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Saturday , January 21, 2006
Message #1632
WEALTHY: How interest rates are going to affect you in 2006
HEALTHY: Is your workout doing more harm than good? (Michael Masterson)
WISE: Immanuel Kant on ethics
ALSO IN THIS ISSUE:
Mr. Hawkins' $300,000 mistake (Robert Ringer)
A treat for word lovers
Add the phrase "modus operandi" to your vocabulary
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The Attributes of People Who Have Personal Power, #11 of 12:
They don't become therapists for their employees
"Don't spend too much time solving problems and answering employee complaints. Succumbing to this temptation steals valuable time from more profitable endeavors … and reinforces the nonproductive behavior of the employee. While you might listen briefly, make it clear that the solution lies with him, not you.
"If you have a chronic complainer on your hands, you may want to give them a formal procedure to follow before they come to you with another problem."
- Michael Masterson
[Ed. Note: Since January 10th, we have been excerpting highlights from Michael Masterson's new book Power and Persuasion. Look for the final excerpt in this series on Monday. Meanwhile, if you would like to learn no-B.S. secrets for commanding success in your personal and business life, based on Michael's 40 years of down-in-the-trenches business experience, you can pick up a copy here: http://www.powerandpersuasion.com.]
Will Interest Rates Continue to Rise?
Interest rates going up is plain bad news. Suddenly, you're paying more on your credit cards and variable-rate loans. Even the stock market doesn't like rising interest rates. It goes flat or down when rates go up. If rate hikes continue, the U.S. will probably suffer a major economic slowdown. Fortunately, the Fed seems to realize this.
It's hard to make serious money while using your "extra" income to pay interest on a debt – so I hope you're not planning to take out any new loans (except for real estate). But if you really need to do it, do it NOW. Rates will be going up a little more before the Fed puts the brakes on sometime in the spring or early summer (at the latest). At that point, I suggest you wait a few months – if you can – because interest rates will be at their peak. Then look around. Rates aren't going to get worse … and they may improve a little.
- Andrew Gordon
[Ed. Note: Andrew Gordon, ETR's financial expert, is the editor of The Skeptical Advisor, our investment newsletter. Check it out at http://skepticaladvisor.com.]
"In law a man is guilty when he violates the rights of others. In ethics he is guilty if he only thinks of doing so."
- Immanuel Kant
Salting the Record
By Robert Ringer
The form of the real estate brokerage business may have changed since the advent of nationwide brokerage firms, but the substance has not. Human nature is the same today as it was when Century 21 first came on the scene back in 1974. Indeed, the same as it was in 1974 B.C.!
And when it comes to the real estate brokerage business, a reality of human nature is that the real estate agent who allows himself to be intimidated by the buyer or seller of a property (or, worse, both) is a real estate agent asking to be separated from his commission.
To put it more succinctly, such an agent is likely to be on the receiving end of a commissiondectomy – a delicate surgical procedure aimed at removing all or part of his commission from his grasp. From the aspect of pain, a commissiondectomy might justifiably be described as the equivalent of having a hemorrhoid operation and root canal performed simultaneously.
Sadly, far too many real estate agents practically volunteer for this excruciating procedure by not taking certain actions – e.g., binding either the buyer or seller in writing, taking control of the deal, and refusing to relinquish that control until their agreed-upon commission has cleared the bank. A recent front-page story in The Wall Street Journal underscores the importance of these actions.
Nantucket, Massachusetts is the setting for the commissiondectomy described in the aforementioned Wall Street Journal article. Nantucket Island is the kind of place that is inhabited mainly by the super-rich – and, of course, rich-widow stalkers like John Kerry.
The Nantucket saga involves a broker by the name of J. Craig Hawkins and socialite Catherine R. Clifton, daughter of Ralph Roberts, founder of Comcast Corp. Mrs. Clifton's husband, Anthony, is also along for the ride. Ringer Rule No. 328: All other things being equal, the greater his or her "high-society" factor, the more likely the person is to shaft you in a business deal.
In Chapter 7 of To Be or Not to Be Intimidated?, I tell the story of the owner of a large apartment development in St. Louis who spent a great deal of time trying to impress me with his credentials. He went to great lengths to expound on the virtues of dealing only with people like himself whose integrity and ethical standards are beyond reproach.
I nodded my head on cue as he doled out such cliches as, "Life is too short to deal with unethical people." His Saddam-like grin had the aura of a neon sign flashing the words "Trust me."
It wasn't until I had experienced a sufficient number of commissiondectomies that I was able to identify such talk as a sure sign that the person with whom I was speaking was either a rapist, murderer, criminal-defense attorney, or (worst of all) unethical real estate developer.
So, welcome to the world, Mr. Hawkins. Had you read my book, you would have known better than to spend months showing Mrs. Clifton properties all over Nantucket Island without having a signed agreement.
When Hawkins finally got around to presenting Mrs. Clifton and her husband with an agreement to represent them, she decided that she didn't want to deal with him anymore. Her unofficial occupation is professional philanthropist, but you'd never convince Mr. Hawkins of that. Echoing the sentiments of Marie Antoinette, Mrs. Clifton's attitude toward poor Craig Hawkins was "Let him eat Big Macs!"
One of the properties Hawkins showed Mrs. Clifton happened to be a $15.5 million, 25-acre waterfront home, which she and her husband ultimately purchased. Right now, the listing broker and another company that "helped market the property" are set to split a Trump-sized commission of $600,000 – without even a bone in there for poor Mr. Hawkins.
Hawkins' company, Maury People Inc., has filed a lawsuit, but not against Mrs. Clifton. After all, unless it's in writing, a buyer has no obligation to a real estate agent. So Hawkins' company instead filed suit against the listing broker and the estate of the owner of the property.
In an affidavit, Mrs. Clifton admitted that Hawkins had originally shown her the property clear back in 2001, then again in June 2005. She also said that Hawkins "seemed to be steering me strongly" toward two other properties. This is a classic kind of irrelevant, gobbledygook argument spewed out by buyers and sellers who are intent on performing a commissiondectomy on a real estate agent.
And, as a gobbledygook bonus, Mrs. Clifton claimed that Hawkins hadn't shown her any "particularized information" on the property. Which is a euphemism for "He didn't print out a couple of multiple-listing sheets from his computer."
Attention Mr. Hawkins: You screwed up! You may as well have trusted Kofi Annan to hold your wallet for you while you went for a jog.
Having been through many commissiondectomies in my early days as a real estate broker, I am, quite naturally, sympathetic to Mr. Hawkins' plight. So I can only hope that he will learn from his mistake. Which means not expending an ounce of energy on future deals until he has something in writing from either the buyer or seller.
I should point out that in real life, buyers rarely enter into signed agreements with real estate agents. Most brokerage agreements are between a listing broker and the seller of a property.
So, how does a guy protect himself when he's showing a prospective buyer around? He "salts the record"! I first heard this term from an attorney who was explaining to me how important it is to document your dealings in great detail. I specifically recall his using the Clintons as an example of people who have mastered this art. He opined that their conscientious salting of the record is the primary reason why they themselves aren't salted away in some federal prison.
How could Mr. Hawkins have salted the record to help his cause? For one thing, he should have been in contact with the listing broker of the house the first time he showed the property to Mrs. Clifton. When I was in the real estate brokerage business – somewhere around the time Cro-Magnon man first appeared on earth – I made it a point to inundate sellers and listing brokers with certified letters. In those letters, I registered the names of prospective buyers, and kept the sellers and brokers abreast of my activities with those buyers.
To put it mildly, this made me quite unpopular with those on the receiving end of my certified mail. They deeply resented the implication that I didn't trust them. Nevertheless, I'm proud to say that I stuck to my modus operandi, which was somewhat similar to the soon-to-be-born Ronald Reagan philosophy: Trust, but verify.
Today, of course, it's not necessary to irritate sellers and listing brokers with certified mail. It's much more subtle, much easier, and much more effective to create a phone record via both regular telephones and cellphones. And, best of all, by using lots of e-mail.
This operational strategy is not by any means restricted to the real estate brokerage business. Regardless of your profession, you'll find that salting the record is always a prudent strategy. And don't be shy about erring on the side of more salt rather than less. It can be tedious work, but well worth your time.
In the case of Mr. Hawkins, a heavily salted record could have made it much more likely that he and his company would be awarded 25%-50% of the $600,000 commission due from the sale of the property. In other words, $150,000 to $300,000. For that kind of money, I'm willing to salt until my wrist falls off my arm.
Of course, the best possible way to avoid these kinds of legal hassles is to make it a point to deal with people whom you know, through firsthand experience, to be ethical and honorable. Unfortunately, in the world of real estate, that eliminates the vast majority of buyers and sellers. Which is why I'm now an author instead of a real estate broker.
Come to think of it, dealing with publishers isn't exactly a walk in the park, either. They've been committing genocide against authors for centuries.
[Ed. Note: If you are among the millions who appreciate the wit and wisdom of Robert Ringer, then be sure to sign up for Robert’s brand new e-letter, A Voice of Sanity in an Insane World, delivered twice a month. You can sign up by visiting Robert’s new website.]
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Setting Goals — And Sticking To Them – Will Help You Achieve Financial Independence
Don’t take our word for it. That’s the headline from an AP article than ran in hundreds of newspapers across the nation last week.
"This is definitely the time of year to get things started," was how Barry Armstrong, a Boston financial planner with Woodbury Financial Services put it.
"For some people, it's a bitter message. There are things that you don't like doing. But they have to be done."
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Beware of Young, Enthusiastic Fitness Coaches
By Michael Masterson
I was lifting weights in 1962, and have been reading about physical fitness for 40 years. Most of the personal trainers I talk to don't know a fraction of what I know. And yet, I wouldn't pretend to be an expert.
As my friend JM says, "A personal trainer is just someone who takes a six-week course and gets a certification. Six weeks doesn't teach you shit." (JM is a physical therapist, a qualified Pilates instructor, and has been teaching fitness to Navy Seals and professional dancers for many years.)
The worst kind of fitness trainers are the young kids who believe their mission is to get you to work harder than you've ever worked before. They yell at their clients and encourage them to do more reps with weights, without having any idea of how the body really works or how it ages.
I watched a terrible example of this – a clip of "The Greatest Loser" – on the plane recently. "The Greatest Loser" is a reality TV show that challenges extremely obese people to lose maximum poundage. The very idea of the show is stupid – and one of their instructors is an absolute maniac.
She was screaming at some pathetic 275-pound woman to run faster on the treadmill without using her hands. The woman kept saying, "I can't! I can't. If I let go, I'll fall!" And the 116-pound fitness instructor screamed even louder, "Damn it! If I tell you to release your hands, release them!"
So the dangerously obese lady – whose tendons and ligaments were not ready for this kind of running in the first place (forgetting about the pace) – did what she was told … and promptly fell off the machine and hurt herself.
My good friend EP and his wife had a similar experience. Their trainer was in incredible shape and believed that they should be in the same shape. Why? I don't know. Because he worked out two hours every day … and EP and his wife are 50-something professionals.
They were challenged by his tough workouts, and kept with him for several years. But they were always in pain and/or injured. Finally, I told them, "Don't you think it's stupid to be walking around in pain all the time? What's the purpose of all this working out, anyway? Yes, it can get your bones and muscles working better. But that's not happening for you. You are walking around crippled. And it won't help you defend against heart attacks or cancer. (You need to use Dr. Sears' PACE program for that.)
They took my advice – which was to dictate the lessons themselves, to slow them down, to lift less weight, and to spend much more time stretching. Now, they are pain-free and looking better.
Not all fitness trainers are bad. On "The Biggest Loser," one of two trainers was very good. He took time to interview his clients, assess their fitness, and determine their goals. He didn't treat them like soldiers in his private platoon. He treated them like the enormously obese and unhealthy people that they were.
The bottom line is this: Don't expect your personal trainer to know what kind of workout is best for you. Rely on what you read in ETR and on what your body is telling you … and adjust your workout accordingly.
Today's
Action Plan
If you are overweight, over 40, or over-stressed don't allow your personal trainer to push you too fast. Moving too quickly is a great way to get injured. And getting injured is a great way to sabotage your chances for success.
It's your body. Be in charge of it.
It's Good to Know: A Radio Show for Word Lovers
If you love word play and fast-paced, intelligent entertainment, you'll love "Says You!" Described as "a game of words and whimsy, bluff and bluster," this 30-minute radio program will keep you laughing while it challenges your brain.
Go to www.wgbh.org/radio/saysyou/ to find a station in your area that carries it. If you can't find one near you, some stations do Web broadcasts. And you can purchase the shows (individually and by subscription) from www.audible.com.
- Will Newman
[Ed. Note: Will Newman, a regular contributor to ETR, is the editor of AWAI's The Golden Thread online newsletter. Learn how to subscribe to it - and how to discover AWAI's proven marketing secrets - here: The Golden Thread .]
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Word
to the Wise: Operandi
A person's "modus operandi" (moh-dus op-uh-RAN-dee) is the way he functions or operates. The phrase is derived from the Latin: "mode" + "operari" ("to work").
Example (as used by Robert Ringer today): "I'm proud to say that I stuck to my modus operandi, which was somewhat similar to the soon-to-be-born Ronald Reagan philosophy: Trust, but verify."
Michael
Masterson
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