfidence."

Here’s where Evans cautions readers about the challenges of working with experts in an effort to understand risk: Just because someone has expertise in a particular subject matter does not necessarily mean they know precisely how much they do and do not know.

In Evans’ own words, "[experts] often think they know more than they really do." Rigorous reliance on data about outcomes, versus expert opinions, is Evans’ suggestion for mitigating the overconfidence of experts.

"Risk Intelligence" is a comprehensive, research-packed tour through the realm of probabilities and the thought flaws and failures that stop us from predicting them accurately, whether we’re talking about likely surgical outcomes or how that fully adjustable, stated-income mortgage is likely to turn out.

It might be a little involved for the average layperson seeking to simply make smarter decisions in his everyday life, but I suspect that those who devote much of their time and effort into planning their finances might find in it an entirely new outlook on expert advice and data-based decision-making.

Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   

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