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.
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.
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:
- Florida room over looking an open field frequented by wildlife
- Shady backyard
- Large fenced yard.
- Privately laid out
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.
If you need more information about the 80/20 rule, do not hesitate to call our office.