Back to Basics: Prospecting Expired Listings (Part 1)
by Bernice Ross, Ph.D. MCC
Owner, Teleclass4U.com, LLC and RealEstateCoach.com
Copyright © 2006
RealEstateCoach.com and Teleclass4U.com
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Why do listings expire? Normally it’s because they are overpriced. You may be reluctant to confront these sometimes unrealistic sellers, but learning to prospect expired listings can keep your income strong for years to come.
Even as the web continues to grow in importance, focusing on the basics is still the name of the game. The term “right now” business refers to expired listings, for-sale-by-owners, referrals, and tenants in occupied listings. Each of these represent the best type of real estate lead—the person who needs to buy or sell a piece of property now. In contrast, web leads take 6 to 18 months to incubate. While web leads purchase faster once they decide to take action, incubating them can often be difficult. Even though traditional leads interview more agents and/or look at more houses, they lack the long incubation period that web leads require.
Because the sellers are often angry that their property hasn’t sold, many agents are unwilling to approach a seller who may be confrontational. Others are afraid to compete with multiple agents who regularly prospect recently expired listings. Many also do not know what to say when the seller complains:
Where were you when I was listed with XYZ real estate? No one showed my property and now every broker in town is calling on me.
The answer is,
I focus on selling my listings. If you were listed with me, you would want me to focus on selling your listing rather than a competitor’s listing, wouldn’t you agree?
To effectively prospect expired listings, here are the steps that you need to take before you contact the owner.
First, you must be prepared to deal with an angry seller. The best strategy for coping with angry owners is to help them understand why their listing did not sell. A great way to do this is with the following script:
One of the reasons that listings expire is because they did not receive adequate exposure on the web. If you were to place your property on the market again, would having it marketed on over 20 different websites be a service you would want?
This script does a number of things. First, this script offers a service and then asks whether the seller would like the service. This is quite different from using manipulation or telling the seller how good you are. In fact, the most effective closes work with an offer of service followed by a question. Second, this approach provides an explanation for why the property did not sell—it didn’t have enough exposure on the web. Third, you eliminate virtually all competitors since very few agents have figured out how to achieve this level of web exposure. Instead, they send out an expired listing package or offer to provide a competitive market analysis (CMA) as their primary means of motivating the seller to contact them.
You must also be prepared to address pricing issues. If the seller is over-priced, use the amount of inventory on the market to motivate the seller to be realistic. For example, if you are in a market where there is ten months of inventory, this means that only 10 percent of the inventory sells each month (100 percent of the inventory divided by the total months of inventory = the percentage of inventory that sells each month.) Here’s how to present this to the seller.
Mr. and Mrs. Seller, there is currently ten months of inventory on the market. This means that if no new listings come on the market, it will take ten months for the existing inventory to sell. In other words, in any given month, the probability that your listing will sell is 10 percent. The probability that your property will still be listed next month is 90 percent. Consequently, you have an important decision to make. Will you price your property in the top 10 percent of listings that will sell next month or will you price it in the 90 percent that will still be listed next month?
This is an extraordinarily powerful script that I have used since the 1980’s. Most sellers understand that the market may be slowing. When they realize, however, that they must be priced in the top ten percent based upon their condition and the amenities that their property offers, they normally will decide to be more realistic about their price. This script works not only with expired listings, but on all listing appointments. It is also a powerful approach for getting price reductions.
You now have a way to approach expired listings, a powerful offer of service, and a simple pricing script. Master these and you are prepared to go on an expired listing appointment. The next step is to locate expired listings and make the actual appointment.
Want to learn more about prospecting expired listings? If so, see Part 2 of “Back to Basics: Prospecting Expired Listings.”