How Does the 80/20 rule applies to Home Sales?


     You have probably heard about the 80/20 rule in your profession, services, or products your company supplies to the market where you were taught that 20% is vital and 80% is trivial.
For example:

• 80% of your income is derived from 20% of your work.
  
• 80% of a business’s income is derived from 20% of their customers.
• 80% of your value to your employer is derived from 20% of your work.

   What does this mean to you as a seller planning to place your home on the market? It simply means that they are areas in your homes that deserve more attention than other areas, and that understanding this concept will save time and yield you the highest amount of Profit. Unfortunately, many real estate agents completely ignore the Pareto Principle when it comes to advising their sellers on what to focus on when staging their Home.

Focus on unique features to grab buyers’ attention:

     20% of your Home features are important. The remaining 80% are trivial. If most Sellers learn how to tap into this rule, they will not have to settle for less than their asking price . Buyers who fall in love on the 20% do not bargain over pricing; they make good offers.
Let’s assume you as a seller have a 3 bedroom/2 bath house, and let’s also assume that there are five other houses for sale nearby with practically similar features and they’re all priced with the same range. Two of those homes are facing a large pond, two others are backing to a nice reserve, and the last one is situated on a large corner lot but not considered a premium lot.
     I, as an experienced a real estate agent, took the buyer to view the two homes backing the reserve and not all five homes. Why didn’t I show him other homes that have similar layout ? simply because I had thoroughly interviewed my client and understood his needs. He was a busy man that worked in a highly hectic environment and he wanted an area in his home where he could relax and be in direct contact with nature. Bingo!
The buyer’s decision was not based on the 80% of features this house shared with the rest. Instead, his choice was strictly based on one unique attribute: a peaceful reserve where he could unwind and de-stress.
On another different instance where the 80/20 rule helped a seller receive a full offer for his home that languished on the market the market for months. A custom builder believed that if he focused on highlighting all the upgrades and the interior perks, he would impress buyers. There were other custom built homes within two miles radius that offered similar features. He did not understand why would his fancy new house sit on the market for several months. He ended up hiring our team for a limited service term to help him find that one buyer he was looking for.
      After going out to the home and analyzing its potential, we realized that he was not focusing on one feature that could changed everything. His house sat on 3.45 acres while the others were on 1 to 2.85 acres. The difference in numbers may seems small but the outcome is huge. As a marketing specialists, we highlighted the importance of the acreage and mentioned all the benefits a new buyer can enjoy owning this luxury home. Although we mentioned details and a description of the house, it was never the main selling point. In no time, our phone rang with a full offer from a buyer relocating to Florida from Chicago. We closed in 30 days. The seller was impressed, and we were happy to serve his needs.
Understanding the 80/20 rule and special feature on a home is extremely vital. Never create an advertisement similar to every other house in the area. Instead, turn attention to something different about your home. You will attract interested buyer. Buyers willing to pay FULL PRICE.

Throwing down some hard-earned cash on blackjack or craps at the local casino is enough to make some folks break out into a cold sweat. But when it comes time to buy a home, the ante gets raised to truly nerve-racking levels: They're making the biggest wager of their lives on what'll likely be their largest investment. Ever.
Owning a home has long been considered the fastest and most predictable way to build wealth in the United States. And while home sale prices are at an all-time record (at a median of $262,000 as of June) not everyone is walking away with double-digit annual returns.

1. Bridgeport, CT 
Average annualized return: 14%
Median home list price: $789,100

2. Detroit, MI
Average annualized return: 12% 
Median home list price: $260,000

3. Seattle, WA 
Average annualized return: 12% 
Median home list price: $582,400

4. San Jose, CA
Average annualized return: 12% 
Median home list price: $1,240,300

5. Palm Bay, FL
Average annualized return: 12% 
Median home list price: $270,000

6. Denver, CO
Average annualized return: 11%
Median home list price: $467,600

7. Providence, RI
Average annualized return: 11%
Median home list price: $350,000

8. Boston, MA
Average annualized return: 10% 
Median home list price: $529,100

9. Nashville, TN
Average annualized return: 10% 
Median home list price: $368,000

10. Portland, OR
Average annualized return: 10% 
Median home list price: $477,500

According to the National Association of Realtors, pending home sales are up by 0.5% from the month of December. NAR gathered this information from their Pending Home Sales Index (PHS), which is an indicator for housing activity that tracks signed real estate contracts in order to measure housing contract and sales activity.

The data they gathered uses both seasonally adjusted, as well as not seasonally adjusted data, in order to allow for the most accurate results. Their PHS Overview Chart clearly identifies their results.

Due to this information, the National Association of Realtors has forecasted existing home sales and price growth to moderate within the 2018 fiscal year. This is due to the new tax laws that are expected to impact high-cost housing markets.

What does this mean for realtors? Sell while the market is still high! NAR chief economist Lawrence Yun speculates that the rise in home sales is due to the current healthy jobs market, as well as an overall increase in wages. While this is wonderful news for the time being, Yun also predicts that consistent inventory shortages and a rise in home prices will cause sales activity to slow and gradually decrease throughout the year.

Therefore, it is better to act while the market is still hot! Traditionally, real estate has always been known as a risky game and real estate professionals must know when to make the easy bets – now is the time. Clients are more likely to sell now more than ever, especially due to the extreme increase on return on investments that have recently been released.
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Lawrence Yun states that, at the moment, “jobs are plentiful, wages are finally climbing, and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now.” Now is the time to take charge!

Seritage Growth Properties (NYSE: SRG) is making progress on its anticipated late-summer completion of a major renovation that will welcome new shops and restaurants to the East Colonial Drive area.
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Last year's removal of the Sears location at Orlando Fashion Square was the first step toward installing a 60,000-square-foot Floor & Decor location and a more than 40,000-square-foot Orchard Supply Hardware store as mall anchors. The demolition was followed up by the leveling of the Sears Auto Center, which left even more space for additional tenants.

Fast foreward about 10 months: The post-demolition debris field is now replaced by a brand new building measuring more than 110,000 square feet as heavy machinery moves earth for parking lot renovations and infrastructure improvements. Meanwhile, a new 17,127-square-foot parcel, to be erected on the former site of the Sears Auto Center, will house an Olive Garden and LongHorn Steakhouse. See the photo gallery for a look at how things are shaping up.

New tenants will add jobs, as well as broaden the retail and restaurant choices for the neighboring Baldwin Park community and downtown Orlando.

The new construction may just be the beginning of major changes for the property as DeBartolo Development Co. — the company behind the $100 million Mills Park mixed-use project — is under contract to buy the 44-year-old Orlando Fashion Square mall. The sale and new high-profile tenants are a positive turn for the long-struggling mall, which has changed hands four times since 2004 and, according to Orange County records, has an assessed value of nearly $41 million.

​In 1897, the Italian economist and sociologist, Vilfredo Pareto, discovered a very intriguing correlation after studying the different economies of several nations. He noted approximately 80% of each country’s wealth was controlled by approximately 20% of its population. Pareto called this phenomenon “predictable Imbalance”. This phenomenon was applied to more than just the wealth of a nation. He noticed that 20% of the Pea pods in his garden held 80% of the seeds and 80% of the land in his area was owned by 20% of the people.
It was soon evident that things were never equal:

20% is Vital and 80% is Trivial

Twentieth century quality management expert Joseph Juran expanded upon Pareto's conclusion by creating a general rule which became known as Pareto's Principle; that small cause(s) produce larger effects. From the 1950s to the present day, the 80/20 rule has become a general management principle as people employ it to evaluate problems and solutions, risks and rewards, efforts and results, and other productivity ratios.

When selling Real Estate, the same rule applies.

After selling plenty of houses throughout the years, I realized many families decided on one or two aspects that were important to them and not on all the features of the house. Knowing this, my marketing and selling time was cut in half. I started saving a great deal more time and getting results very quickly. I stopped selling the entire home and instead started to focus on the most important 20% of the home’s features.

Focus on the vital features instead to grab attention:

Let us look at some real-life examples of how this rule works and what impact it can have on selling your home.

CASE #1

A buyer is in the market for a three bedroom/ two bathrooms house. His agent found five houses to preview. Each meet his general criteria and are all in an area he would like to be in. The buyer and his agent drive out to look at the five houses. They all have very similar features with comparable prices. Imagine four of the houses don’t have a pool and one does. The buyer doesn’t know this because the agent didn’t mention it.

The buyer then goes out to see the four houses that don’t have a pool. He isn’t particularly interested in any of them. Then on the last house he steps outside and notices the pool! Suddenly, he is ready to make an offer. He may even pay above asking price.

His offer isn’t based on the 80% of the features the pool home shared with the rest. Instead, his bid is based on one unique attribute: a pool. The 80/20 rule predicted the sale of this house.

Sadly, in this case, so much time was wasted finding the perfect house. If only the agent known to look for the 20% differences, this may have been their first stop. On the other side, as a seller, you can leverage this rule to work in your favor by draw attention to defining characteristics in your home.

CASE #2

A real estate agent had a client visit her from out of town. This buyer did not have a list of criteria, he just liked the area. She drove him from house to house. In each case, the buyer suggested offers that were 10-20% below the asking price. He would not budge and the whole day was looking like a huge waste of time. Before the day ended, they decided to stop at one last house. It did not have much curb appeal nor was it attractive looking from the outside. However, this house broke the tough negotiator down. He was suddenly willing to offer the full asking price. What happened? What set this house apart from others? Simple, the 80/20 rule kicked in again.

The agent and her client had spent the whole day looking at houses that shared 80% of the same features. He did not care about any of those details. A bedroom was a bedroom as far as he was concerned. This house stood apart and he fell in love with the one remarkable feature. This plain Jane had something truly special. As you walked into the great room, there was a large window overlooking a gorgeous lake, and to top it off, the sun was setting below the distant tree line. That view sold the buyer. The other 80% could be improved. The view caused this buyer to stop negotiating and offer full price on the spot. This is the power of 80/20 rule.

As seller, learn how to leverage a unique selling point. Buyers who fall in love do not haggle over pricing. They make good offers.

With this mind, it is essential you take time to uncover your home’s most attractive and unique features. Compare notes with other houses in the neighborhood to see what makes yours stand out.

Potential Unique features:

• View
• Location
• Patio
• Florida room over looking an open field frequented by wildlife
• Shady backyard
• Large fenced yard.
• Pool
• Privately laid out

You get the point…

Look for the 20% difference and find a way to market it. This is how you get results. You cannot just throw the information into a listing. You must take the right approach.

Happy Selling!

If you need more information about the 80/20 rule, do not hesitate to call our office.

Real estate markets ebb and flow just like the seasons. The spring market starts hopping when the sun comes out, flowers bloom and winter is over. Conversely, fall signals the beginning of a slower market, which could be good for buyers.
If you’re in the market for a home, here are some reasons why fall can be a great time to buy.

Leftover spring inventory may result in deals
Home sellers tend to go on the market for the first time in the spring. They often list their homes too high out of the gate, which could mean that a series of price reductions follow during the spring and the summer months.
These sellers have fewer chances to capture buyers after Labor Day. By October, buyers are likely to find desperate sellers and prices that may, in fact, be below a home’s true market value.

Fewer buyers are competing
Families who want to be in a new home by the beginning of the school season are no longer shopping at this point. These families have exited the market, which means less competition. That translates into more opportunities for buyers.
Taking out an entire segment of the housing market provides millennial, single, and baby boomer buyers some breathing room. You’ll likely notice fewer buyers at open houses, which could signal a great opportunity to make an offer.

Motivated sellers want to close by the end of the year
While a home is where an owner lives and makes memories, it is also an investment — and one with tax consequences. A home seller may want to take advantage of a gain or loss during this tax year.
Buyers might find homeowners looking to make deals so they can close before December 31st and get that tax benefit. Ask why the seller is selling, and look for listings that offer incentives to close before the end of the year.

Homes for sale near the holidays signal a motivated seller
As the holidays approach, the last thing a homeowner wants is for their sale to be dragging on and interrupting their parties and events.
If a home has not sold by November, and it’s still sitting on the market, that homeowner is likely motivated to be done with the disruptions caused by their home being listed for sale.

Many homes don’t show as well once the landscaping fades
The best time to do a property inspection is in the rain and snow, because the home will be truly exposed for buyers. The same holds true for fall, when flowers die, trees start to shed their leaves, and beautiful landscapes are no longer so lovely.
Scratching the surface of the pretty spring home season and fall reveals home flaws, making it a great time to see each home’s true colors. It’s better to see the home’s flaws before making the offer, instead of being surprised months after you close.

Home sellers are making bank in today's market, realizing an average profit of 24.1 percent, or $39,900, in 2016, according to a recent study.

Sellers on the West Coast—where home prices have skyrocketed since the recession—saw higher returns. Sellers in Oakland, California took home the highest profits at 78 percent, or $235,000.

Duration is key. The average seller turning a $39,900 profit, the analysis shows, held on to their home for seven years and five months. The average seller in Oakland hung on to their home for seven years and three months.

The top 10 markets:

Oakland, CA

Portland, OR

San Jose, CA

Denver, CO

Los Angeles, CA

Sacramento, CA

Seattle, WA

Philadelphia, PA

New Orleans, LA

Boston, MA

"The housing market can change a lot in 10 years, and you see that reflected in this top 10 list," says economist Dr. Svenja Gudell. "Buying a home is one of the biggest financial decisions people will make in their lifetime, and it really paid off for sellers in these cities. Every city on this list has been growing extremely fast over the past decade, with the majority passing peak home value hit during the housing bubble."

The ability to amass wealth over the long term makes real estate the No. 1 investment for most Americans, despite proven results from stocks and other vehicles.

"It's extremely difficult to time the market, but if you're a longtime homeowner in one of these cities, you could potentially see a great return on your investment," Gudell says.

It's anyone's guess just how much higher home prices will go—and if they'll ever slow down. Besides, if you could see the future, wouldn't you rather focus your energies on predicting the winning lottery numbers?

Nationally, the median existing-home price for single-family abodes zoomed up to $255,600 in the second quarter of the year, according to the new quarterly report from the National Association of Realtors®. (Existing homes are previously lived-in residences as opposed to newly built abodes.) That was up 10.1% from the first quarter of the year and represented a 6.2% rise from the second quarter of last year.

Prices are continuing their steady climb because there simply aren't enough homes on the market to go around. As the economy has improved, more people who held off on becoming homeowners or trading up to bigger, better abodes are getting into the market.

"Household incomes may be rising and giving consumers assurance that now is a good time to buy," NAR Chief Economist Lawrence Yun said in a statement. "But these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year."

The cost of buying a single-family home increased in about 87% of the metros that NAR looked at. Prices dropped in just 23 markets.

That might explain why sales of all existing homes, which include both single-family residences and condos, fell 0.9% in the second quarter. They hit 5.57 million, according to the seasonally adjusted numbers in the report.
"With new supply not even coming close to keeping pace, price appreciation remained swift in most markets," Yun said. "An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth-building benefits of homeownership."

Even the median prices of lower-priced condos and co-ops shot up to $239,500. That's up nearly 9.5% from the first quarter of 2017 and represented a 5.4% rise from the second quarter of last year. Sorry, buyers.

The most expensive metros were, unsurprisingly, primarily in California. Silicon Valley's San Jose topped the list with a median price of$1,183,400 for a single-family, existing home, according to the report.

Silicon Valley buyers are "commonly very well-to-do people in their mid-20s to mid-40s. Most typically are working in high tech," says Realtor® Avi Urban of Keller Williams Palto Alto. "Many of them are making enormous amounts of money."

But prices fluctuate during the year depending on the season as well as the local job market, he says.
"As long as the Silicon Valley economy is doing well, I do not expect prices to go down," Urban says. "I expect prices to continue with more gradual, moderate appreciation."

San Jose was followed by its neighbor to the north, San Francisco, at $950,000; Anaheim, CA, at $788,000; Honolulu, at $760,600; and San Diego, at $605,000.

Meanwhile, the cheapest metros were Youngstown, OH, at $87,000; Cumberland, MD, at $98,200; Decatur, IL, at $107,400; Binghamton, NY, at $109,000; and Elmira, NY, at $111,600.

Realtor.com

There are inherent risks involved in an Adjustable Rate Mortgage (ARM) vs. the relative predictability of a Fixed Rate Mortgage. So why would a homebuyer consider an ARM? Here are three situations where a homebuyer should give an ARM a closer look:
1. Planning to Sell Quickly
The main risk of an ARM is at the end of an introductory period when the rate adjusts. However, if you plan on using those savings to fund home improvements and sell before the introductory period is up to upgrade to a better property, an ARM may be a good financial decision.
2. You Need to Move Again
There are many reasons why someone would need to suddenly relocate. Perhaps you expect to move soon for work, or maybe there's a need to be closer to family. If a homeowner sells their house before the first rate adjustment, they could save a great deal of money on interest over a Fixed Rate Mortgage.
3. Low Monthly Payments
This is the most popular reason to seek out an ARM. If you are confident that you will be making as much or even more money in the future, you should consider getting a monthly payment that you can afford now and begin building equity.
A Fixed Rate Mortgage is usually the best home-buying strategy because long-term planning benefits from stability and predictability. But there are situations where an ARM makes more financial sense. Contact a lender to find out which loan is best for you.