Being an Expert and Authority in the Market
As founder and CEO of ForSaleByOwner.com, Colby Sambrotto naturally put his own techniques to work selling his personal property. Unfortunately, despite his best efforts, nothing happened. His trendy New York condo sat unsold for six months!
Eventually, he gave up. Mr. Sambrotto not only hired an agent, he even agreed to full commission terms. His surrender paid off, and his condo was soon under contract.
Despite his expertise in the FSBO sphere, Mr. Sambrotto didn’t realize he was sabotaging his very own sale. By under-pricing his trendy condo in a hot market, he actually scared away potentially interested buyers!
Sometimes that’s all it takes to close the deal on an unsold home: an expert.
And he’s not the only one: Craigslist founder Craig Newmark has stated at multiple conferences that he loves his real estate agent. His business gives many owners an opportunity to post their own home for sale. Craigslist gives owners a platform to attract local buyers without an agent. But, when Craig has real estate deals to do, HE hires an agent.
So while it is a tired cliche, it IS important to hire a professional.
And while that is a great story, let’s look at some hard numbers. Take emotion out of the equation, and the stats don’t lie: FSBO sellers need your help!
FSBO home sold for $210,000 vs $249,000 when agents helped. Loss of $40 GRAND! (16-22% MORE MONEY)
The numbers are even more drastic when the selling and buying parties already knew each other. It’s clear that while they may be able to attract a buyer, owners going it alone still suffer from not knowing the true value of their home.
FSBOs have the lowest market share since tracking started in 1981.
FSBOs accounted for 8% of sales in 2014.
Only 6% of FSBO owners surveyed specifically said they did NOT want to work with an agent.
In a survey asking FSBO sellers to list the “Most Important Reason for Selling FSBO”, 48% replied they “Did not want to pay an agent’s commission or fee.”
The median age of FSBO owner is 56. Simply put, these owners have lived a little. They are not stupid. They just need your help. Take time to share stories and stats. Educate them on the benefits of listing with an agent.
Highlight the stats showing they are likely to make 15-20% MORE money by listing their home with an agent.
A key to this entire home selling approach and being an authority is a revolutionary finding discovered by an Italian economist. His name was Vilfredo Pareto. The most important thing we can learn from him is the Pareto Principle, better known informally as the 80/20 rule.
The 80/20 Rule applies to all aspects of life
In 1906, Vilfredo found a very intriguing correlation. He noticed 20% of the peapods in his garden held 80% of the seeds!
Studying the seeds prompted him to take a closer look at this ratio. In one of his initial discoveries, he found 80% of land in his area was owned by 20% of the people. After detailed study, he observed this ratio held true in many aspects of life. The Pareto Principle, or the 80/20 Rule, is a result of his findings.
The 20% is vital and the 80% is trivial.
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 an employer is derived from 20% of your work.
You might wonder what all of this means. In a nutshell, it means some things are substantially more important than other things. In other words, things are not equal. Approximately 20% of what you do matters more.
It is important to understand this is not always split at 80/20. It can be 70/30 or another percentage. The key is the two numbers are not equal and they are usually close to 80/20.
How can you apply the 80/20 Principle to selling your home?
Now that you know what the 80/20 Rule is, you are probably wondering how it applies to selling home.
When you use the 80/20 principle in selling, you stop trying to sell people on the entire home. Based on the rule, only 20% of your home’s features are important. The remaining 80% are trivial.That is because they are the same features many other homes in your neighborhood have. Instead of focusing on those trivial features, you need to focus on the vital features.
When you sell your home, focus on unique features to grab the attention of buyers.
These features make the home different from others. These features will make it easier to sell your home for the full asking price. Let’s look at a few real life applications and examples of how the 80/20 Rule can have an impact.
So there’s a buyer looking for a 3 bedroom, 2 bathroom home. Let’s assume you found him five houses to preview. Each meets his general criteria, and is located in the area he hopes to live.
You go out with the buyer to view them. They all have very similar features. The prices are comparable. In theory, you might think the buyer will have a hard time deciding between houses.
No matter how similar they may seem, no two houses are exactly alike.
In real life however, that is not the case. The 80/20 Rule comes into play. Imagine four of the houses don’t have a pool, but one does. He is not aware of this though, because the agent didn’t mention it.
The buyer sees the four houses that don’t have a pool. He isn’t particularly interested in any of them. Then he sees the fifth house and the pool! Suddenly, he is ready to make an offer. He may even pay full asking price, even though this house is more expensive than the others.
The 80/20 Rule in action: Buyers focus on unique features.
His offer isn’t based on the 80% of features this house 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.
When you sell a home, you can leverage the rule to work in your favor. Draw attention to defining characteristics in your home.Here is a real life example. A real estate agent had a client visit from out of town. He did not have a list of criteria, just liked the area.
She drove him from house to house. In each case, this buyer suggested offers 10-20% below the asking price. He would not budge. She began to worry; the whole day was turning into a big waste of time.
As the sun set, they stopped at one last house. It did not have a lot of curb appeal. It was not a good looking home. She was out of options. Nevertheless, this house broke the tough negotiator down.
He was suddenly willing to offer the full asking price! You may wonder what set this house apart from the others. It was not because he had a thing for ugly houses. Nope. The 80/20 Rule kicked in again.
The 80/20 Rule in action: Buyers pay more for unique features.
This 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. He fell in love with the one remarkable feature of this house.
This plain jane house had something special. As you walked into the great room, there was a large window. The house sat atop a hill with a gorgeous view. 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.
He did not buy the house because he liked the floor plan or the number of bedrooms and bathrooms. His decision was completely based on the hill and view. That view caused him to stop negotiating and offer full price on the spot. Such is the power of the 80/20 Rule.
Learn how to tap into this rule. Leverage a unique selling point. Buyers who fall in love do not haggle over pricing; they make good offers.
In some cases, the 80/20 Rule even helps people make a sale without conducting a showing. This is a huge time saver. The house in the following example had languished on the market for months.
Unlike the previous house, this place was not ugly. On the contrary, it was a brand new custom built home. But nobody seemed to care. It sat on the market over seven months without a single offer.
The builder was baffled. His fancy new house would not sell. He ended up firing his agent and hiring a new one. Fortunately, the new agent knew the importance of finding that special feature. He drove out to give the house a thorough investigation.
What he found changed everything. The house had a gorgeous 5-acre yard. Other houses being sold in the area were all on 1-2 acre lots.
Not only was the yard bigger, it was more private than other lots available. The new real estate agent marketed the 5 acres. He mentioned details and a description of the house. But, he focused attention on the lot.
The house was not the main selling point, so he shifted attention to the 5-acre lot. In no time, his phone rang! A buyer was relocating. He had noticed the house was for sale, but it hadn’t caught his eye.
Potential Unique Features
Each house will have its own unique features.
● Hilltop views are an excellent defining feature. Like the example from earlier, a high vantage point comes with a spectacular view of the surrounding area.
● Maybe your home looks out on an open field frequented by wildlife. Many people would like that view.
● Your house might even have an unobstructed view of the sunset. That would interest potential buyers.
● Patios are another great feature. Maybe the neighbors do not have patios, or their patios are smaller. That vital feature could help you sell your home.
● Location is something else that can set your property apart from others. Not your addressed location but rather your location compared to the surrounding homes.
A buyer once paid extra for a townhouse simply because of its location in the complex. Most of the surrounding homes did not have any yard. However, a few shared a large half-acre “yard area.”
One of the owners whose townhome backed up to this yard area was able to sell his townhouse for a higher price. It set his property apart from others on the market.
His home had a characteristic shared by fewer than 10% of the others. He had the only available listing offering that feature. With this easy point of difference, the house sold for a higher price.
Another townhome seller (in the same complex) found a different unique feature. He did not have a yard, but he was still able to use his location to his advantage.
His property backed up to a lake and fountain. That extra feature helped him sell his townhouse quickly and for a great price.
● They might have a private location. For instance, the lot may be partially concealed by trees, might have an empty lot next to you. Use this to market the property.
● They might have a unique backyard. If they have a larger backyard than your neighbors do, use that to your advantage.
● A shady backyard can also help sell the property. Some people like the idea of lounging in the shade.
● A fenced in backyard is also a big selling point. People with kids and pets flock to homes with fenced in backyards.
● You can also look at other features. For instance, a finished basement can help you sell your home. You can also market a large attic, an extra-large garage, a swimming pool, or anything else that makes the home stand out.
Look for the 20% difference and find a way to market it. That is how you will get results. You cannot just throw the information into your listing, though. You have to take the right approach.