Exchange is a game of balance. I help you then you help me then I help you, and so on. What we exchange is not so much distinct things as perceived value. If I have something that I do not value very highly but you do, then it is a useful thing for exchange.

Exchanges are not necessarily financial or physical in nature. Emotional exchanges, which we use a great deal of the time, can be of surprising value. When I take my daughter to a concert, a smile and a hug is more than adequate payment. A simple thanks is all many want for much of their hard work on behalf of others.

A simple definition of trust is "delayed exchange". I will do something for you today without asking for something in return. I must thus trust that you will repay the favor some time in the future.

Without trust, exchange is confined either to an immediate exchange or else a trusted third party must be utilized. Third party "trust brokers" are more common than might be imagined. For example, a major function of banks, lawyers and friends are to act between us and others who we may not trust.

Breaking the exchange principle in a group can be a heinous crime, punishable by ostracizing or expulsion. The fear of such penalties is more than enough to keep many people on the straight and narrow.

Exchange is something like a bank account. Sometimes I put things in, sometimes I take things out. I can thus invest in helping others today so I know I can call on them in my hour of need.

The idea of social capital is that when there is a high level of trust within a social group (which can be a large as an entire country), then we will help people we do not know in the confident knowledge that others who we do not know will also help us. It is like we all have one big joint bank account.

We may need some help with the trust thing in such situations. What if someone takes advantage and asks for too much? This is where laws, trusted brokers and so on start to creep into the picture.

The Golden Rule says "Do for others as you would have them do for you." Exchange and social balance. Although others might not like the same as us, it

is a simple rule which guides many decisions in an equitable fashion.

Exchange rules are based on long-term relationships, where the balance of exchange evens out over time. However, we are programmed by these rules to the point where we will obey them even in shorter-term and low-trust exchanges.

If I give you something, then there is a social rule that says I can ask you for pretty much anything in exchange. Cults use this when they demand absolute obedience (and all the worldly wealth) of their devotees.

One of the tricks of unbalancing exchange is to make what you are offering very desirable, for example by using scarcity or other principles to jack up the value.

If I do three things for you and you do something of equivalent value all in one go, does that make us even? Unfortunately not. The equations of exchange are not that linear. We often confuse quantity of occurrences with quantity of time.

So what does this all mean?

Companies and shops will give you free samples, which then encourages you to buy the full product in return. Leaders will grant favors to their followers. These can be small strokes of attention in payment for what may be significant efforts. By giving out their attention in many, small packets, they can create a remarkable imbalance, yet still have their followers loving them unquestioningly.

If you don't have enough Christmas cards, try sending cards to total strangers. A surprising number will send you one back (and even add you to their regular Christmas list).

Politics is rife with "log rolling" and the exchange of favors. It is one reason why laws can get strangely convoluted as modifications to suit just a single person get woven into the wording.

The "rejection-then-retreat" technique (also known as the foot-in-the-door method) works by making an arbitrarily large request. When this is naturally turned down, you then retreat to your realistic request. The person now feels obliged to repay your climb-down by agreeing to your request.

A variation of this is used by sales people who make cold calls and get rejected. After the rejection, they can ask to be recommended to someone else. They can then leverage the liking principle by saying to the next person "John said that you would be really interested..."

For more persuasion principles, see www.ChangingMinds.org  BACK

Harmony Principle
Go with the flow to build trust and create subtle shifts. We like and trust people who we believe are like us and who like us. When we trust them, we are then more easily persuaded. We are also more persuaded when they do not knock our arguments.

Interest Principle
We are interested in those things that affect our needs and goals. The AIDA (Attention, Interest, Desire, Action) sales model says that the first step of selling is to get attention, which makes obvious sense. Without the attention of the other person, you cannot have any kind of conversation. The same is true of any kind of persuasion. If you want to maintain attention, you will need to constantly play to their interests.

Investment Principle
If I have invested in something, I do not want to waste that investment. Investing includes not only money, but also time and emotion. When someone makes an investment in something, it is because they have predicted the future and decided that the investment of time, energy and, possibly, money is worthwhile. They have also included gaining a return on that investment into their goals.

Once the preparer confirms they have all the correct documents in place, the "button is pushed" and the lender receives a resale package. Some management companies use third party services to order and upload documents for 24/7 service. So, assembling a resale package is quite an involved process.

Why should the homeowner pay for a resale package? The board’s job is to run HOA business, not provide special services for buyers and sellers. And it wouldn’t be fair for all owners to pay for resale packages through their fees, since the average annual turnover ranges from 10 – 20%. Just as the HOA should not pay for real estate agent commissions and loan processing fees, so should it not be responsible for the preparation of resale packages for an individual owner.

Anything that could negatively impact the value or marketability of the property needs to be divulged before closing. While there are usually statutory disclosure requirements of single family house sellers, these same disclosures are generally not required of homeowner association home sellers. This is a huge problem and here’s why:

Homeowner associations obligate their members to substantial financial obligations to the association and each other. So, while a buyer may purchase a condo in great condition and needing no repairs, that same buyer is also obligated to share the cost of certain repairs to all the condos, which may be in very bad condition. Since there is no specific legal requirements in most states to disclose these obligations, the buyer often finds out after closing when presented with a special assessment that can amount to many thousands of dollars.

Here’s the key to uncloaking this problem: The board of directors controls the quality and quantity of disclosure information. The responsible board treats the HOA like the business that it is and keeps certain basic information available such as:

Governing Documents. Includes the Declaration, Bylaws, Rules & Regulations, Resolutions which are the specific obligations each member has to the association and other residents.

Newsletters. Reveal events (renovation, litigation, etc) that could indicate a possible special assessment.

Meeting Minutes. Same as newsletter but with more specifics.

Annual Budgets for Last 3 Years. Could reveal expense trends and failure to adjust for inflation.

Financial Reports. Monthly reports comparing actual expenses to budget should be available to track income and expenses.

Collection Activity. How much of the assessments are overdue 30, 60 or 90 days? If some don’t pay, guess who gets to?

Litigation Activity. Are there any pending lawsuits that could trigger a special assessment?

Reserve Study. A 30 year plan for association maintained components like roofs, painting, paving, etc. This is the biggest time bomb in the many homeowner associations that lack one. Failure to plan for predictable long range expenses often mirrors a lack of ongoing maintenance which causes spiraling property values.

Key Contact Information. How to contact the board and manager.

From Difficult to Reasonable
As with any relationship in life, we hope for harmony but often experience a share of "difficult" people. Some may remember their first encounter with that bad kid at school. Others may recall the co-worker who made every meeting unbearable with constant whining. Serving on a board of directors or committee for a homeowners association (HOA) can be challenging in many ways; dealing with individuals who are difficult is part of the landscape. However, there are issues to consider, whether we are the recipient or the cause of this negativity.

There are some fundamental techniques in dealing with challenging personalities, whether you encounter them at an HOA meeting or just walking around a neighborhood. First, try to understand what motivates people to be difficult. Some owners may attend a board meeting because they received a rule violation notice. There could be other underlying reasons for the tirade. Second, don’t discount the value of criticism. If we step back from our defensive inclinations, we might find a great suggestion or solution. Finally, maintain realistic expectations. It’s true that an HOA has rules, but those rules may have just enough flexibility to enable the board to compromise.

There are simple strategies for just getting along with difficult people:

1.Listen for understanding – amidst the rant from a difficult person, it may be difficult not to tune them out, but try harder to listen.
2.Demonstrate empathy – understand the difficult person’s feelings.
3.Manage your attitude – you can be perceived as being as difficult as the other person.
4.Control your emotions – assume it’s not personal and remain as professional as you can.
5.Begin with something positive – you may know what’s coming at a meeting so you can be prepared.
6.Build on agreement – find common ground and build on it.
7.Avoid "why" questions – these can easily be construed as accusatory.
8.Stay focused on the issue – straying from it makes finding a solution more difficult.
9.Avoid personal attacks – even if you are being attacked, don’t respond in kind.

Remember, people are important – even the difficult ones – and we have a choice every day whether to have a positive or negative effect on them. Even more important, we may sometimes forget that, as board members or community volunteers, we might be the difficult ones based on how we choose to react to challenging people. Can we admit when we are wrong and accept constructive criticism? Can we overlook our own need to be right and recognize that there is an issue at hand to be addressed by both ourselves and a difficult person? Granted, some of the strategies are easier said than done. However, when a person becomes difficult at an open meeting, practice the tips above and focus on the goal of converting that difficult person to a reasonable and happy homeowner.

Thomas Paine wrote "Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one." In his day, Paine had the power of the printing press on his side. None of today’s communication marvels were available to him. Can you imagine how many friends he would have on his Facebook page or how many Twitter fans would be following him? Humor aside, it is fair to say that most volunteers can communicate far better with the members today than Thomas Paine could back in his day. Is your HOA a better place because of your board’s communications and leadership?

Lack of transparency is a common complaint from disgruntled members. A homeowner association board that sheds as much light as possible on its governance is more likely to thrive than one that operates in secrecy. The lack of effective communications has made the very people that elected them see their leaders as an intolerable evil. The irony is that in most cases, those who are governing are doing their level best to serve the members.

Thomas Paine wrote "the harder the conflict, the more glorious the triumph". While governing a homeowner association may not be as great a challenge as the American Revolution, combining communication skills with well executed governance will ensure success.