BEWARE OF CHARISMA

These days, it can feel like everybody is trying to sell something. Usually that’s no problem, but a magnetic salesman can tempt people into making bad decisions. Over the years, I have learned to be wary of charismatic personalities who want to steer me into deals that might benefit them more than me.

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Reflecting on my career, I’ve come across some charismatic real estate brokers and salesmen, and they are really fun to work with. Their deals often feel like that have extra sizzle. Those properties often feel timely, exciting, and right. But emotions can mislead, and it’s not always the underlying properties that are creating wow factor. Sometimes, it’s the influence of a strong personality.

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In the end, a real estate deal is about real estate. Investors’ returns are going to come from managing details and execution well. But a charismatic salesman can mess with our intuitions and play on our emotions. Steve Jobs was famous for his reality distortion field that bent smart people to his world view. While Jobs might have been a special talent, he was not alone in his ability to distort reality. Charismatic leaders use that same skill every day.

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This question of influence has been on my mind recently because so many stories of high profile fraud are popping up all over the place. The massive health-tech scam of Theranos, the Fyre Festival, Volkswagen’s emissions scandal, and so many more stories are all pointing to something about human nature. There is an ample supply of gullible people out there.

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Even when things look too good to be true (as with the three scams listed above), a lot of people are willing to fork over their money. People must want to believe. Like the old proverb says, a fool and his money are soon parted.

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When it comes to real estate, I can always fall back on the fundamentals of a deal to cut through a reality distortion field. This can be much harder in different contexts, but the same principle probably still works. Behind every pitch is an actual product, service, deal, asset, etc. Set aside the story and look as directly as possible at what’s offered. Is it helpful? Is it priced fairly? What does the person or organization stand to gain from your business, and what have they done to earn your trust?

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To make rational choices, we all need to stay in touch with reality. Show me the facts and I’ll decide what makes sense. That’s how markets are supposed to work.

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