I’ve made many mistakes in my life, and they’ve come in different shapes and sizes. Some were circumstantial, some came from trying and failing, and others came from not asking the right questions and were completely avoidable. It’s the last type that stings the most. Getting the right answers has everything to do with asking the right questions.
If you’re not among the 12 million people who have watched Simon Sinek’s famous 2009 TED Talk, I highly recommend it. Five years after I created my company, discovering his TED Talk helped me re-crystalize my brand identity and further reiterate the “why” behind why I started CORE.
Being able to clarify “WHY” our company is built the way we are has been a pillar of our brand and is why we remain the number one boutique agency in the most grueling market on the planet. I’ve watched Sinek’s TED Talk many times, and I feel that it is more relevant today than it was 15 years ago.
In his Talk, he discusses leadership and what we can learn to build a successful business. Simply put, he explains that people buy “WHY you do it – not what you do.” Knowing the “WHY” of companies can give you precious answers to help you avoid make costly mistakes.
This is applicable in real estate. Everyone knows that understanding WHY a seller is selling could be crucial to a successful negotiation. On a larger scale, understanding WHY a developer is building a project is as important. Knowing the developer’s “WHY” will help you navigate “WHAT” you should buy.
A few years ago, I sold a magnificent project to a handful of buyers who were excited about the apartments and the amenities of the building. These buyers closed, moved in, and waited for the developer to finish the amenities they had been promised to them. Soon after closings, the developer ran into financial trouble and handed the keys back to the lender, and now these disgruntled homeowners are still waiting for the gym, playroom, and spa to be completed.
I can’t help but feel that if we had all understood the developer’s WHY, it might have come with a “Buyer Beware” clause, and these buyers might have bought somewhere else.
Generally, there are two leading “WHYs” that motivate developers.
1. The ones who put blood, sweat, and equity into a project and care about what they are building knowing that the project’s success drives their reward.2. The ones who don’t count on the success of the project. They are developers who get paid vast sums to get the building built. They can amass hefty fees. The average development fee is 2-5%, meaning that on a $500M project, that developer makes about $10M, regardless of the sales velocity.
There are a lot of both out there.
A developer who is in pursuit of riches at the expense of the buyer is very different than the developer who has the vision and leadership to build homes we dream of.
As a buyer, it’s important to understand the “WHY.” Knowing the answer could save you a lot of heartache.
Side Bar:
Simon Sinek uses an excellent anecdote of man’s first flight. Sandra Langley had everything teed up to lead man’s first flight, but it was the Wright Brothers who won the prize because their WHY was more defined.
You can watch the video HERE.
Let’s do this!
-Shaun