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It’s not as easy as you think to achieve maximum profit…
How it impacts profit and dictates strategy when selling a home.
By Steven Weirich, co-author: The Value Driven Approach To Sell Real Estate: A practical guide to protect yourself from REAL ESTATE GREED & bank an extra $30,000 by thinking like the great Warren Buffet.
realize the image to the right may look a little Howard Hughes-ish, but there is a method to my madness. And this sketch, if you’re thinking of selling your home, may have a profound and direct impact on your bottom-line profit. You’ll also want to share this with friends and family members that you care about too.
When I set out to study Warren Buffett, his investment philosophy, to find out what made him the world’s greatest investors, and, ultimately, how his methods could be applied to my clients’ home sale—I came stumbled upon a book called Differentiate or Die. This book changed my entire perspective on real estate. Jack Trout was the author. In the book he laid out the fundamental reasons why a business must differentiate from competitors, not just to be successful, but as the key ingredient to thrive in our current era of Killer Competition. Now, admittedly, from a business perspective, this is common sense. Every entrepreneur knows he must differentiate his business. As a mentor once told me, “Nobody needs two left shoes.” In business, if two businesses are the same, then one is dispensable.
But, this got me thinking.
Business, and the fight for new customers, really, is no different than real estate and the fight for homebuyers.
Your home is a home, yes, but analogously speaking, it is also product no different than Tide laundry detergent, where you are the owner of that product, no different than Proctor & Gamble is Tide. And see, when you look at your home through this lens—the profit from your home sale; its ability to compete in the marketplace—comes down to your ability to differentiate.
Is your home no different than the many other homes on the market? Is it just a commodity? Or is it different, and could it be judged superior?
In my sketch above, you’ll notice there are three scenarios. Each scenario describes the starting position of your product, your home, in relation to other competing homes on the market. Each of these scenarios can also be thought of as a race.
The more and better you differentiate your product, the faster you move forward toward higher profit. And of course, the less you differentiate the faster you move backwards toward lower profit. All the while the other homes on the market, in your neighborhood, in your price range, with similar square footage, amenities, etc., are competing in the same race.
In scenario #1 – you, your home, you start even with your competitors. You are neither ahead or behind. There is no discernible difference between your home and others. No apparent advantages and no apparent disadvantages.
In scenario #2 – you, your home, starts out ahead of the competition. This could be for a number of reasons. But through some means of differentiation, you have the advantage of a 5-second head start. So as long as you run the race appropriately, and don’t trip over your feet or make a fundamental mistake, you have increased odds of winning.
In scenario #3 –you, your home, starts out at a notable disadvantage to the competition. You are now the underdog, not the frontrunner. And to win, and bank the most profit from your home sale, you’ll have to run the race of your life.
Part of my job then becomes, prior to creating the actual “race strategy,” is to determine where a clients’ home’s starting position is.
If you’re running the 800-meter dash, for example, someone running on the inside lanes—from a strategic standpoint—must run a very different race than the runner who runs in the outside lanes. Similarly, the runner with a known disadvantage, must run a very different race than the runner who doesn’t have that handicap.
Now you would think that every home, given the three scenarios above, either a) starts out even, b) ahead or c) behind the competition, right? Wrong. There is actually a 4th possible scenario.
In scenario #4 – you, your home, starts out ahead of the competition but…only “in your mind.” For obvious reasons, this is dangerous.
When a homeowner is blinded to their true starting position in relation to other competing homes on the market; due to pride of ownership, ego, arrogance, lack of understanding of how true differentiation works, how value is created, etc., almost always, in my experience, they sabotage their chance for maximum profit.
There is, by the way, nothing wrong with starting from behind. The fabled underdog story exists for this reason, to upset the odds-makers. But the underdog, to win, must realize he is the underdog and, through strategy, offset his handicap.
David versus Goliath: An apparent mismatch, but in this fight Goliath’s size is no match for a small well-placed stone, shot from a distance, out of reach of Goliath, from David’s high-tension slingshot. Bing! One stone upside the head, and Goliath is out.
This is why, in my book, ‘The Value Driven Approach’ to Sell Real Estate: How to protect yourself from Real Estate Greed and bank an extra $30K in profit by thinking like the great Warren Buffet, I talk about the importance of getting an accurate and comprehensive diagnosis—for this very reason—to identify your homes’ true starting point.
The last scenario in the world you ever want to participate in is scenario #4.
One interesting tidbit too, about how true differentiation works, when done correctly and effective, you not only control whether your home moves forward or backward “in the race” toward higher or lower profit, you also control whether other competing homes (with yours) move forward or backward too.
I suppose it’s kind of like cheating, that is tying a rope around your competitor, and anchoring him to a tree before the start of the race, but hey – that other homeowner should have hired someone who understands true differentiation, then they wouldn’t have been in that position, chained to a lower potential profit.
The biggest secret, though, for maximum profit, you must know your “product’s” starting point in relation to its competitors. Without this, nothing else really matters, as the details are fiction and hypothetical, and not reality.
But with reality, we can get to true strategy.
If it turns out that we’re the underdog, so be it, we’ll run the race of the underdog and in accord to the facts, to strive for the upset.
For a more in-depth discussion on this topic, go to: www.literature4charity.com . There you can request a FREE copy of my forthcoming book ‘The Value Driven Approach To Sell Real Estate: How to protect yourself from Real Estate Greed & bank an extra $30K in profit by thinking like the great Warren Buffet.
Steven Weirich- Co-Author & Creator
By Steven Weirich,co- author, creator: The Value Driven Approach To Sell Real Estate: A practical guide to protect yourself from
Real Estate Greed & bank an extra $30,000 by thinking like the great Warren Buffet.
Tweet storm! Inman News publisher vents about bad agents
FINALLY – I’m no longer the sole “Paul Revere” alerting the public of the REAL ESTATE GREED pandemic that has swept the real estate industry. In my book, The Value Driven Approach to Sell Real Estate, I talk about this in-depth. (Read Chapter 1). But finally, I’m no longer alone. Brad Inman, of Inman News, he seems to agree with me. The industry is corrupt from top to bottom. This past week he unleashed a “Twitter Storm” of truth. A truth that NAR (National Association of Realtors®), individual agents and brokers, have long been in deniable about—that the real estate industry, as a majority, is not an industry that can be trusted. Don’t get me wrong. Good and bad apples exist in every industry. But most industries, unlike real estate, the “people at the top” don’t profit from bad apples. A bad employee, in most cases, hurts the company. Not the case in real estate. Real estate is a free for all. Then there is a “government” (NAR) that tries to manage the million-plus independents.
Here’s the easiest way to think about NAR. In real estate terms, NAR is equivalent to the United States government. Does the government want more taxpayers, or fewer taxpayers? Of course! More taxpayers. So does NAR. More agents, regardless of their ethical or moral compass or competence level, means more membership dues. More money.
This what Inman meant by his tweets, shown to the right. That the entire industry from the national level to the local level is setup to profit, the most, when as many agents as possible are able to secure a real estate license. So how do you facilitate that? Your drop the licensing requirements so low that anyone with three brain cells could, theoretically, become a real estate agent. Naturally, by doing this, more people get into real estate as a hobby! Which means more money is funneled to those who lobby to make the rules.
You must understand, NAR, is a lobbyist group—in fact it’s one of the largest lobbyist groups in Washington—that fights for the best interest of the agent, and those in power, themselves, not for what is in the best interest of the client or general public. Again, Inman hinted at this:
Folks, can I tell you something?
In regards to REAL ESTATE GREED, this is why I’ve been so outspoken. I have written and published articles on this topic non-stop for over a year. Because until now, not enough people, especially high-profile people, like Brad Inman, have been willing to have this conversation. And it needs to be had.
If you think reporting your Horror Story to some kind of real estate commission is going to do you any good. Protect you. Or give you retribution for the damages you suffer. You may want to rethink that... The agent, if anything happens to him at all, is likely to get a slap on the wrist or face a small fine. It’s unfortunate. But nobody at the “regulating committee” cares about you or your poor experience.
This is what Inman basically states in his tweet storm. They, first and foremost, take care of their own, especially when “their own” is who they profit from. Let’s face it, to them your complaint is just an annoyance. “How can we make this go away?” They ask.
And while Inman believes the solution is: “tougher rules, tougher penalties, consumer watchdogs in regulatory roles, change in the broker biz model and leadership from NAR.” I kindly disagree. Inman’s prescription would be akin to the federal government trying to fix all the problems that it has created. Not likely!
Instead, from a trust perspective, the industry must be fixed from the bottom up. It starts with people like Brad Inman and I, writing and speaking about the problems that pose great threat to the public.
By publishing articles such as this, and writing books—as I have done—the public becomes more informed about how to protect themselves. They become more leery of real estate agents, and less tolerant. And, hopefully, more critical of the process of how they select their agent.
Only when the public demands higher professionalism from agents, by boycotting the use of the majority of agents—thus, forcing agents without competence, ethics or skills from the industry, meaning fewer and fewer dues-paying members—will NAR, or anyone in a position of power, start to listen.
It’s sad. But that’s the only solution.
You have to hit them in the pocket book. As long as money is flowing like wine, what motivation do they have to change their wicked ways?
For a more in-depth discussion on this topic—protecting yourself from REAL ESTATE GREED—go to: www.literature4charity.com . There you can request a FREE copy of my new book “The Value Driven Approach To Sell Real Estate: How to protect yourself from Real Estate Greed & bank an extra $30K in profit by thinking like the great Warren Buffet.” Be sure to read Chapter 1. Expect delivery in 1-3 business days via USPS Priority Mail.