Life is too
short to be cheap.
Now I’m not
in favor of mindlessly blowing money, far from it. But I think a fundamental skill for anyone to
develop is discerning the different between cost and value.
Cost is what you pay. Value is what you get.
But for many
people, the conversation begins and ends with cost. Determining value requires higher level
thinking, and some just can’t get there.
I recently
went on a listing consultation and after the appointment, as I was walking to my
car, an elderly lady called out to me from her front porch across the street. “Sir, are you a real estate broker?”
We sat down
and chatted, and as it turned out, she had been recently widowed. She now wanted to sell her small starter home
and move back to Nebraska to be closer to her kids.
I’ll skip
the details, but over the next few days we had several conversations about
what she needed to do to get the home ready, what the strategy would be for
pricing and marketing it, and how we would approach things if we received
multiple offers, which was likely at this entry-level price point.
Finally, the
conversation turned to commissions. “What
do you charge?”, she said.
“Six percent”,
I replied, “which is split between my brokerage and the brokerage that brings
things the buyer. I pay for staging and
photography, plus I’ll handle all aspects of marketing, negotiations, and
follow up. I’ll get the word out to as
many people as possible before we list, I’ll follow-up with everybody while we’re
on the market, and I’ll do everything in my power to leverage the offers we get
to help you end up with the most money possible when it’s all said and done. It’s my job to make this simple, keep stress
off of you and manage the entire process.”
She
paused.
“Six
percent?”, she said. “I know I can find
someone who will list it for less.”
And she
can. Absolutely. And I can find a bottle of wine for $3.99, a
hamburger for a dollar and we can pick some old French fries out of the trash
can. A well rounded meal for under $5.
In life,
most of the time, you get what you pay for.
And when you
focus on cost, you miss half of the equation.
What if you
pay $20,000 for a car that breaks down after 100,000 miles? But what if you could pay $25,000 for a car
that runs well for 200,000 miles? Which
actually costs more?
If you have
45 showings and seven offers on your house, can you screw that up?
Those who
focus on cost will simply go with the highest offer. Those who focus on value will look at it
differently. Of these seven buyers, who is actually likely to close on the deal?
Who is qualified and who is not?
Who is motivated and who is not?
Who has a problem-solving agent and who has a hot-tempered screamer
representing them?
Who will
take the time to vet each offer? To call
the lender? To Google search the buyers. To profile the agent? To talk about potential challenges up front,
so we can address future sticking points before signatures have locked us into
a binding agreement?
I am a huge
believer that most of what exists in our lives is stuff we attracted. Want to be cheap? Get ready to hang out with cheap people. Want to be greedy? Welcome to a lifetime of tug of war. Want to be dishonest? Get ready to be lied to.
People who
focus on value know that the true measure of value isn’t the size of the seed,
but rather the size of the tree that comes from it.
Can two
agents list the same home, but one agent gets $290k while another can get
$300k? Absolutely. It’s called marketing, strategy and
negotiation.
Who’s
smarter? Seller A, who pays a 5%
commission and gets $290k? Or Seller B,
who pays a 6% commission and gets $300k.
One focused on cost, the other on value.
In my worldview, cost is secondary to value. I strive to surround myself with problem-solving people who spend their time building
relationships and networks.
I spend time with people who are honest, reliable, hard-working and
committed. I look for people who invest
in other people and who are willing to do the right thing, whose ethics are
unwavering and non-situational. I look for connectors, not takers.
If you find
and build a network of people like that, you’re going to win.
In the end,
it doesn’t matter if you pay 5%, 6% or 10% to someone to sell your home. The only thing that matters is what you walk
away with at the end of the day. And how
you feel about the process.
This lesson
goes so far beyond real estate, because it’s also how life works. Be careful about what (and who) you invite
into your life, because chances are whatever you make room for will eventually
fill that space.
