From wikipedia:
The self-fulfilling prophecy is, in the beginning, a false definition of the situation evoking a new behavior which makes the original false conception come ‘true’ This specious validity of the self-fulfilling prophecy perpetuates a reign of error. For the prophet will cite the actual course of events as proof that he was right from the very beginning.”[1]
The more things are fine where I am, they aren’t where you are, I get that. You want me to fear what you feel, but I cannot touch what you see. I find it insane at how the phenomenon works really. One lady walks into the office hating her life, she can’t close a home to save her life this month, the mortgage is due and she’s stressed. Like a virus, her mood and attitude sets off a chain reaction to all that surround her- she passes on her worries, stress, and fears. Before you know, everyone needs a stiff drink and begins feeling her pressure even though they’re just fine.
As some (including myself) try to remain positive around the blog-o-whatever about the mortgage industry, there are already those who cannot stop warning and passing along their own fears. It is already preordained that we will have a mortgage meltdown because the virus of words is already spreading.
Rather than being responsible, acknowledging there is a problem, many would rather run around yelling fire as opposed to simply grabbing a fire extinguisher of solution and spreading it around to quench the fears of those trapped inside. I can see some pundints want me to go along and jump on board the sorrow, but my fear is that perpetuating the maddness might just feed a perfectly fine owner into believing his rate is awful, the home is no longer worth what he paid- “I guess it’s time to cut our losses,” he says, not realizing that he was never in a crisis in the first place. But that guy on the blog, and on TV said he was.
I know it’s coming, not because it had to, but because you keep insisting it already has.
Thomas Theorem said:
“If men define situations as real, they are real in their consequences.”
So now that we know it’s coming, what shall we all do about it? I’m doing a few things like; creating a shortsale team to assist sellers, offering move-down programs to those who aren’t so much in a bad way-yet, talking about it with sellers that call, offering advise on when to get out, and when to stay, talking to lenders about refinance options for those who might not need to move if we can do something now before they begin missing payments (not charging for that by the way, just guiding), calling past clients to see how they are, and that they’re okay. Anyone have more suggestions? Feel free to let me know…
jp moses
August 11, 2007 at 9:41 pm
I’d also suggest you add to your list to create a short list of trustworthy real estate investors – folks who are interested in buying preforeclosure, who can treat the transaction with integrity, close quickly with cash, and help the clients your short sale team works with to make their exit sooner rather than later. Seems like a great compliment to the short sale strategy.
…jp
Michael Cook
August 13, 2007 at 8:06 am
I think this is an interesting theory on the surface. Unfortunately, many “bubbles” are caused by real valuation issues that exist in the market. The tech was obvious and I think the mortgage issues have been long overdue. I think a better theory might be to examine the event that triggers rationality. As prices get more and more out of whack, the likelihood of a trigger event becomes very high. This could be a bad economic report or a slow down in growth, that then tailspins.
To say that there is no problem or that there is an easy fix to a problem that has been growing for years is a bit too simplistic.
B. R.
August 13, 2007 at 10:16 am
I responded with a new post by Ben Stein. Fear is a very real thing and drives people to do very insane things.
You and I are talking on two totally different levels. You’re yelling for the lenders, I’m simple telling you what it’s like here on the ground in residential. Obviously if you’re heavilly invested in subprime, you’re maybe ready to jump off of a building, but the overall hit the markets will take is still a drop in the bucket by almost all accounts of folks in the know. But the minute I see what you see down here, I’ll let you know.
Erik Hersman
August 13, 2007 at 11:41 am
Ben, this was one of my favorite posts in a long time, not just for this week’s carnival.
B. R.
August 13, 2007 at 12:10 pm
That means a lot, thanks so much.