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Agents – How To Approach An Expired Listing Or FSBO
It is a mystery when agents claim that the market is bad and have problems finding leads and just customers to serve. Because there is a huge public database of prospects who have already taken action to sell their homes available in every market. And that is the market for expired listings and FSBOs.
In case you don’t know what I’m referring to, here’s a short explanation. When a home owner hires an agent to sell his house, he often signs an exclusivity contract with the agent. This so that the agent will commit his resources to market the place knowing that he will be remunerated should his marketing efforts succeed in selling the house. And when this contract expires, the agent will usually move on partly because he has given up. Or the owner prefers a change of agent due to the disappointment that the agent has delivered. The same with FSBOs.
This is a great chance for you to contact these sellers and acquire them as customers. As you can probably tell that the competition will be fierce, you will need to offer something different to inch ahead of your competitors who are eyeing this market as well. But very often, agents forget that “something different” is not necessarily a new technology, a new marketing channel, or a new target market. It could be as simple as a different person. Ignore these prospects at your own opportunity costs.
One of the reasons agents avoid such prospects that they think such deals could be difficult to transact as they have already proven to be tough sells in the market. The truth is that there are many reasons why a seller might be unable to sell his house. And it usually revolved around having expectations too high for genuine buyers to meet. And now that their listings have expired, it is also the time where they review their expectations and lower them. Meaning it could be easier for you to close a deal compared to the agent before you.
Here are some activities that can help you when approaching expired listing owners and FSBOs.
Address their expectations. If an owner has not been able to sell during the listing period, the second listing will most probably have a slightly listing objective. For example this time, they could be happy with just a real offer of 5% short of their asking price. You need to dig out this information and do not over promise. Because it is almost a certainty that you will under deliver.
Work fast. Action takers and desperate sellers will re-list their properties within days of expiration. This is the window for you to get a leg in. It is also when they will be most open to hiring someone instead of going about a re-listing themselves.
Don’t oversell. This is the biggest mistake that agents make everyday. They promise the moon and always fall short. You don’t know the situation, haven’t seen the condition of the house, don’t have a real feel for what the owner is seeking, etc. So don’t make promises where you don’t know what you are getting into in the first place. Leave a little room for you to manoeuvre.
Be prepared for objections. In this instance, the homeowner have already gone through at least a round of listing and selling activities. They might ask questions like what you would do differently, or how confident are you. At this point, a newbie might try to sales talk his way out of a stressful situation. But because the seller is now experienced at this, he is usually not expecting correct answers. They are more like courtesy questions. The best way to handle these objections is to be frank and open about how you view his situation.
Acquire information. In the real estate market, information is truly power. You want to get as much information as possible about the seller and his house. Not so that you want to feel powerful. But so that you can evaluate why it failed to sell previously and how you can approach the deal differently so that there can be a better chance to close this time. Ask about what the previous agent did so that you know what has failed.
Present your track record. It will undoubtedly help you if you have a history of taking over expired listings and turning them around quickly. If you have a track record of these successes, make sure to present them to your client. This very often is enough to convince someone to hire you as you have the specific experience on a specific situation. This can be a basis for you not to compromise on your fees as well.
Exit option. In most cases, owners of expired listings had wanted to fire the previous agent long ago. It was just the contract penalties that had prevented him from doing so. So to get into a new contract can be a deal breaker for some homeowners. For such prospects, allowing the option of exit before contract expiry can be a term that is difficult to turn down. Owners have nothing to lose and everything to gain.
Many agents still have a phobia with making cold calls after years in the industry. So they use other methods to reach out the prospects. Just don’t forget that a phone call is a better opportunity for you to acquire a client compared to just sending a post card. It’s not as scary as you imagine. If you stop fearing rejection, you will soon find that making cold calls can be a fun activity.