Selling a Home That Failed to Sell Series -Part 7-The Pareto Principle
Vilfredo Pareto was an important philosopher and economist in Italy in the late 1800s/early 1900s. One day he was hanging around his garden and he noticed that 20% of the pea plants generated 80% of the healthy pea pods. This observation caused him to think about uneven distribution. He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies.
The result was the Pareto Principle or 80/20 rule. Meaning, 80% of results will come from just 20% of the action.
The Pareto Principle can apply to most things in life. Most things in life are not distributed evenly. It can mean all of the following things:
20% of the input creates 80% of the result
20% of the workers produce 80% of the result
20% of the customers create 80% of the revenue
20% of the bugs cause 80% of the crashes
20% of the features cause 80% of the usage
And on and on…
The 80/20 rule observes that most things have an unequal distribution. However, it is important to understand that this isn’t always split 80/20. It can be 70/30 or some other percentage. The key is that the numbers are not equal.
How can you apply the 80/20 rule when selling your house?
First, understanding this principle can save you time and money. Most of us would agree that no house is perfect. If we focus our efforts on the 20 percent of your property that will affect 80 percent of its value to buyers, you win!
Stop trying to sell people on 100 percent of your home. Based on the rule, only 20 percent of your home’s features are important. The remaining 80 percent are less important.
For example, if you are selling your 3 bedroom, 2 bath home alongside of other similar 3 bedroom 2 bath homes, you would not want to focus on those features. Instead you would focus on what makes your property stand out. The remodeled kitchen, the additional built in storage, and the stunning outdoor fire-feature.
Focusing on unique features grabs the attention of buyers and sets you apart from the competition. This 20 percent focused approach can make it easier for you to sell your home for full asking price.
In the next post we will dig deeper into why this focus on the 20 percent especially applies to hard-to- sell homes.