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The most powerful advantage doesn’t come from making the easy . It comes from avoiding impossible ones. Organizations who practice the art of declining bad deals have discovered a powerful market advantage. Here’s why.

The best salespeople understand the law of scarcity. In every deal, something is scarce. During booms, it’s the product. During busts, it’s often money. At various times, it’s time, physical labor, or even knowledge. Yet the trickiest scarcity to master is the scarcity of the deal itself: when no deal is possible.

The most powerful sales organizations know how to protect everyone’s capital when there is no sale possible.

This might be the next big competitive advantage in the housing industry. Not a new technology, finance program, or compensation plan. Imagine organizations rigorously identifying when no deal is possible, then acting in everyone’s best interest by saying:

Thanks, but no thanks.

Good or bad, all deals require capital. But bad deals waste capital, with little hope for returns. Start with the broker’s capital: cash spent up front marketing the unsellable. Add in the agent’s time, invested like Sisyphus for weeks and months. Estimate the value of the client’s goodwill, possibly the most valuable capital in a referral-based industry. When the good deals are barely breaking even on such capital investments, the bad ones are sinfully wasting it.

It would be a huge advantage to a company who train their agents to recognize bad deals, and how to systematically walk away. Rather than the emotional approach: protecting your integrity, honesty, pride, etc, why not train agents to look at it financially. Not only can’t you get the job done. It would be a waste of capital to try.

All the glitzy gadgets alone won’t rescue companies whose agents don’t understand the value of capital. Future companies will think like asset managers as well as salespeople.

A recent example. Next month I have to trade in my leased car. My choices are to buy out my current lease and keep a car with all the goodies, for a modest payment. Or, find something smaller but with newer goodies for the same payment.

As you’d expect, some dealerships I visited displayed classic disregard for capital. After five minutes, they should have known they could not help me, and acted to preserve their capital (gas, brochures, labor/time). Yet each tried to go “all in” with test drives, financial contortions and persuasions for a non-deal that was recognizable from the start. Everybody, including the consumer, walked away poorer.

It was refreshing, therefore, when I met the saleswoman at the Cadillac dealer, who clearly valued everyone’s capital. She demonstrated the advantages of recognizing the non-deal quickly, and taking action to preserve everyone’s best interests. After we talked for ten minutes, she punched a few numbers into a calculator, then she sat silently for a moment.

Her next statement blew me away: 

Well, Matthew, given your criteria, and your love of tech goodies, it sounds like it would be best if you bought out your lease and kept your current car.

There I sat, across from a salesperson telling me not to buy her product, that the best deal was the non-deal?  More importantly, she wasn’t even going to try creating something out of nothing. She would rather not waste my goodwill, her time or her company’s assets by showing me cars we’d never come to agreement on.

She recognized a non-deal, then acted in everyone’s best interest. Even though I wasn’t even a client, she refused to waste my time by giving me the final answer up front. Even when she asked me to meet her manager, it was only so he could thank me for stopping by, not convince me to do a non-deal.

Now apply that thinking to the housing industry. Imagine a salesperson who tells sellers their price doesn’t exist, won’t exist, won’t even let them pretend it could exist. And walks away from an overpriced, painful-price-reduction listing. An agent who tells their buyers their offer won’t work, can’t work, won’t even let them waste time making foolish offers. And encourages them to rent for another year or two until they can save up a better down-payment.

An agent who acts to preserve capital, in all its forms: marketing, sweat, and goodwill.

Imagine institutionalizing the art of rejecting bad deals. Creating teams of agents who can’t possibly believe it’s worth trying to sell the unsellable. They realize that undertaking a futile deal isn’t merely impossible, but irresponsible. Agents who see every expired listing as a misallocation of capital, desperately needed these days. Agents who couldn’t imagine wasting money, let alone writing their marketing plan around it.

Consider the advantages of approaching your their sales strategy as a capital investment plan. You’ll quickly see how easy it is to walk away from bad business. The argument that, if we don’t take the listing, somebody else might, becomes meaningless. Marketing strategies built around “sequential price reductions” wither under the scrutiny of asking, Is this the best way to spend cash, invest agent labor, or earn consumer goodwill? 

Once we look at the sales business as an asset management activity, the art of good deals becomes easier, the art of avoiding bad deals, a matter of course. Once we ask ourselves if we’d be happy if our stock broker called us to tell us about a bad deal, we see how silly it is to be happy to do bad deals as a real estate broker.