Don’t Step Over Dollars to Pick Up Pennies

(5-minute read)

Why choosing the cheapest option can sometimes cost you far more in the long run

When you're buying or selling a home, investing in real estate, managing your finances, preparing your taxes, repairing your vehicle, remodeling your home—or making almost any important decision—there is one question that often comes up:

“Who will do it for the least amount of money?”

It is an understandable question. Everyone wants to get a good deal.

But is the person or company offering the lowest price always the person you should choose?

Probably not.

In fact, when something important is at stake, focusing exclusively on the lowest price can sometimes be a costly mistake.

The Lowest Price Isn't Always the Best Value

Think about the people you trust with important parts of your life.

Would you choose your doctor solely because he or she charges the least?

Would you hire an attorney simply because that attorney offered the lowest fee?

Would you select an accountant because someone else could prepare your taxes for $100 less?

Would you hire a contractor to remodel your home based entirely on the lowest bid?

And when it comes to something as significant as buying or selling real estate, would you really want your decision to come down to who will work for the smallest fee—or who will give you the biggest concession?

Price matters. But value matters more.

The distinction is important.

A low price tells you what something costs.

Value considers what you receive in return.

What Are You Actually Buying?

When you hire a professional, you aren't simply buying their time.

You're buying their knowledge, experience, judgment, reliability, communication, problem-solving ability, relationships, and willingness to protect your interests.

Those things can be difficult to put on a price tag.

For example, when selling a property, two professionals might offer very different fees. At first glance, the lower fee may appear to be the obvious choice.

But what happens if the lower-cost professional:

• Doesn't know the local market as well?
• Provides less marketing exposure?
• Has fewer professional relationships?
• Is less experienced negotiating difficult situations?
• Is less available when problems arise?
• Doesn't recognize an issue until it becomes a problem?
• Focuses on completing transactions rather than maximizing results?

Saving money on the front end may feel good.

But if that decision ultimately costs you thousands of dollars in a lower sale price, unnecessary concessions, avoidable problems, or a transaction that falls apart, was it really a bargain?

Why Relationships Matter

The original article -that I read and was inspried to create this blog entry- makes an important observation about success: loyalty and relationships matter.

That lesson extends far beyond real estate.

Over time, good professionals develop relationships with other good professionals.

They know who can be trusted.

They know who answers the phone.

They know who follows through.

They know who can solve a problem when something unexpected happens.

And perhaps most importantly, they develop a reputation that causes other people to want to work with them.

Those relationships can create opportunities that simply aren't available to everyone.

Sometimes a phone call from someone you have worked with for years can accomplish something that a stranger's phone call cannot.

That's not necessarily about getting special treatment.

It's about trust that has been earned over time.

There Is a Reason Someone Is Cheaper

The original piece makes a deliberately blunt observation: when someone consistently offers to do something for substantially less, there may be a reason. The author identifies possibilities ranging from lack of ability or experience to desperation or a business model focused more on quantity than quality.

That doesn't mean the cheapest professional is always bad.

And it certainly doesn't mean the most expensive professional is always the best.

Price alone simply isn't enough information to make a good decision.

The better question is:

“What am I getting for what I'm paying?”

That's a much more useful way to evaluate a professional.

Cheap and Inexpensive Are Not the Same Thing

There is another distinction worth making.

Something can be inexpensive and still be an excellent value.

Likewise, something can be expensive and provide very little value.

The goal shouldn't be to spend the most money.

The goal should be to make a wise investment.

If paying a little more for an experienced professional helps you avoid a major mistake, negotiate a better outcome, save significant time, or reduce your risk, that additional expense may actually be one of the smartest financial decisions you make.

Real Estate Is a Perfect Example

Real estate transactions involve substantial amounts of money, complicated paperwork, deadlines, negotiations, inspections, financing considerations, title issues, and sometimes unexpected problems.

That makes choosing the right professional particularly important.

When you're buying or selling a property, don't evaluate a real estate professional solely by asking:

“What is your commission?”

Instead, consider asking:

• How much experience do you have?
• How well do you know my local market?
• How will you market my property?
• How do you handle negotiations?
• How accessible will you be?
• What happens when something goes wrong?
• What professional relationships can you bring to the transaction?
• What is your track record of helping clients accomplish their goals?
• Most importantly, what value will you bring to my transaction?

Those questions can tell you considerably more than simply comparing percentages.

The Long-Term Perspective

One of the most powerful ideas in the original article is that success isn't necessarily about saving a few dollars today. It is about making decisions that produce better outcomes over time.

That requires looking beyond the immediate transaction.

A few dollars saved today can be insignificant compared with the opportunities, relationships, time, money, and risk involved over the next several years.

That's why successful people often surround themselves with professionals they trust.

They aren't necessarily looking for the cheapest person.

They're looking for the right person.

Don't Step Over Dollars to Pick Up Pennies

There's nothing wrong with being careful about money.

In fact, you should be.

But being careful with money doesn't mean automatically choosing the lowest price.

Sometimes the cheapest decision is the most expensive decision you can make.

The better approach is to look at the entire equation:

Experience + knowledge + relationships + service + results + trust = value.

When something important is on the line, don't make your decision based solely on what you might save.

Consider what you might gain.

Because, as the old saying goes:

Don't step over dollars to pick up pennies.

You may save a few dollars today and regret what it costs you tomorrow.

Excerpts from article by TOM TOGNOLI, co‑founder of Intero Real Estate Services.

Shared by: 

Randall C. (Randy) Anderson, REALTOR®/Agent 
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