Influence: The Psychology of Persuasion by Robert B. Cialdini

I would like to share book that I read recently. We can exactly know how these weapons were effectively used by RE companies & brokers so far.

This book is psychological research on factors that influenced us to say ‘yes’ or ‘no’ at various events /situations that normally occur in everyone’s life but we really would not see the outcome or results of our response when we committed. Robert B. Cialdini is professor of psychology at Arizona State University. This book is his life time research on people’s behaviors and he took various roles during his research as door to door salesman, marketing guy and PR agent etc.


Author talks about the ‘weapons of influence’ that normally enterprises and other people use for their gain over the society which means the normal public. Prof. Cialdini found six common traits of people that influence an individual to make any decision.

Reciprocation – Based on the widespread human culture and evolution, the rule requires that one has to try to repay what another person has provided by means of any service/gain. Not repaying is considered as rude or uncivilized in our society. Free food samples at malls and stores.

Commitment and Consistency – It is easier to resist at the beginning than at the end – Da Vinci. It is always our desire to move with the society, colleagues, friends or relatives on making decisions or on deciding lifestyle. We all like to get approvals from the above mentioned social set up. I know many people who signed on the dotted line for the word of a marketing guy ‘just sign we will take care of it, don’t worry’ for their investments, mortgages just because others did so; dared to ask questions.

Social Proof - This is about how a person likes the society to view his actions; this comes of out his skepticism about other people’s reaction. When he is not sure about the action he would tend to follow the predecessor. This is an easy experiment for us who live in India. Next time you come across a beggar at a temple, train or bus stop; people normally look for a predecessor. Try for once the role of predecessor and see the results.

Liking – People tend to say ‘yes’ to individual they know and like well. There are three main factors for this behavior. Physical Beauty – This halo effect makes people to yes. Similarity – We like people like us by appearance or behavior etc. Increased Familiarity – Repeated contact or information about a thing. (Advertisements, stock recos.) Why are we spending so much time and money on some of the bakwaas movies of Bachans, Khans and Rajinikanth though we know already? (No offense meant)

Authority – This is very simple to understand. We will do whatever our boss says with “I will take care of it, don’t worry’. Individual will not stand up and say ‘no’ even if he knows something is wrong. You might have read a lot in newspapers these days about 'Satyam'


Scarcity – Another simple one to quote an example under current scenario. You might be seeing lot of advertisements from real estate developers, car companies and banks with a limited time offer “Only for next three days” or “Pre Launch Discount – Very few flats”. Cool that’s it.

I read and watched Cialdini talking about this; I can go on writing about this book. I have listed only main 6 items and there many examples & other weapons detailed in the book. Get a copy if you want to overcome or positively use these 'weapons of influence'



Thanks Vik for giving the oppurtunity.

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Unscrupulous real estate brokers will cheat you

The Hindu reports

Some go strictly by an unwritten code. They can be called honest brokers

Middlemen, or brokers as they are called, are found in almost all major business deals today. They advertise the sale, educate the client and broker the deal by functioning as a go-between.

It is in the property business that they are thriving. However, many believe that honesty does not always pay in brokering. That is, perhaps, why some real-estate middlemen become rich overnight. Their wealth often makes the buyer and the seller grow suspicious. But their capabilities in brokering and striking deals find little parallel.

They usually come as glib talkers. Their payment is fixed, often as a percentage of the sale value. In most property deals, brokers get two to four per cent of the total value as commission. Some go strictly by this unwritten code. They can be called honest brokers.

But there are others who do not care for the commission. Their aim is to strike the deal at any cost. And, often, they play an unconscionable game in achieving that end.

Desperate sellers

Their victims are usually desperate sellers. If you want to sell your property somehow, better beware. You may not enjoy the complete benefit from the deal if you fully trust the broker. Better make sure that you interact with the buyer.

Unscrupulous brokers often create situations where the buyer and the seller never see face to face. Their modus operandi is simple. They may approach you, saying that your property is not worth the price you ask.

After waiting for some time, you may be prompted to reduce the price. Then, they may approach again and make a negotiation.

For example, if you expect to get Rs. 10 lakh for your property, the broker offers Rs. 8 lakh or so. You may be somehow prompted to accept the offer.

The broker will tell you that if this opportunity is not grabbed, you will never get a better price.

Differing rates

The broker at the same time approaches a potential buyer offering him your property for Rs. 10 lakh or above.

He may be ready for a bargain. Yet, the price of sale fixed for the buyer will be more than the price of sale set for the seller.

The difference may be lakhs of rupees. But neither the seller nor the buyer gets the benefit. Only the broker makes money.

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NRI realty investments drop by over 50%

NRI realty investments drop by over 50%
26 Feb 2009, 0044 hrs IST, Avinash Nair & Parag Dave, ET Bureau

The result: NRI investments in India-based properties dropped by over 50% this season, with the four metro cities and “NRI-heavy” mirco markets in states like Gujarat and Kerala being among the worst hit.

“Compared to last year, the drop in NRI interest in India-based properties has been almost 50% in all sectors. The metros showed a sharp drop in demand, largely owing to the steep prices”, says Sanjay Dutt, CEO - business, Jones Lang LaSalle Meghraj (JLLM), a global real-estate consultancy firm. “Very few luxury homes have been sold as compared to last year”, he adds.

At a time when the domestic demand in micro-markets in Tier-I, II and III cities began to slump in the third quarter of this financial year, the developers were hopeful that the demand from the NRIs will pep up the sentiments in the realty markets.

However, the global slowdown and the resulting slump froze the bullish sentiments among NRIs. “Though a far-from-spectacular number of transactions have indeed taken place this season, generalised job insecurity and a desire to conserve available cash among IT employees abroad has curbed investment demand for high-end properties, Mr Dutt said adding that the response was “significantly muted” from the NRI community this season.

The sharp corrections seen in some larger cities has also led to an “acute wait-and-watch attitude among NRIs who - just like everyone else - are now very price sensitive”, he explained.

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DLF slashes apartment prices on OMR

Times Of India reports

CHENNAI: Shaking up the city's realty market, DLF on Monday announced a hefty price cut, ranging from Rs 3.6 lakh to Rs 12.6 lakh, for its residential project Gardencity - on the Old Mahabalipuram Road (OMR).

It would benefit existing as well as new customers, said K K Raman, executive vice president, DLF Chennai. The builder has introduced four price slabs, three for old customers and one for new entrants. Those who booked apartments during the soft-launch of the project, at Rs 2,800 per sq ft, would get a discount of Rs 300 per sq ft. The new price for those who booked at Rs 3,000 per sq ft last year is Rs 2,550 per sq ft. The maximum discount of 18.75 per cent Rs 600 per sq ft has been given to those who booked at Rs 3,200 per sq ft between August 2008 and February 2009. The price for new customers is Rs 2,650 per sq ft; the price will hold till May 31, 2009.

While the minimum savings on the smallest apartment 1,200 sq ft at Rs 300 per sq ft works out to Rs 3.6 lakh, the maximum benefit for the largest apartment 2,100 sq ft at Rs 600 per sq ft is Rs 12.6 lakh. This is also the highest price cut announced for an ongoing project by any promoter in Chennai after the economic crisis set in. Significantly, the promoter has also decided not to collect any interest for delayed payment from existing customers.

Speaking about reasons for taking such a drastic step, Raman said: "With unprecedented events in the world economy affecting the real estate sector here, bringing changes in input cost and interest rates, DLF went back to the drawing board and created further efficiencies. These benefits are being passed on to consumers."

DLF entered Chennai's residential sector with a bang in January 2008 by announcing the biggest project of 3,493 apartments spread over 53.5 acres in Semmanchery, 2 km off OMR. Its soft-launch made headlines with close to 2,200 people booking flats in less than two weeks. All major empanelled realty consultants were in the race for clocking the maximum number of bookings for the project. Three months later, when the formal launch happened, several hundred customers opted out, perhaps anticipating the market downturn in the months to follow. The DLF sales team took several months to make up for those cancellations. Currently, the project has about 1,800 bookings in the first two phases.

Ramesh Nair, MD, Jones Lang LaSalle, an international realty consultant, said: "DLF's price revision could drive up demand for the project as it becomes more affordable for home buyers. It will also lead to most developers reducing their unit sizes and building specifications apart from reconsidering their pricing strategy."

At least half-a-dozen residential projects on OMR, in which private equity funds, mostly foreign, have been parked on a pre-agreed condition that sales will be effected at a minimum price of Rs 3,200 per sq ft, will be affected by the DLF move. Also, customers who had booked apartments in other ongoing projects on OMR at higher prices could apply pressure on their builders. In short, a price correction for properties on the much-hyped OMR is perhaps underway.

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Goldman Sachs Research - Building up to a crisis

Also shows the trends are the last downturn in 1996.

Via R.N. Bhaskar at livemint.com. The original PDF can be found here.

Quoting Bhaskar:

The Mumbai attacks tipped real estate prices down by another 5-10%. This brings the decline in real estate prices in Mumbai to around 25% from peak levels. But market watchers say real estate prices in Mumbai could fall by another 25% over the next six months. Expectedly, most developers are bracing themselves for the worst of times (see the next item). The only silver lining appears to be the reduction in rates on home loans. But with consumers expecting real estate prices to fall much further, it is doubtful if too many people will queue up for such loans right away.

The last time when there was a crash in property prices (in 1996), it took four years for real estate prices to bottom out. This time, while property prices have fallen 25% rather sharply, the bottoming out is expected to take at least another year. So, evidently, the real estate sector could experience either a sharp downturn, or a slow prolonged one (see table).

Check out the article.

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For a responsible citizen, is investing in land the wrong thing to do?

Like a few other NRIs, I got carried away during the boom years of Bangalore Real Estate and invested in land. I tend to think I am a responsible citizen, so in order to avoid the normal trappings of black money, went with a 'BDA approved developer' in an approved layout. All the money I put in was accounted for money - directly from my savings earned through my full time job. I made sure the money I paid was properly accounted for, receipts issued and so on.

To my surprise, at the time of land registration, the land was being registered for a fraction of what I paid for and the rest of the money going towards 'community development' towards the developer. Again, since this was all documented correctly in the documents I signed and since I had written proof, I didn't think twice about this. I was now a proud land owner in Bangalore.

Early 2007, I visited India and tried to sell the land. I was told that the best deal I could sell the land was through a 50:50 split of black vs white money. Even if I find a buyer to pay completely through white money, I would run into trouble trying to register the land at that face value, since the face value might be much higher than the prevailing rate or the rate the Government sets as fair price value.

Now the quandary. I dislike black money. I strongly feel it feeds corruption, feeds the mafia monster and in general prevents India from truly becoming the great nation it ought to be. From a pure investment point of view, as white money, I have barely beaten the Fixed Deposit rates offered by the banks and I have generated an equivalent amount of black money. The preferred way of disposing off the black money would be to re-invest the money into real estate, thereby feeding the corrupt system even more fodder. I disliked the idea and I haven't sold the land yet.

Every person I talk to treat this with an very casual attitude, "Every one does it, so what is the big deal?" - "There are much bigger fish to fry in India, no one comes after you and me".

In my view, it is pretty callous and the domino effect caused by many of us small investors is what drives the parallel Indian black economy. The more you feed the mafia monster, the more it grows. It controls countries in the long run.

Hence the title of the blog. For a responsible citizen, is investing in land the wrong thing to do? To be very clear, I am not looking for suggestions of what to do with black money - I am looking to hear from you what responsible citizens would do to avoid the black money mess in the first place.

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Prices of starter homes

This is my first post to this excellent blog. Thanks to Vik for the opportunity.

One of the blogs I follow regularly is The Big Picture. Barry had an extremely interesting blog yesterday about home prices (in the US), but the similarities are very striking in India as well.

Real Estate is unique from most other goods and services, in that the purchase is not independent of other transactions. Buy 100 shares of stock, or a new or used car, or a can of soup, and only two parties are involved: The buyer and the seller.

Buy a home, and you are likely involved in a long transaction chain with five, six or even more other buyers and sellers. A newlywed couple buys a starter home from a family (with another child on the way), who are moving to a bigger home, and whose seller is moving to an even nicer part of town, and so on. It is a long chain, not of mere lateral moves, but increases in size, cost (and property taxes). If any of those sales fall through, the entire chain collapses.

And therein lies the problem.

The concept of constantly upgrading your home may not be as common in India, but has the real estate industry in India completely ignored the long tail of non IT earners? Entry level two bedroom apartments in Bangalore seem to sell for about 30 lakhs in a reasonable neighborhood, which given a Rs.30,000 per month salary, is about 9-10 years gross annual income.

Assuming this recession cleans up the speculators in the Indian real estate segment, in my opinion, the resurrection of the realty segment totally depends upon the long tail entry level homes.

I think we are somewhat beginning to see this happen already in Bangalore. From a recent Craigslist ad:

You would be delighted to know that DLF's premium homes project in Bangalore – WESTEND HEIGHTS, DLF BTM Extn. is now being launched as Westend Heights, New Town - DLF BTM Extn. We have completely redesigned the project to bring you an even better lifestyle experience than before to maximize comfort and convenience.

The new mix has come with an unbelievable price!

Apartment area Unit rate

1085 sft - 1225 sft Rs. 2000 / sft
1345 sft - 1410 sft Rs. 1900 / sft
1570 sft - 1820 sft Rs. 1850 / sft

This is an Unbelievable offer .Could you afford to miss it out ......

Is this the start of a trend? Is sanity returning?

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