Expired Listings: Using the 80/20 Principle

The key to any successful home-selling approach is the discovery of the Italian economist, Vilfredo Pareto. Pareto came up with the Pareto Principle, better known as the “80/20 Rule.”

The 80/20 Rule Applies to All Aspects of Life

In 1906, Vilfredo found an intriguing correlation, noticing that 20% of the pea pods in his garden held 80% of the seeds.

In studying the seeds, he decided to take a closer look at this ratio. One of his initial findings was that 80% of the land in his area was owned by 20% of the people.

After completing a detailed study, he found that this ratio held true in many aspects of life. The Pareto Principle (80/20 rule) is a result of his findings.

The 20 Percent is Vital, and the 80 Percent is Trivial

For example:

• 80% of your income is derived from 20% of your work.
• 80% of a business’ income is derived from 20% of their customers
• 80% of your value to an employer is derived from 20% of your work

Now, you may be wondering what all this means. In a nutshell, it means some things are substantially more important than other things. In other words, things aren’t equal. Approximately 20% of what you do matters. The other 80% is insignificant.

How can you apply the 80/20 principle to selling your home? Understanding this concept can save you time in selling your home. Unfortunately, many sellers buy into the false idea that more is more. They completely ignore the Pareto principle.

Now that you know what 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’s 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 your home different from other homes. 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 on selling your home.

Points to Remember

• According to the 80/20 rule, approximately 80% of effects are a result of 20% of causes
• Following that principle, buyers will focus on 20% of your home’s features. The other 80% are probably common to other homes.