While markets differ in various ways, most of us in real estate are playing our game by the same rules. All of us have access to the same quality resources, information and tools of our trade. Why is it then, that a select few seem to achieve success so far beyond the rest of the pack? This story offers one of the answers to this question.
I was visiting my friend John, a successful developer I had known for many years. In the imposing brick office complex he had recently completed, we sat in his corner office telling stories, laughing and enjoying a spectacular view of autumn foliage in Ohio.
“I hit another home run last week,” John began with a grin. “Got a call from a guy last Monday asking me if I was interested in buying a few acres with development possibilities.” Pointing across the freeway outside his building, he continued. “Turns out it’s right there.”
“So this seller tells me he’s asking $235,000 and wants to know if I’d like to see it,” John explained. “I tell him I can see it just fine from my window … and I’ll buy it for $225,000 right now. So we set up a meeting for the next day.”
As I later learned, another developer friend of mine, Tom, was also interested in this property. Long before the seller called John that day, Tom had spent months analyzing the potential of this parcel. He had meetings with zoning officials, engineers and city officials to determine the feasibility of re-zoning the use from single-family to condos. He spent many long hours doing his homework, estimating costs and returns, and carefully calculating the fair market value of the land. He had also asked the seller to give him an opportunity to make an offer if any other offer came in.
After John’s offer of $225,000, the seller called Tom as agreed. On the basis of his months of hard work, Tom had decided that the property could be, if all went well, worth something close to the asking price. After agonizing over the decision, he agreed to pay the full $235,000, but not a penny more. The seller, now elated, calls John to tell him he has a better offer.
John’s story continued. “So I get a call the next day and the seller tells me he has a better offer for the full asking price. I tell him that if he has a purchase agreement on my desk by the end of the day, I’ll buy his land for $250,000.”
“This is the best part”. John smiles wider as he leans forward in his chair. “Later that day, I sign the agreement and give him an earnest money check for $1000. While he’s still waiting for the elevator and the ink is still wet on the paperwork, I’m on the phone to the Marriott Corporation. I tell them about the parcel because I know it would be a prime location for one of their hotels. Before the end of the week I’ve resold the property for $1,250,000!”
Looking back, I realized that although they worked in the same market for many years, John consistently achieved a much higher level of business success than Tom. They were playing the same game with the same rules. They both had access to the same resources, information and tools of the trade. And they were both hard working, honest businessmen. Yet, somehow, John and Tom got very different results.
The difference, I feel, is found in their levels of awareness. Like many in real estate sales, Tom was working hard doing business the way he had learned years ago. John, however, always dedicated more time to staying on top of what’s new. He was always increasing his awareness of new opportunities and, as a result, often found possibilities where others saw only obstacles. This story is just one example of the rewards for cultivating this perspective.
One of the opportunities overlooked by many in real estate is found in selling new homes. Sales associates often share their frustration over owners, brokers and managers who fail to offer the support or encouragement to pursue this business. Some see new home listings as the only possibility and overlook buyer representation, lot sales, raw land sales and opportunities to capture more resale business in the process. This problem is clearly due to a lack of awareness. Because of this, too many continue to do business the way it’s always been done.
In the development business, success is relative to discovering the highest and best use of raw land. In the business of real estate sales, we must maximize our opportunities for success by increasing our awareness and discovering the highest and best use of ourselves.