In my writings here on AR and elsewhere I tend to rely on economic analysis quite a bit. And while I understand why some people's eyes will glass over when I start talking about supply curves and equilibrium points and such, I do feel that looking at our businesses, our industry and the economy through the lens of economic reasoning can be very helpful in dealing with the situations that we find ourselves in as real estate practitioners.
For many people economics was a class that they HAD to take and while they might have been very good memorizing the formulas and taking the tests, a lot of people simply didn't "get it". Some of us didn't even do so well on the tests!
That was me when I had returned to college to finish my degree. I had dropped out of college, gotten married and had two small children. Through dumb luck I had found myself working as a commercial loan officer for a mortgage brokerage here in St. Louis when Black Monday hit. The Dow lost a third of it's value in one day and the world realized that the commercial real estate market was way over built. At the time I had a $65,000,000.00 pipeline, of which I ended up only closing about $2,000,000.00. To me, it was like the coal mine closing in town. What was I going to do?
After much soul searching I decided that I needed to go back to school to finish my degree. I then planned on going to law school, which had always been a desire of mine. I went back to school on a mission!
Now, when I had been at Mizzou it's safe to say that I had had as much fun as any one person should be allowed to have. Since I was paying for my own college I had to work. Being a young All-American male there were always skirts to be chased. If those skirts happened to be at a party, all the better! Let's suffice it to say that academics weren't my top priority. As a matter of fact, I think that I might still hold the University of Missouri record for number of consecutive semesters on academic probation!
If I wanted to get into law school, I was going to have to put my nose to the grindstone and keep a very high GPA. My first semester back I had "A's" in all of my classes except economics. I had a "D" in that class.
It wasn't that I wasn't working, I was! I just didn't "get it". I could memorize the formulas, but they didn't make any sense to me. I had never had anything like this happen to me before. Before, if I had put any effort at all into a class, I could usually pull at least a "B", but this was different. It was like I was stupid or something!
So, I went to my professor, Dr. Ireland and he told me about the "aha!" principle. I had never heard of this principle before, but he went on to explain that in economics it was not unusual for a student to not have all the pieces fall in place for them right off of the bat. He assured me that if I kept hammering away at it, that I would have an "Aha!" moment when it would all click and I would see how it all worked together.
This conversation happened in the first part of the semester and I hadn't gone, "Aha!" going into the final. I still had a "D". The only saving grace was that Dr. Ireland believed so much in the "Aha" principle that he graded his course in such a way that you had the choice of taking the average of your test scores throughout the semester as your grade and not have to take the final. You could take the average of your test scores including your final or you could take your score on the comprehensive final as your grade for the class. There was still hope!
The night before the final I locked myself away and reworked every single home work problem over again. I used flash cards to make sure that I had every formula memorized and still nothing. I had the formulas memorized, but was dumbfounded as to how they all fit together. To say the least, I was discouraged.
So, there I was sitting at my brother's kitchen table at 3:30 in the morning and I decided to go over the formulas, one more time. Then it happened! As I flipped the formula, it all clicked! AHA! It all made sense!
I went back to the problems and they, for some reason, seemed easy. I had "gotten" it! The next day I took the final and got a 98 on it. I had aced economics! Sad to say, I bombed a different final and just missed my 4.0, but in the long haul it didn't matter. I had found my calling. I switched my major to economics and while a divorce, having to earn a living and my mortgage banking career turning around precluded me from finishing my degree, my way of looking at the world had changed for good. I still utilize economics in my every day business affairs, as well as using it to make sense out of the world.
On the immediate front I have no intentions of going back to school to finish my degree. Instead I'm savoring the experience of watching my two children who are currently in college (my son goes to Auburn University and my daughter is set to graduate from The Ohio State University in about 10 days). I'm pushing both of them to go on to graduate school and after they are done, I will go back to finish up. My hopes are that I can build my business to a point where I can hire somebody to run it and to eventually go back to school full-time to finish. After that, if I can weasel my way into law school that would be cool too!
In the mean time, I'll keep building ValueList and hopefully take advantage of my background in economics to make sense of the world around me. If nothing else, maybe I can utilize it to make some money out of this turbulent market that we're now in!
R. B. Mitchell
R.B. "Bob" Mitchell is president of ValueList Real Estate Services, St. Louis' largest discount/full-service real estate and mortgage company. If you would like to find out more about Bob, ValueList or about our flat-fee listing program, please feel free to visit us at valuelistre.com