The 95/5 Principle

I know you have heard of the 80/20 principle, “The Pareto Principle”, and I agree with that principle for the general work environment. 20% of the effort for 80% of the results.  And Pareto may have even found a scientific way to prove it.  

As a real estate agent, I watch lots of folks make decisions, and I get to watch others decision making processes. I have the pleasure of opportunity for observation.

And what I see often enough leads me to come to this principle –  that people often make decisions based on something that is actually a small part of their lives.

In general application, the 95/5 principle is in effect when people buy a house where a major focus of what they want is something they will seldom use.  For example, they have to have a dining room for 2 family gatherings per year.  They require a dining room for 60 hours out of the 8,760 hours they will live there in a year.  I know, that is less than 5%, but let’s go with it.  Maybe they will have a few dinner parties.  The result of this is that they rule out houses that may actually work well for them, or even better in other situations they use more often, but they hold out for the house with the large dining room.  I call that  95/5 decision.  It is neither wrong, nor right.  It is a consideration that I want my buyers to recognize.  Once they recognize it, they are then deciding it on purpose, rather than letting an emotional need drive the decision making process.

We frequently see this also as a factor for seldom-played grand pianos, extra bedrooms for unborn grandkids, and a large yard for kids who don’t play outside.  Again, if a buyer can afford it, they can, of course, buy for things they love and wish for.  If they cannot afford the larger home, it is my desire that they’d be realistic in their usage of their house.

Certainly, the choice is the buyer’s and they can and will buy for the 5%, and that is fine.  House buying is mostly emotional anyway.  But for those of you on a budget, do you want to buy for the 5%?

Happy Shopping! You can read about the personal side of this principle here.

Sellers Representative Specialist Course

Have you seen this new designation from NAR yet?  This designation course will help agents better serve their seller clients. It is a 2 day class with great information to help agents build up their listing businesses and to manage it with attention to the client, the Code of Ethics and state law.  Improve your professionalism as an agent by gaining the skills necessary to be an effective listing agent.  This course goes through the whole transaction to help you manage it well for your sellers.

You can read more about the designation at the SRS Council Home Page. I look forward to seeing you in one of my SRS classes.

What is my Brand?

Do you know what you do best? Can you express that clearly to a client? Agents own their own business. And as business owners, they need to express clearly what they offer as part of their business and communicate this clearly to their clients. And in this fast paced, technology driven, culture, they need to do it legally and with clarity and consistency. This class will help agents explore their expression of their business, where and how to communicate this expression, and to do it beautifully and legally.

Wells Fargo No Longer Accepts Reverse Mortgages

This is an interesting article from the Wall Street Journal about why Wells Fargo isn’t doing reverse mortgage loans anymore. Regulations on the bank limit their ability to get information they need to make decisions, so they ended the program. Other lenders are still lending, but this will be something to watch.

Wall Street Journal Article

Basics for Building a Better Business

Last week I taught this class to a group of agents in Murfreesboro, TN at the Middle Tennessee Association of Realtors.  Terrific class with everyone participating.  One of the brokers suggested this would be a great class to be required by all new agents.  We discuss the income and budgetary sides of the business.  How and where do agents get business.  And once they have the business, how are they servicing their clients to make sure that clients get the best care with the least amount of stress!  Are your agents providing the level of service your clients need and deserve?