The book is titled, ‘The Value-Driven Approach To Sell Real Estate –
A practical guide to protect yourself from Real Estate Greed
& bank an extra $30,000 in profit.
Interviewer: Mark, you’re not like most agents. You publish the truth. You’re a bit of a crusader, which I want to talk about in a minute. But, with the help of your team, you published the book, “The Value-Driven Approach To Sell Real Estate,” a practical guide to protect yourself from Real Estate Greed & bank an extra $30,000 in profit, in addition, you founded Tri Town Nurse’s Only Program®, host a business podcast on iTunes, and are the editor-in-chief of Tri Town Advice Givers® magazine.
Going back to the book. I’ve heard you say that studying Warren Buffett, your fascination in his investment philosophies, has led to superior results for your clients – could you explain how this is possible… and how it differs from the approaches of other real estate agents?
Mark Borst: Absolutely… There’s no question about it. The right approach can make all the difference in a family’s home sale, especially how it impacts their profit. Let me start with an example. And I won’t use names for obvious reasons, but you’ll still be able to grasp the concept. So Homeowner “A” put their home for $210,000. On that same day, homeowner “B” put their home on the market for $240,000… a full $30,000 more.
Both homes were near identical; both had the same 2-story layouts, were in nice neighborhoods, just a few blocks of each other, built in the same year and, had virtually all the same upgrades and design features, even built by the same builder.
What happened next isn’t what you’d expect. Homeowner “B” sold their home in just days, accepting an almost full price offer. Homeowner “A”, on the other hand, despite being priced a full $30,000 lower… his home sat on the market for months.
Homeowner “A” received hardly any showings. Very few buyers came through the house… the offers he did receive were all low-ball offers too, with heavy negotiations. There were lots and lots of contingencies. In other words, the contracts were written in favor of the buyer, not the seller, which is not ideal…
After 30 days, a price reduction was done. After 60 days, another price reduction. That one for $10,000 bucks. After 90 days, there was another price reduction. And this continued…
After six months, Homeowner “A’s” home still hadn’t sold. Eventually, the homeowner pulled the home off the market altogether. He was frustrated, depressed and, as you can imagine, puzzled… How was Homeowner “B” able to sell his home, for a much higher sales price when, seemingly, he – Homeowner “A” – couldn’t give his home away for thousands less…
Interviewer: What accounted for the difference?
Mark: It had nothing to do with price. It had nothing to do with square footage. And it had nothing to do with the lot size or the design features.
It was simply the fact Homeowner “B” did not make any of the cardinal home-selling sins, or what I call, “Fundamental Mistakes” that Homeowner “A” did. And he made a ton of them….
Interviewer: What do you mean by Fundamental Mistakes?
Here’s what I mean. Homeowner “A,” priced his home using a CMA or what is known as a “Comparative Market Analysis” or “Free Home Evaluation.” This is a very common term in real estate, and it’s the approach taken by about 90% of real estate agents.
Unfortunately, it also is the least effective approach when it comes to maximizing sales price and profits, and decreasing time on market.
It sounds counter-intuitive, I know. But homebuyers don’t buy based on “price.” Their decision, almost always comes down to value. So if you can increase the value, at least the perceived value of your home, then, just as Homeowner “B” did, you’re able to legitimately increase your home’s sales price without running the risk of over-pricing it.
You definitely do not want to over-price your home. So this is why a value-driven approach over a price-driven approach is so important, and can account for such a huge spike in profits. It’s a process that starts with a detailed diagnosis of the property being sold, to be able to identify the areas where perceived value can be created. It’s also a process that is laid out in the book, which you can read in detail, starting in Chapter 3.
Interviewer: How does someone go about taking a value-driven approach? Is there a plan someone can follow?
Mark: There is… and it starts with a total different mindset. First, you have to stop thinking of your home as a ‘home with a sales price,’ and start thinking of your home as a ‘business with a stock-price.’
We call this the “Value-Driven Approach to Sell Real Estate,” which resulted from studying Warren Buffett’s investment philosophy. And when you do this, it’s possible to extract upwards of $30,000 more from your home, than other similar homes on the market.
We’ve also been testing this approach in different markets throughout the United States and Canada, sharing the approach outlined in the book with other consumer-focused agents. In fact my buddy Steve Sunseth, up in London, Ontario Canada, just sent me this update, in regards to how the approach worked for one of his recent clients:
“It [the home] hit the market Friday, had an offer Sunday and a second Monday. Sold in 3 days in multiple offers for $12,000 more than I would have recommended if I went by the comps alone. Based on the comps we should have expected a sale price of around $228,000. We got $240,000.”
And see, just by adhering to the approach, that’s an extra $12,000 in profit. Not every home has the $30,000 of additional profit in it, but the approach works as it was designed – to maximize profit that is possible. And $12,000, extra cash in hand, is certainly nothing to sneeze at. Needless to say, his clients were happy.
Interviewer: To most people, that sounds almost too good to be true. Where do we begin?
Mark: Let’s start by taking a look at these people’s mindset, and how most people approach the sale of their home. I’ll give you an analogy about business, and then we’ll loop back around to how this applies to real estate and someone’s home sale.
If you’ve ever sold a million-plus dollar business, you know you don’t just wake up one day, put a “for sale” sign in the store window, and have someone write you a check. This kind of “shoot from the hip” tactic, is a very bad approach if you want to maximize profit.
Most businesses are prepared for sale, 6 to 8 months in advance at minimum, and typically 12 to 24 months.
During this period, the business owner often documents every detail of the business. The marketing costs, the profit margins, the lifetime customer value of each new customer, the cost to acquire a new customer, the operating expenses… and so forth. They often, during this time, also, start fine-tune their procedures and systems for inventory, management, and sales.
In short, there are many different factors the business owner seeks to improve, during this time period to make the business more attractive to a potential buyer of that business. Why?
The higher the perceived value, the higher the “stock price” that business, or company’s stock can command… Hence, the story above, this is how Homeowner “B” prepared his home for sale, as a business, as an investment, as a means to Homeowner “A” on the other hand, did like most people. He thought he knew it all, did none of what is recommended in the book, and it cost him big time.
Interviewer: What do you mean by that? Can you explain?
Mark: Sure, let me clarify. I talked about it earlier, the death of client profits, is making Fundamental Mistakes. You simply can’t come back from it. Especially in real estate, you don’t get multiple shots at it.
In this case, Homeowner “a,” his first Fundamental Mistake was the assumption that all real estate agents are the same… the kind of thinking that says, “any one agent is just as good as another.”
So here’s what Homeowner “A” did. About 2 weeks before he put his home on the market, he interviewed 3 different agents. Each agent came to his home, sat at his kitchen table, and each one did their listing presentation. They all showed him their CMA: Comparative Market Analysis of the neighborhood. And they all gave him a price-range of what his home might be worth, based on the sales in the neighborhood.
Since each of these home evaluations came in pretty close to each other, as you’d expect, Homeowner “A” assumed he should price his home somewhere in that range. And probably close to the middle… And see, this is what led to Fundamental Mistake No. 2. He never asked or even bothered to question, what if…. the agents he interviewed, were using an inferior, ineffective approach in the first place – to gather the data – that he was looking at, that ultimately he would base his decision on…
It’s funny, because in business, a consultant is universally known as ‘someone who can teach you 112 ways to have sex, but can’t get a date on Friday night.’ In other words, he has all the answers, but then isn’t able to actually put anything into practice. And, for the most part, the same is true in real estate, which is what complicates things.
Going back to our business analogy, the businesses that sell and yield their owner the greatest profit, are the ones – behind the scenes – where there is almost always a “consultant” providing that business owner invaluable advice and direction.
The challenge of course is, how do you find that person, whether selling a home or selling a business, capable of providing you that invaluable direction? It’s not easy. There are many wolves in sheep’s clothing. But that’s why I wrote the book. It’s based on research. Homeowners can do their research and due diligence – to be able to tell the difference between a superior and inferior approach.
Interviewer: I’m curious… I know you got to run, we’re running short on time, but if someone wants to learn more, or has a question, what is the best way for readers to contact you.
Mark: It’s pretty easy. If someone wants to learn more about the “value-driven approach to Sell Real Estate”, and so forth, they can request a free copy of the book by visiting: www.MakeImpactMondays.com. Or email works too: Mark@MakeImpactMondays.com or folks can always try my direct line as well: 219-714-2399.
Interviewer: Mark, thanks so much for taking the time. I really appreciate it.
Mark: You bet. It was my pleasure.