Why do listings expire? Normally it’s because they are overpriced. Learning to prospect this important part of the market can keep your business running strong for years to come.
I recently sat in on a webinar conducted by Laura Duggan, the broker-owner of West Austin Properties and founder of MailYourselfARaiseIn30Days.com. A major portion of Duggan’s business comes from prospecting owners of expired listings. Since Duggan hates cold-calling, she has designed a very effective system for prospecting owners of expired listings: contacting them every three days using snail mail.
Why work expired listings? Duggan cites five reasons:
1. You can target exactly the listings you want and that fit your style of marketing.
2. The sellers have already identified themselves as wanting to sell in today’s market.
3. You avoid sending costly direct mail to strangers who aren’t interested in selling now. Instead, your direct mailing program to expired listings is both highly targeted and strategic.
4. You can delegate the management of this program to an assistant.
5. The most important reason is that each expired listing that she converts normally generates an additional three to five sales for her team.
Duggan says targeting the right listings is crucial to success. She uses the expired listing service from TheRedX.com, specifically searching for the expired listings where one or more of the owners is on the Do Not Call list. She lets the agents who like cold-calling and door-knocking compete for the listings that are not on that list.
She then applies the following five criteria to determine whether the listing is really worth going after:
1. Location
Duggan prefers high-visibility homes in areas where there is high activity. You may be able to obtain a beautiful listing, but if it’s in an area where there is little sales activity, your listing may expire as well.
2. Condition
This is a huge factor for Duggan. She carefully reviews the multiple listing service photos to discover the age and condition of the property, and whether it is well suited to the buyers who are purchasing in that area. For her market area, there are two types of properties that sell well: relatively newer homes, and older homes built around the turn of the century.
She also looks for ways to change the condition of the property. For example, does the ivy need to be cut away from the trees? Do the flowerbeds need mulching? Does the front door clash with the trim on the house? If so, is it an easy fix with a little paint? Will the property require major work to get it into shape, or will it be relatively minor?
3. Marketing
Duggan looks carefully at how the previous agent marketed the property. For example, did the agent hire an architectural photographer who could show the house to the best possible advantage? If not, Duggan tells sellers, "Your photography is your first showing. People who view your property online are looking to disqualify houses. Your home will definitely benefit from our photography."
4. Pricing
In Duggan’s experience, about 75 percent of the listings that expire do so because they are overpriced. Duggan does an extensive statistical analysis to show sellers exactly where the property should sell. If the sellers still cling to their old price, Duggan passes on the listing.
5. Previous agent
If the previous listing agent was a strong, competent agent, Duggan usually passes on the listing. If a top agent failed to sell the property, there is often a seller-related issue that is blocking the sale.
Staging is a must
For Duggan, getting the sellers’ permission to tell the truth about what they will have to do to sell their property is paramount. As she puts it, "You don’t live in a house the way you sell it." If the sellers are unwilling to make the changes she suggests, she walks away from the listing.
Duggan also works with a staging company. This is a win-win, especially when there is a vacant property. Insurance companies normally cancel their policies if they discover a house is unoccupied. Many staging companies provide a "house manager" who will live in the property and cover the cost of the utilities.
This shows the house to the best advantage, it allows the owner to keep their current insurance in place, and helps with the owner’s expenses.
Immediate, easy access
Let’s face it, when there is plenty of inventory agents are going to show the properties that are easiest to show first. Duggan says that if there is an issue with the door sticking or with the lock being hard to operate, fix it. Don’t require the agents to make an appointment with the listing agent to show the property.
Furthermore, get rid of the big security sign out front and turn the security system off. Agents are reluctant to deal with security systems. Plus, it sends a nonverbal message to the buyer that the area may not be safe.
Finally, animals need to be crated and out of the way during all showings. While Fluffy may be OK when the family that lives in the property is there, many animals are territorial and can bite when they feel threatened.
What makes Duggan’s approach so effective is her careful targeting plus her clear-cut standards about pricing and staging. If you haven’t considered working with expired listings, there’s no better time than now.
