New-home salespeople, or for that matter anyone selling real estate or related products, have seen a huge shift in the competitive landscape in the current environment. You probably don't need a blog to figure that out.

But for as much as we recognize that, we may still be missing something. Not only are we likely overlooking the nature of that competitive shift (and the effect it has on us as salespeople), but we also may very well be misunderstanding the structure of our competitive DNA. Are we really as well equipped as we think we are to compete? And do we really know who (or what) our true competition is?

These questions were prompted by a piece in last Saturday's The Wall Street Journal titled "The Superstar Effect," written by Jonah Lehrer. (Lehrer also wrote a great book that anyone selling anything should read called "How We Decide".) In the WSJ essay, Lehrer introduced the notion that, when faced with a dominant talent in any given field (golf, chess, business, what-have-you), top-notch competitors can become so intimidated by those players (think Tiger Woods, Bobby Fischer, Jack Welch) that they pretty much just pack up and go home. That's right, rather than stepping up their game, they fold in the face of steep competition.

As Lehrer put it:

"This is what happens when people 'choke.' Because the performers are nervous, they begin analyzing actions that are best performed on auto-pilot. When playing against Mr. Woods, for instance, golfers might start second guessing their drive, a skill they've honed through years of practice. Instead of elevating their game to compete with the superstar, his intimidating talent makes them think like a beginner. They regress before the crowd."

So, what does this have to do with selling homes or products related to home sales such as mortgage financing, title insurance, and the like? From about 2000 to 2006, buyers were plentiful. There were more of them than houses to sell, and home sellers thought they were competing at the highest levels. But competing for what or for whom?

Because there was home buyer demand, home builders, for example, competed against each other for land, subcontractors to build the product, pricing advantage for commodity product like lumber and drywall, etc. Similarly, mortgage companies competed against one another to offer easy-to-qualify financing plans in place to meet the demand. But at the point of sale--where and when home builder salespeople actually engage customers--there was no competition.


Think about it: Customers were competing with each other to buy homes from sellers.

So, to draw from the WSJ essay, those selling homes (primarily builders) were the so-called "superstars" (at least in their own minds), and customers succumbed to the pressure.

Now the worm has turned. In 2006, the markets began to cool as consumers lost jobs and financing sources dried up. The industry's supply-and-demand balance shifted from a shortage of product and a nearly insatiable demand for housing to too much product for a dwindling number of buyers. Many home sellers reacted to the new market dynamics with a race to the bottom; they essentially tried to beat each other's brains out with incentives and deals to lure in the shrinking supply of buyers. But what really happened is a new "superstar" emerged--the buyer.

Better prepared, more capable, smarter, the "New Buyer" entered the game. Not only could this new buyer stand toe-to-toe with home sellers but s/he could also pack quite a punch. Home sellers, once always on the offensive, quickly fell back on their heels. In boxing terms, it was as if they were trying to engage Muhammad Ali in the ring while backing up to the ropes.

So, how should we be competing?

We should not compete with our peers for customers. Rather, we should focus on competing with the customer to solve his/her problem. Obviously, it is important to be productive and generate sales. However, those home sellers that focus solely on what the builder down the street is doing instead of on trying to understand the fundamental problems, needs, and desires that are driving potential home buyers to their doors will come up short. So, the game is about understanding and solving problems that allow you to avoid what Lehrer called "the inevitability of defeat."

Jon Fogg is a partner with The Berke Group's sales practice. He can be reached by e-mail at