Are you Interested or Committed? Your ROI depends on it…
That question presented a perspective which completely changed the way I operate. As you may or may not know, the approach I’ve collaborated on and devoted years of development to, referred to as “The Value-Driven Approach”, utilized by clients/friends of mine to protect their real estate investments, is all about applying a particular mindset— no cutting edge piece of technology, newspaper ads, or shiny objects— a mindset. Here’s why:
Mentality influences approach. Approach creates results.
In other words, when you seek to accomplish something, your thoughts and understandings are what define the path you take to do that. Therefore, how you choose to go about it, then equates to the overall experience, whether it be success or failure—somewhat obvious, but would you agree?
It’s simple really, yet many get caught chasing without realizing their capability to engineer their results. This can be applied to many of our endeavors— especially a home sale. Take the following story for example:
It was late winter when I first met Tom and Jana at my office, who had stopped by to discuss the real estate market and possibly selling their investment home here in Gunnison. If I’m talking real estate with someone for the first time, my focus is to always start by gaining (or to help develop) an understanding of what their priorities are, specifically in relation to expectations. This way, if it is determined that working together makes sense; we don’t find out a month or two down the road that we’re on completely different pages.
I learned through our discussions that Tom & Jana did not feel a need to sell the property, but were interested in doing so “for the right price”. Now, if only I had a dime for every time I’ve heard this! That is a common mindset amongst homeowners. The question then, is what will you do to justify “the right price” to your potential buyers? This is a topic that I’ve dissected into greater detail in other articles and publications, but what’s key to understand when listing your home is this:
You’re either in it to “see what happens”—or— you’re making a commitment to engineer results.
Translated; just getting the home “sold”—or— taking the time to avoid making fundamental mistakes.
It’s important to realize that those are two completely different outcomes. There’s no overlapping. One requires thorough preparation, while the other runs on a whim. It’s gambling vs. strategy.
Award-winning Harvard Business School Professor and Author, Michael Wheeler states
“If something is cheap and easy to reverse, it’s an experiment. But if it’s not both those things, it’s a commitment.”
Now ask yourself; is a real estate investment cheap and easy to reverse?
Surprisingly, after outlining the risks/benefits of these two approaches with Tom and Jana, they were geared more towards “seeing what happens”. This equates to nothing beyond a mere comparison of the prices of similar sold homes and active listings (the most basic information available) when determining your property’s pricing, then just throwing it on the market strictly based on that data.
They had done this research, had their number in mind, and were ready to give it a whirl. After all; they didn’t live in the home, were consistently keeping it rented, and generating good cash flow. In other words, the potential sale was not a big deal to them.
But frankly, if I’m being honest, this boggles my mind. Why do these people not care about their investment? Why do they not take it seriously? Do they not realize the difference proper preparation can make? If you have any explanation for me, I would love to hear it.
Partly I guess it is my fault. Perhaps I’ve not done a good [enough] job of warning these folks about the risks and likely damage that could be caused, as a result of basing their decisions strictly on pricing comparisons, instead of a value-driven approach, or to convey the importance of making a commitment to protect their investment by avoiding fundamental mistakes.
And really, it makes no sense for me to accept clients who choose not to carry the same level of commitment as I do. Not because I’m stubborn or unwilling to do things differently, but because it is a complete team effort to achieve superior results.
It requires SYNERGY.
I’ve long held the belief that when electing to work with/hire someone, the plan and approach should be mutually accepted and truly make sense to all. If that is the case, then we take the next step. But can I make a confession to you? In certain situations (such as this one) I’ve allowed exceptions. I’ve even broken my own rules.
Given Tom & Jana’s congruent expectations that it was essentially a roll of the dice as to whether or not they would sell the home for the “right price”, their understanding of the potential risks, and the fact that this all made the most sense to them and their situation—I went ahead and worked with them. The lesson I learned from that decision though, serves as the example I’m sharing with you now.
With everyone on the same page, we firmed up plans to list the property that April. The property was in good shape and very presentable, but was priced at a premium, somewhat arbitrarily. Thus, it took about 2 months until we began making some traction.
I received a call one day from a woman named Beth, who lived out of town but had been accepted for a local job and was now looking for a home. She traveled up for that weekend and we spent half a day looking at about 7 or 8 properties. Knowing that Tom & Jana’s property would compare excellent with what we had already seen, I saved it for last. Without hesitation, she came back by the office approximately 2 hours to discuss making an offer and drop off earnest money.
Fast forward 37 days and we are at the closing table. The property sells at a price that was “acceptable” to Tom & Jana. Mission accomplished for them—but it is painful and frustrating to me, to see a client get an inferior result, when I know the result could have been much better. Perhaps it’s the sense of pride I have about my work. Or the want I’ve always had to do my best. Or both, plus a number of other factors too. I just know that it kills me, and is not at all gratifying to sell a home for a client, when I know the result is inferior to which it could be, because we didn’t take the time to do X, Y, Z…
Out of nowhere, barely two weeks after closing, Beth calls me in panic. Apparently things were not going so well with the new job and she was preparing to leave the following week. “What?… Seriously?… How?… ” No need for details here, but the situation was certainly a new one for me.
With no desire to keep the property for rental income, here’s what needed to happen for Barb; sell the home for a higher price than what she had paid literally a few weeks prior. You might be wondering if that’s even possible. After all, doesn’t it seem reasonable to assume that prospective buyers would not be willing to pay a penny more than the price Beth just did? A tall order indeed, but…
Price and Value are not the same.
As explained in chapter 3 of my book, “The Value Driven Approach to Sell Real Estate: A practical guide to protect yourself from real estate greed and bank extra profit by thinking like the great Warren Buffett” :
Value is what dictates price and determines what someone is willing to pay for a certain product, service, or in this case, your home.
We had a solid grasp on the pricing aspects of the property, especially given the recent sale and appraisal, but the focus would need to shift toward perceived value and how it could be enhanced if we were going to dig Beth out of this.
Over the course of a few days, we discussed and laid out applicable steps of the approach. I scheduled a consultation with the stager and arranged professional photos while Beth and her husband made a commitment to get down to it. It took a couple weeks to address items on their inspection report, but what a difference it made! The place was in tip-top shape and once the professional cleaners had their way with it, we were ready to hit the market.
Within two weeks we had a full price cash offer. Due to the condition and positioning of the property, the transaction was a total breeze. No negotiations, no inspections, no appraisals. I realize it sounds somewhat fairytale [they’re not always that quick and easy], but when the commitment and efforts are made to implement a value-driven approach, you can count on it paying off nicely in the long run.
Which brings me back to the point… mentality influences approach. Approach creates results.
Here, the same home sold twice within a 60 day period. Once with sellers who were “interested”, and once with sellers who were committed. The difference? An additional $11,831 in bottom-line profit and a much smoother transaction. Sure, that might not be an overly-significant amount of money to some, but it’s the fundamental principles to take note of here as they could be applied to the tune of thousands more, and serve as a stout reminder that your success (or failure) in the real estate world starts with your mindset.
I want my clients to be successful. I want my clients to maximize their ROI. I want my clients to be one of the few who see their real estate agent (me) as an investment, returning in spades, opposed to the salesman who runs off with the commission. At the end of the day, to be happy, and to achieve something special for my clients, I want to work with clients who are as committed to the success of their home sale as I am. Because just finishing the race isn’t enough, when you know you could have won, had you just tried harder.
So now, as assurance to my clients and myself, I ask— are you interested or committed?