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Health & Fitness

The Natural Convergence of Real Estate

Have you ever noticed that when you are driving, riding, running, or passing, that all of the ‘pieces’ seem to converge.  Yesterday, while running on a narrow path, I was coming up on a walker and there was a runner coming the opposite direction.  There was enough room, but it was intriguing that we met at the same spot.  Not sure if there is an actual theory to explain it, but lets call it the Universe’s Nature to Converge, UNC.   Business is similar, with a natural, pro-competitive drive toward consolidation.

Real Estate is no different.  There is a natural concentration of talent, work and people that results in outcome.  The Pareto Principle maintains that 20% of the people impact 80% of the outcome.   What is interesting is that Victor Pareto made the observation about land ownership in Italy in 1906.   What the Pareto Principle is truly about is efficiency.   

There are approximately 1,000,000 Realtors in the United States and 200,000 of them are the movers-shakers –producers.  They generate MORE than 80% of the business.  Rhode Island is similar:  3600 Realtors, and about 720 do the 4/5th of the business.  It is about efficiency.  There is a convergence in business, and real estate is similar.

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What has been interesting is that buyers and sellers understand the impact of the Pareto Principle often more than the Real Estate agents.  We can see this when sellers ask buyers for a list of current inventory and sales activity.  We can see this in the concentration of specific Realtors in specific neighborhoods.  We can see this in the Sold signs.   Real Estate follows the theorem of the Universe’s Nature to Converge.

What is more intriguing is what causes that convergence.  There is not a single cause but it follows one concept: consumer need.  What does the consumer value?  In Real Estate, buyers can ‘find’ what they are looking for online.  What they need from the Realtor is a ‘trusted advisor.’  They need someone to help them analyze value, handle the negotiation, shepherd them through the financing process, and complete the sale.  It sounds easy, but it is not.  The process is complicated, not transparent, and challenging.  (And this is a 30 + year veteran of Real Estate speaking).   For the do-it-yourselfers, there are limited service companies.  For people who need comprehensive help, there are full service options.  In most instances, the fee is paid from the transaction.  By the way, that fee is usually paid at closing, after all parties’ purposes have been satisfied: sellers, buyers, inspector, lender, appraiser, city/town, title attorney, insurance agent et al.   

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There is a natural convergence in Real Estate. It is the result of Realtor effort to create the consumer-desired outcome.  Superior service and successful outcomes are the cornerstones.

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