Business
Too Many Positives Make a Negative for Online Retailers
There is a term for those suspiciously enthusiastic online reviews and testimonials that read like they were written by the business owner or paid for.
It’s called “astroturfing,” and according to Canada’s Competition Bureau, it’s the practice of creating commercial representations that masquerade as the authentic experiences and opinions of impartial consumers.
While companies that engage in such practices believe they are doing themselves a favour, researchers in The Netherlands and Germany have found that overly glowing product reviews can do more harm than good.
Such reviews encourage more people to buy, but they also increase the probability of returns, and for a simple reason: The higher an item is rated, the more shopper expectations rise.
“Once the product has been purchased and inspected at home it may not meet these high expectations formed at the moment of purchase due to the reviews,” according to the researchers, Alec Minnema and Tammo Bijmolt at the University of Groningen and Sonja Gensler at the University of Münster.
In fact, most products are not returned because of product defects but because customers are simply disappointed by the product overall. Only five per cent of returns in the electronics category are related to defective products, according to data collected by the researchers.
Returns are an expensive problem for online retailers – as much as 30 per cent of products purchased online are returned, at a cost to retailers of between $6 and $18 per return, say the researchers.
In the U.S., customers return $264-billion (U.S.) worth of products annually. A one per cent decrease in the returns rate could reduce costs by an average of $17-million for large U.S. retailers, according to the researchers.
They found that a one point increase in positivity in reviews increases the likelihood of purchase by 9 per cent in electronics and nearly 15 per cent in furniture. It also increased the probability of returns — 11 per cent in electronics and just over 10 per cent in furniture.
“Retailers should provide information that sets the right expectations for customers,” the researchers concluded. “Currently, many retailers encourage customers to write reviews. Given our results, it is important that the reviews reflect all buyers’ opinions regarding the product.”
The data was collected from a major European online retailer between 2011 and 2013 and included 8.8-million page-views that resulted in 631,063 purchase transactions for 2,164 different products in electronics and furniture.
The retailer asked to remain anonymous.
No good deed…
You’re at a critical point on a project at work. After long hours spent collecting data and puzzling over how to approach the problem, you are flying down the home stretch, finish line in sight.
A colleague appears at your desk, distraught. Her proposal just got torn apart in a meeting and she needs kind words and coaching.
What happens next?
If you want to get ahead at work, new research shows, you may have to turn her down.
Organizational citizenship behaviour (OCB), has long been regarded as a win-win-win – the person who needs help gets help; the person providing the help gets a psychological and social boost from the interaction and the business benefits because everything runs more smoothly as a result.
But research led by Klodiana Lanaj at the University of Florida explores the idea that helping may consume so-called regulatory resources – the reservoir of internal energy you draw upon when you pay attention, persevere at a difficult task or manage emotions.
“My recent research suggests that responding to help requests at work is a double-edged sword,” wrote Lanaj in a recent article at hbr.org.
“On the one hand, helping co-workers in need is energizing and replenishing, particularly when that help is perceived as beneficial to co-workers – in other words, when you can see that your help has actually made a difference,” she wrote. “On the other hand, helping co-workers in need drains that helper’s cognitive and emotional resources, leaving them too tired and depleted to perform subsequent work tasks.”
In a study published in the Journal of Applied Psychology, Lanaj and co-authors Mo Wang at the University of Florida and Russell E. Johnson at Michigan State University, surveyed 68 managerial and professional employees every day for 15 consecutive workdays. They asked them to report how many times they responded to help requests and whether they thought their help had been beneficial. They asked them to report on their energy levels.
It turns out that for some people, the energy expended by helping drained their own resources to the point where they had less energy to pursue their own work.
Particularly at risk are those inclined to be the most helpful – people who highly value collective interests and adhering to moral obligations regardless of the costs and rewards of doing so.
The researchers suggest that such people should be more judicious in their helping, or that they counteract the depleting effect of their actions by taking breaks, having a nap or a coffee.
The study also recommends that help-seekers ask themselves if they can solve the problem without assistance, perhaps by consulting a manual or an online resource.
“It’s important for help seekers to realizing that asking for help (especially when it is done multiple times per day) has detrimental effects on helpers. This is not to say that co-workers should avoid seeking help, but that they ought to consider the magnitude and solvability of the issue before doing so and avoid continually seeking help from the same person.”
Snappy comebacks show charisma
The socially inept nerd who can answer trivia questions lightning-quick is a pervasive stereotype, but mental speed is actually a marker for charisma, according to research.
Australian researcher William von Hippel at the school of psychology, University of Queensland, recruited 400 participants and assessed them for intelligence, mental speed and personality, and had them rate one another on a charisma scale.
Participants who were able to answer common-knowledge questions more quickly were evaluated by their peers as being more charismatic than participants who responded more slowly, according to the results.
While mental speed is a sign of a high-quality brain, in much the same way that physical speed is a sign of high-quality muscles, the key finding in the research emerged after the results were controlled for IQ.
While speed is a predictor of charisma, IQ is not.
“It turns out it’s more important to be fast than smart if the goal is to be charismatic,” said Hippel.
Mental speed allows people to judge the demands of the situation, mask inappropriate initial reactions, consider a repertoire of responses and their social acceptability and make time-sensitive, humorous associations.
In other words, they’re less likely to put their foot in their mouth.
“When you’re talking to someone, particularly about an emotional topic or when you’re trying to make a joke, you have to respond within a certain window of time,” according to Hippel.
“For example, if you surprise me by telling me you’re gay, even if I’m cool with that, if I take too long to say that’s no big deal you won’t believe me and you’ll think I’m bothered by it,” said Hippel. “Same with making a joke — if it takes too long it’s pathetic rather than funny. So a faster thinker will have a wider repertoire of responses that (s)he can consider in the necessary time frame than a slower thinker.”
Quicker thinkers also notice opportunities first, giving them an advantage in the workplace and business, Hippel said.
“Because people intuitively know that smarter people are also faster, they’ll also be perceived as more intelligent,” said Hippel.
The bad news is Hippel said there is no way he knows to train to improve mental speed.
It is that time of the year for you to renew your mortgage and all you want to do is sign the papers and get done with it. However, you shouldn’t be in a haste to renew your mortgage without doing a little research.
A good fraction of Canadian homeowners—about 27 per cent of them—who carry a mortgage have automated their renewal process, according to a survey by Angus-Reid. While the aim is most likely to avoid any penalties or stress that comes with missing a renewal, this approach can prove costly. Automatically renewing your mortgage means you lose out on great opportunities to save money and take further advantage of any new products and features on your mortgage that may be advantageous to you.
Typically, mortgage renewals occur at the end of your existing mortgage term and the most popular period is usually 5 years—though it can range from 1 to 10 years. Depending on your mortgage type, with a fixed rate mortgage calculator, you can easily estimate your monthly mortgage payment and know how much you’re due on your next payment.
However, before you make your next mortgage payment, here are some important tips that would help you get the most out of your mortgage renewal.
1. Review your current goals
It is possible that your financial needs must’ve changed since you first applied for a mortgage. Therefore, before your sign that renewal slip, you may want to take another look at your financial goals.
For instance, if you’re currently on a five-year fixed mortgage, your renewal would likely come with another five-year fixed mortgage. If you’re certain you would be staying in your home for that amount of time, then renewing it would be great. However, if you have plans of relocating to a different city in a couple of years, then a shorter mortgage term would be best.
Other financial goals that you may want to consider is whether you want to refinance your mortgage or access some equity with Home Equity Line of Credit (HELOC).
2. Ask for better rates
Before your mortgage renewal is due, your current lender would most likely try to get you to renew early. Typically, you will receive a renewal letter from your lender 6 months and 4 months before your renewal date. While they may offer you a rate that is lower than what you currently pay, it is often not the best rate you can get.
The renewal offer given to you by your lender is often not the best deal and in an increasing rate environment, negotiating your renewal rate is even more important. Signing the renewal letter right away because of some discount offered by your lender might seem tempting but you are potentially losing out on a lot of savings by not considering other available options.
3. Shop early for better rates
Rather than just accepting your current lender’s renewal offer immediately, you can start searching early for other providers and comparing their rates to see which one is most favourable for you. If you begin at least four months before your renewal due date, you will be giving yourself enough time to make a switch, if necessary.
While there are no major penalties if you choose to switch providers, there are some charges incurred that are typically covered by your new mortgage provider. You may not be able to change your mortgage provider until the actual renewal date, but this would give you enough time to find the right product and sort out every required paperwork.
4. Take advantage of a renewal rate hold
A mortgage renewal rate hold allows you to lock in a particular mortgage rate before your renewal is due. Normally, rate hold can last for about 90 to up to 160 days, protecting you from increases in interest rates.
During this time, you can comfortably compare rates months before your renewal date just to find a better deal. If the interest rates increase during your rate hold period, you would have nothing to worry about. Also, should the interest rates decrease, you can still negotiate for a new lower rate with your lender.
5. Switch mortgage lenders
Cutting ties with your current lender can be difficult—at least that’s the impression most lenders give to home buyers. But don’t be afraid of switching lenders, especially when you’ve found a better rate elsewhere.
Remember, getting a better deal on your mortgage can save you few thousands of dollars. Switching providers might mean you have to go through requalification but that is not a problem as long as you begin the process early enough before your renewal date.
6. Add some extra on your principal
If you’re looking for the best time to make a bigger payment on your mortgage, then renewal time is the best since there are no limits on pre-payment.
Making a lump-sum payment can put a huge dent in your mortgage amortization and you would be saving a lot of money on your total interest cost.
7. Consider switching to a broker
If you’re not already using a mortgage broker, then renewal time might be the best time to consider making the switch. According to a study by the Bank of Canada, most homebuyers who used a broker got a much lower mortgage rate than those who used one of the big banks.
Mortgage brokers are a better alternative because they have access to several lenders who offer different competitive rates, unlike the bank. Therefore, if you’re looking to get the best deal on your mortgage, switching to a broker might be a great move.
The path to buying a house isn’t the cheapest nor the easiest. Since the COVID-19 pandemic began last year, there has been several opportunities and challenges for first-time home buyers in the Canadian real estate market.
For some, sudden changes to their lifestyle created better opportunities to improve their savings plan while for others, such plans were halted due to the economic impact of the pandemic and rising home prices in real estate markets across Canada. According to the Canadian Real Estate Association, over 550,000 properties were sold in Canada last year, a new record for the country’s real estate market and a huge boost for the Canadian economy.
If you are a prospective buyer, looking to purchase a home within the year or just planning for the future, having access to the right information, resources and support can be crucial during your home-buying process. Many people—especially first-time home buyers—easily fall into home debt due to a lack of proper research into the market.
There are some important factors to consider in ensuring that your mortgage works best for you by not only saving you time but money. However, before you start searching for a home to buy, you should have a good idea of just how much you’re able to afford for one.
Checking your credit score using a Canadian mortgage calculator before applying for a mortgage, would give you a realistic price range and equally inform you of your chances of getting your mortgage approved.
Here are some important mortgage tips to help you save time and money while house hunting:
1. Know the penalties on your mortgage
There are several reasons why anyone would want to sell their property. From changes in your financial or marital status to getting transferred to a new location due to either school or work. However, these circumstances could lead to you selling your home and breaking the terms of agreement on your mortgage.
If you’re on a variable-rate mortgage with one of the major banks in Canada, to successfully break your mortgage, you would need to pay about 3 months’ worth of interest. For a fixed-rate mortgage, the cost is much higher than 3 months of interest and there’s also the option of an interest rated differential (IRD). This is typically based on your remaining mortgage balance and current mortgage rates.
To avoid penalties on your mortgage, apply for a portable mortgage that allows you to transfer your existing mortgage to a new property and even combine it with another loan, if necessary. There’s also the option of an assumable mortgage, where you can transfer the mortgage to a qualified buyer instead of breaking it.
2. Inquire about pre-payment privileges
When buying a home, you need to understand how rising interest rates would affect your mortgage. Without having any pre-payment privileges, the larger portion of your monthly mortgage payment would go towards the interest against the principal—making it harder to complete your mortgage.
Once you have pre-payment privileges, you’re offered enough flexibility to repay a percentage of the principal on your mortgage before the amortization period is over—and without any penalty. In fact, some lenders may even offer you their best rate to avoid giving you the option of pre-payment over a fixed period of time. Therefore, it is important to ask your lender the specific kind of pre-payment privileges you enjoy on your mortgage.
The amount of money you save by taking advantage of pre-payment privileges is quite substantial. For example, if you took a $300,000 mortgage at a fixed rate of 3.29% over five years and is amortized over 25 years. By making a pre-payment of $2,000 annually, you would save about $21,787 in interest and finish paying off your mortgage almost 4 years faster—assuming the interest rate was fixed throughout the amortization period.
You can always use a mortgage calculator to check much you would be saving by making extra mortgage payments annually.
3. Know the benefits of making a less than 20% down payment
Typically, when house hunting, the recommended amount of down payment you need to make is 20% of the property cost. However, you mustn’t always pay that high to get the best deal.
Surprisingly, lenders offer the best interest rates to those who want high-ratio mortgage because they have less than the recommended 20% down payment. This because a high-ratio mortgage borrower has a low risk against losses.
Default insurance makes it a lot cheaper for lenders to easily fund the mortgage loan, allowing them to transfer some of the savings—in form of lower rates—back to the borrower.
It is important to always carry out thorough research before applying for a mortgage to know what the best rates are, if a broker is more advantageous than a bank, or simply how you can get the best credit scores.
BENGALURU (Reuters) – The outlook for major global housing markets is brighter than previously thought due to expectations for a broad based economic recovery and easy monetary policy, with only a low risk that a COVID-19 resurgence will derail activity, Reuters polls showed.
Over 100 million people have been infected by the coronavirus, leading to a healthcare crisis and deep economic recessions, but fiscal and monetary stimulus, and the rollout of vaccines, mean the global economy is set to recover this year.[ECILT/WRAP]
While already high unemployment caused by the pandemic is expected to rise further, the Jan. 15-Feb. 1 poll of over 130 property market analysts showed average home prices would rise this year and next in most countries polled.
That compares to largely pessimistic predictions made in September.
An economic rebound, loose monetary policy, government stimulus, pent-up demand and tight inventories were expected to boost housing market activity to varying degrees in Australia, Britain, Canada, Dubai, India and the United States.
“A solid economic recovery bolstered by more fiscal stimulus, still-low mortgage rates, and unmet demand should continue to prop up home sales and construction in 2021,” said Gregory Daco, chief U.S. economist at Oxford Economics.
“We expect some gradual moderation in price growth over the course of 2021 as home sales cool, but sparse inventory will keep a solid floor under home prices.”
Reuters Poll: Major housing markets outlook https://fingfx.thomsonreuters.com/gfx/polling/bdwvkybkqvm/Reuters%20Poll%20-%20Global%20housing%20markets%20outlook%20-%20Feb%202021.PNG
Three-quarters, or 77 of 102 analysts, said in response to an additional question that the risk of a COVID-19 resurgence derailing housing markets this year was low.
Although the U.S. economy on average contracted last year at its sharpest pace since the Second World War due to the pandemic, it had little bearing on housing market activity, an immunity the sector was expected to carry this year.
Despite the recent surge in coronavirus infections and renewed restrictions imposed in the United States, house prices there were forecast to rise over the next two years and activity was expected to continue on a strong course. [US/HOMES]
“The recent COVID-19 surge has not had any noticeable impact, with transactions near record high levels despite record high case growth,” said Brett Ryan, senior U.S. economist at Deutsche Bank.
“Pent-up activity from COVID-19-shutdowns earlier in the year will soon start to wane and transactions will likely normalize. More housing supply will come online as vaccination picks up at the same time that base effects will start to roll off.”
Reuters Poll: Global house prices outlook – Feb 2021 https://fingfx.thomsonreuters.com/gfx/polling/xklpylyqbvg/Reuters%20Poll%20-%20Global%20house%20prices%20outlook%20-%20Feb%202021.PNG
When asked about the primary driver of housing market activity this year, over 55% of respondents, or 57 of 101, chose an economic recovery and easy monetary policy.
Of the remainder, 20 analysts named a desire for more living space and 18 said a successful vaccine rollout, while six chose fiscal stimulus.
Australian and Canadian house prices were expected to rise significantly this year and next, helped by low mortgage rates and massive fiscal spending. [AU/HOMES][CA/HOMES]
When asked what was more likely for housing market activity, 58 of 100 respondents said an acceleration. The others expected a slowdown.
Those views were swayed by a somewhat modest outlook for the British, Dubai and Indian housing markets compared to the rest.
Indian house prices were expected to barely rise this year despite an economic recovery and supportive policies, and Dubai house prices were predicted to fall at a slower pace this year and next compared to the previous poll. [IN/HOMES][AE/HOMES]
British house prices were forecast to flatline this year.[GB/HOMES]
“While we expect a strong start to the year, we expect momentum to wane following the end of the stamp duty (property sales tax) holiday in April. Towards the end of the year the housing market should settle,” said Aneisha Beveridge at estate agents Hamptons International.
