Tag Archives: First Hundred Days

Paradigm Shift: Changing the Human Experience

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What will be the tipping point that creates the paradigm shift that is needed in the Real Estate Industry? 

To begin, I would like to quote a small portion of “Productive Workplaces Revisited” noted in the second link above.  “He put into…context, the age old struggle between authority and dependency”…In so doing he found an audience hungry to find alternatives to bureaucracy, authoritarianism, alienation…not simple ideology…an expression of life’s purpose – affirming diginity in every person, finding meaning in valued work, achieving community through mutual support and accomplishment.”

The above is from a book titled “PRODUCTIVE WORKPLACES REVISITED” – Dignity, Meaning and Community in the 21st Century” by Marvin Weisbord in 1987.  That link provides information regarding Mr. Weisbord’s many books.  For the purpose of this blog post, I am simply borrowing the above excerpt which I have modified to fit most any Real Estate Office in the Country, and a movement that is afoot.

The Paradigm Shift is also referred to as “A Mental Revolution” elsewhere in that publication, (use the search feature and put in paradigm shift for more info on that.)

The problem as I see it, in the structure of the Real Estate Industry, may simply be the old “Too many chiefs and not enough Indians”.  What the Real Estate Industry, and every Real Estate Company in the Industry, and every Real Estate Office in every Real Estate Company, has not answered correctly is quite simply this:

WHO IS THE CUSTOMER?

In most realities, the customer of the Brokerage is the Agent.  That is something that most buyers and sellers of real estate do not get to see.  The inside of a real estate office is about the customer…the customer being the Agent.  The Agent is paying the Broker.  The Broker cannot survive unless it adequately serves its customers…the agents, not the buyers and sellers of homes.

Take a look at the photo below:

Meeting of Professionals

Meeting of Professionals

If the people gathered around that table were Doctors, you might hear talk such as: “I have a patient…I have tried this and that…has anyone had a similar… Yes, I have found X to work for many of my patients, here is a study on X I found the other day…”  The talk around that table, would be about better treatment for the patient.

If the people gathered around that table were lawyers and paralegals, you might hear talk such as “I have a case where the defendent is…I haven’t found adequate support for this client’s…. Try X vs. X, I’ll go get it for you.  Is there any other way we might tackle this in Court to show that our client…”  The talk around that table, would be about helping this client win this case.”

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Rarely, if ever, do you find a room full of real estate agents discussing ways to find a better answer for a particular buyer or seller. 

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The reality is that most times a Broker will set up meetings that help agents sell more houses.  Rarely is the discussion about the buyers and sellers of homes.  If an agent has a problem selling a home, then agents will filter ideas that ultimately do help the seller.  But when the client/customer is a buyer, the conversation all too often revolves around helping the agent “sell a house TO” that buyer.

There are many discussions with regard to “Real Estate ProfessIonals“.  Some of us equate ourselves to doctors and lawyers.  Many more view themselves as (merely) salespeople, and then complain when “real estate agent” comes up on a list next to “used car salesman” on consumer confidence and trust lists.

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The Tipping Point that will create the needed Paradigm Shift is A Mental Revolution with this Call to Arms:

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TO BROKERS:

1) TAKE DOWN ALL OF THE “SALES” BOARDS AND STOP HAVING SALES CONTESTS.

2) STOP TALKING ABOUT “MORE LEADS” AND INSTEAD ASK YOUR AGENTS IF THEY NEED ANY HELP MEETING THE NEEDS OF THEIR EXISTING CLIENTS.

3) HAVE AT LEAST ONE MEETING A WEEK WHERE THE AGENTS MEET TO DISCUSS THE NEEDS OF THEIR BUYER AND SELLER CLIENTS, AND NEVER TALK ABOUT THEIR NEED TO “CLOSE” A PERSON IN THAT MEETING.  CONSUMER-CENTRIC VS. AGENT-CENTRIC MEETING.

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TO AGENTS:

1) TRY NOT USING THE WORD “I” FOR 21 DAYS. 

2) WHEN YOU APPROACH SOMEONE FOR ASSISTANCE, MAKE SURE THAT ASSISTANCE IS FOR YOUR CLIENT AND NOT YOURSELF

3) FIGHT FOR ANYTHING YOU “NEED” TO HELP “THEM” AND NOT YOU.

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TO THE GOVERNOR OF THE STATE OF WASHINGTON (& possibly other States, as well)

RECOGNIZE THE DISCONNECT BETWEEN YOUR AGENCY LAW THAT HOLDS REAL ESTATE LICENSEES TO THE STANDARD OF “REPRESENTATION OF PEOPLE”…AND THEN GIVES THEM A “SALESPERSON” LICENSE.

There are many, many real estate agents who aspire to assist their clients well.  There are many, many real estate agents who “hung(er for) alternatives to bureaucracy, authoritarianism, alienation…not simple ideology…an expression of life’s purpose – affirming diginity in every person, finding meaning in valued work, achieving community through mutual support and accomplishment.

Don't Pay Off Bad Credit

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Step three in the “Should I Buy a House Now” series is somewhat of a sidetrack.  In Step 1 people learned the difference in calculating your current gross income, especially if any part of your income is not guaranteed “salary”.  In Step 2 you were sent off on a long project of accounting for your past practices of spending that gross income.  By finding the money you wasted, and taking steps to waste less of your earnings, you were able to find additional monies to put towards housing payments.

Step 3) Start Improving Your Credit Rating This can take a long time, as does Step 2.  I am suggesting you do these simultaneously.  Don’t think that because you pay your bills on time, that you have good credit.  Paying your bills on time only accounts for 30% to 35% of your credit standing.

Get all copies of your credit history.  Generally there are three sources (or more) and you don’t want to get your credit score, you want full copies of your credit report.  Go through the reports and make sure the history pertains to you.  The more comon your name, the more likely you will have something of someone else’s on your report.  If you are divorced, you want to remove things that you are no longer legally responsible for by divorce decree, even if the item has a high rating.

Let’s assume you have at least one item that you didn’t pay well.  Don’t pay it off!  This is the biggest mistake I see people making.  You need to turn bad credit into good credit.  Paying it off does not remove it from your credit history, so paying it off simply locks in a bad credit item.  You want to “pay it as agreed”.  Sometimes you do that by agreeing to a new payment schedule and then paying the new payments on time for a year.  Sometimes you pay off the balance, but leave the card open, and charge one small item every month and pay that item off every month.  I’m not a credit expert for sure, but this issue goes back long before scoring was used.  All too often people pay off the balance on a bad credit item thinking they made it good.  No.  You locked in the bad long term.

Here’s a story from back when I was 25ish.  My Mom needed me to co-sign on a house.  I had a bad charge card at a department store that was charging me 3% of the balance due until it reached near the max, and then wanted 20% of the now higher balance each month.  There was no way on my income that I could pay 20% of the balance, so it got behind.  It was a ding that was potentially going to cause my Mom to not get the house and everyone panicked. 

I went to the store with the full balance due in my hand, and after a lengthy conversation with the credit manager, I was very angry and said I hated the store and would never buy anything there again.  The Manager said to me, “You can’t hate us.  In fact you have to buy from us.  You can’t just pay off the balance to restore your credit.  If you never buy from us again, that bad rating will sit on your report for years.  The only way for you to improve your credit is to buy more from us and pay off that more well.”  That made me angrier and I started to leave when a lightbulb went on.  I turned around and said, “Are you telling me that I can go downstairs right now and buy something on this card?  He said absolutely, please do.  I said can you give me a letter to that effect.  He said sure.  I took that letter to the mortgage company and said how can you deny my Mom a mortgage based on a bad credit item, when the bad credit item doesn’t think it’s so bad, in fact they invite me to continue shopping there on credit.  I handed them the letter from the Credit Manager on the store letterhead, they agreed and my Mom got the house.

Lesson learned:  Turning Bad credit into Good credit involves not simply paying off balances, but continuing to charge and pay as agreed until the credit rating for that item improves.  Then you can close it after it has a good rating.

I have to meet someone at a house shortly, so I’m going to end here though this post could be a 20 page short story, if I highlighted all the ways to good credit.  The point is EARLY in the process, here at Step 3, know your credit score, review your credit history from 3 credit bureaus, and improve as needed.  Even if your score is high, go through the detail and make sure you correct anything that needs correcting.  It takes a long time for the credit bureaus to reflect change…so don’t wait until the last minute to work on this step in the series.

Count all the money you wasted this year

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This is post #2 in the First Hundred Days series designed to answer the question “Should I Buy a House Now?”.  We often go to professionals to help us make decisions, but whether or not you should buy a house now, isn’t one of them.

By the time you walk into a real estate office or speak with a lender, you should already know whether or not you should buy a house now.  A lender tells you whether or not you CAN buy a house, not whether or not you SHOULD buy a house.  An agent helps you select which house, and guides you through the process of buying a house.  Only YOU can answer the question of whether or not you SHOULD buy a house, and this series is designed to assist you and give you confidence in your decision.

Step 1 – Calculating Your Gross Income for Home Buying Purposes was addressed yesterday. 

Step 2 – Account for how you have spent that Gross Income, using hindsight.

It’s pencil and paper time…yes, you have to move away from the computer for this step 🙂  Take out all of your bills from the last 12 months.  You are not making a budget in this step.  You are accounting for every dime of your gross income for the last 12 months.  Get three different notebooks and mark one of them WANTS, one of them NEEDS and the other one WASTED.  Everyone has that dream where they go to sleep, and every dime they’ve ever wasted shows up in their bank balance the next day.  So let’s not pretend we haven’t wasted any money over the last 12 months.

You are not finished until the total dollars in the three notebooks equal your total gross income from Step 1.

You, and no one else, can determine your needs.  I NEED a cell phone…it’s not optional for me, for others it may be optional.  I don’t NEED a landline (though I have two) so I guess that goes in my WASTED notebook.  Don’t Google sample budgets for this.  Make your own choices.  Picture yourself without that item when determining which notebook it should go in.  I WANT to see my children and grandchild X times a year (anyone who thinks seeing their children isn’t a big expense is a lot younger than I am, LOL)

Everyone’s wants and needs are different, and what you view as a need could appear to be wasted money from someone else’s perspective.  That is why this is a very personal part of the decision process that no one else can answer for you.  You may have children with expensive sports activities.  You may feel getting that Starbucks Coffee everyday is not optional.  It is your right and obligation to determine your own personal wants and needs.  No real estate agent or lender can tell you what you have “left over” from your gross income to spend on a housing payment.

I know this step is a lot of work, but it’s almost year end and a very good time to pull those receipts anyway.  If you don’t have receipts, you’ll have to fudge a bit, BUT starting today keep more receipts than you have in the past.  Put a big envelope in your car for this purpose.  If you use three envelopes marked NEED, WANT and WASTED, all the better.  You may find you waste less money if you force yourself to put the receipt in the money WASTED envelope on a daily basis.

Even if you decide not to buy a house at the end of these First Hundred Days, the process should be of value to you, by forcing you to account for every dime of your Gross Monthly Income.   Better to START the process with accountability, then to be forced into facing a hard reality AFTER you buy a house.

"Should I buy a house now?"

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Q: Should I buy a house now?

A: NO!

Q: Why?

A: Because you should never buy a house when you are not sure that is what you want to do, and you should never let someone else make that decision for you.  Don’t EVER give anyone that much power over your life.

As part of our exuberant expectation of CHANGE, I will be starting a series called “First Hundred Days”.  It’s not enough to vote for change and then sit around waiting for change to come from someone else.  If each of us does something different every day for the next hundred days, that produces a change for the better…then change will happen.

I will tag all posts “First Hundred Days” and I will do my best to include all of the tools and skills you should employ to make your own decision about buying a home. We hear so much about “the stupidity” of people in trouble.  Instead of criticizing, let’s do our best to help the future buyers of homes make better decisions and choices by providing meatier, education oriented, instructional blog posts.

The first step in the home buying process does not start at the lender or the real estate agent.  It starts with you sitting in your own home working through some numbers.

1) Calculate your gross income.  If you are salaried, you have the number.  If you are commission based or hourly, add the last 12 months income to the previous 12 month income and divide by two.  Now double check it by taking the last 3 months income and multiplying it by 4.

Let’s say you are hourly or salary plus commission/bonus.  Note these are not lender guidelines.  These are old-fashioned and proven standards for responsible decision making and so will likely be more conservative  than lender guidelines.

Non-salaried income Last 12 months: $75,000

Non-salaried income previous 12 months $60,000

Current annual income for home buying purposes = $75,000 plus $60,000 divided by two or $67,500.

Now the double check.

Total income for the last 3 months = $14,000 (boss gave you fewer hours)

$14,000 times 4 (12 months) = $56,000.

The double check system suggests that you should not think about buying a home in the near future based on an income of more than $56,000 a year, and you should not buy a home until you are certain that the cut back in hours is not leading to no job at all or even fewer hours.  Stabilize your income situation before buying a home.

If the last 3 months income is $20,000 times 4 or $80,000, you still use $67,500 as your annual income and not $80,000, for homebuying purposes. 

You use the average two year income or 4 x your latest 3 month income, whichever is LOWER.

I’ll stop here and see if people have questions before going to the next post in the “First Hundred Days” series.  When you buy a house…if it is the wrong decision…you can blame lots of people, but you will be left holding the bag.  So let’s work together over the next hundred days to make sure you can answer the question for yourself without heavily relying on the opinion of others.

Treat the series like a workbook, get a notepad, and calculate your numbers.  Questions?  Ask them in the comments section.