How to Figure out What Your Time is Worth
You know what the biggest obstacle is to selling a home? As a real estate agent (or ‘broker’ for my American friends), I can tell you for sure.
It’s not the market.
It’s not the time of year and it’s not the weather.
It’s the client.
Funnily enough, the client, the one selling, is usually the biggest obstacle. They very often stand in their own way. Though more specifically than ‘the client’, it is more accurately, the client’s biased and inherently flawed view on how to understand value.
Everyone thinks their house is Xanadu
It’s called ‘The Endowment Effect’ – where people value something more highly just because they own it. Because it’s their teacup, and not the anonymous one in the shop.
Sellers always do a little bit of their own homework before they invite you into their living room. And normally, there’s slight disappointment over the reality that their run-down old shack is not worth a mozza.
Everyone thinks their house is worth the most.
But few treat their time like it has any value.
The same people in the same culture undervalue their time day-in, day-out.
Where do you stop off on this scale?
Would you work for 5 hours to save $10,000?
Would you work for 5 hours to save $5,000?
Would you work for 5 hours to save $1,000?
Would you work for 5 hours to save $500?
Would you work for 5 hours to save $100?
Would you work for 5 hours to save $10?
Where did you stop off? How strong is your ‘delayed gratification’?
The answer tells you the extent to which you are undervaluing your time.
Don’t mess with an old lady at an auction.
I was at an auction once for a property that I thought was worth around $2 million. It was a fantastic piece of land in a good spot – it felt like everyone who lived in the neighborhood was there to see what happened.
The bidding started and to my surprise, most of the bidders were soon turned away in disappointment. They were being gazumped by three bidders.
The three horse race became a two horse race.
It was an old lady vs. a church in the end. Going neck and neck. Toe-to-toe. Fighting till the last.
The old lady was set on dying in the place! She didn’t need a loan from the bank and was willing to spend every last penny she had on that house. In the end, she did the unthinkable and beat the church…
For a whopping $3 million… that’s $1 million more than I thought the house was worth.
There is no ‘true value’ of a property
People make the mistake of thinking that because a house is something they can look at, touch and feel, that it has a ‘true’ monetary value. But it doesn’t – in my view, nothing does. Value is only held together by strong stories, nothing more.
If this emotional old lady hadn’t been willing to die in this house, or the church hadn’t been interested, the property would have sold for far less. But when people see the latest results online or in the paper, they don’t see the story. They see the number and think “well if that was worth $3 million, mine’s worth double!”
And the market moves over time.
There is no ‘true value’ for your time, in dollar terms
In the same way there is no true value for your time, not in dollar terms. Your time is priceless, and your value cannot be accurately compensated for with bank transfers, cryptocurrencies, notes or coins.
In real estate, agents and brokers are taught a trick to help their decision-making.
Because they normally earn a commission on sales they make, most, if not all of their pay comes in big chunks once a sale is done and settled. But this can be misleading. Agents are encouraged to divide their commission by the amount of time they spent working on the deal to determine an hourly rate.
So if they were paid $10,000 but spent 40 hours working on the sale, they’ve earned $250 an hour for example.
Let’s not confuse this with the real value of our time.
This is not what an individual’s time is worth, it’s what their time is worth as a market rate.
Earning potential is not in any way correlated with the true value of a human life. It is easy to slip into this style of thinking because of the status games we are all wired to play.
But it is flawed, harmful and dangerous.
So how do you figure out what your time is worth?
My answer – however you want. In my eyes, your time should have infinite value to you, precisely because it is finite.
In my eyes, you should not be optimising income-per-hour in your life, unless your Time ROI is being optimised… unless the quality of your experience improves at an exponential rate over time.
If you find yourself asking what should I be getting paid right now? Then in my opinion you’re asking the wrong question.
The real question is how should I be living right now?
Who do you think of when you read this? Would this piece ‘open a door’ for someone you know?
Why wouldn’t you share it with them?