THE 80/20 RULE Imagine a buyer is in the market for a three-bedroom home and his agent found him five houses to preview. Each meets his general criteria, with similar features, are comparable in price, and are located in his desired area. One would assume the buyer would have a difficult time deciding between the houses. But no matter how similar they may seem, no two houses are exactly alike. This is where something called the
“80/20 Rule” comes into play. The 80/20 Rule, also known as
the Pareto principle (suggested by Joseph M. Juran and named after Italian economist Vi l f redo Pareto) , states that for many situations, about 80% of results, or effects, will come from about 20% of
efforts, or causes. Let’s say that one out of the five houses has a pool. The buyer is unaware of this feature, however, because the agent didn’t bother to mention it. The buyer tours the four houses without a pool and isn’t particularly interested in any of them. Then he sees the fifth house with the pool. Suddenly, he is ready to make an offer. He may even pay full asking price, even though this house is more expensive than the others.
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