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80/20 Rule in Real Estate?

By
Real Estate Agent with Coldwell Banker Pioneer Real Estate

80/20 rule in Real Estate?


Hi I'd like to talk about what is known as the  80/20 rule.  For those that don't know about this principle ..." In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. In the late 1940s, Dr. Joseph M. Juran inaccurately attributed the 80/20 Rule to Pareto, calling it Pareto's Principle. While it may be misnamed, Pareto's Principle or Pareto's Law as it is sometimes called, can be a very effective tool to help you manage effectively." (F. John Reh)




I was wondering if anyone had heard about the 80/20 management system. And for those that have used it, how effective is it? How can an agent use this to maximize results? Thank you.

Comments (4)

Derek Fox
Pacific Property & Financing - San Ramon, CA

I was going to research on the web and this is what I can across.

" The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many phenomena, 80% of the consequences stem from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common rule of thumb in business; e.g., "80% of your sales come from 20% of your clients."

http://en.wikipedia.org/wiki/Pareto_principle

i can totally agree with this statement because it is very true. I have created systems with my business that allows me to focus only on the 20% that will give me the most business. It is all about setting up a database a managing it. 

May 29, 2007 11:58 AM
David McDowell
First Horizon Home Loans - Kirkland, WA

If the majority of your business will come from 20% - Then think of it this way. If you have a client that refers someone to you or completes more then one transaction with you then they are in fact a member of that 20% - That means they should become a point of focus for you. Keep in touch with them all of the time. Find reasons, ask them if they need anything, if anyone they know needs anything, and remember that the people they are social with are also part of that 20% - Though on a global scale 80/20 is misleading.

- David

Jun 04, 2007 10:50 AM
Kevin Raymund Lao Jacinto
Coldwell Banker Pioneer Real Estate - Moreno Valley, CA

David,

 That is very true. I will keep that in mind. That person that is giving the referals is very important/valuable and should be treated as such. Thank you for your insight.

 

-Kevin

Jun 04, 2007 11:50 AM
Greg Nutter
Farmers Insurance/Blue Cross Insurance - Santa Clarita, CA
Does this apply to claims as well? I believe that 80% of my claims come from 20% of my clients.
Jun 06, 2007 02:51 PM