One of the biggest complaints about real estate agents is that they ‘listed my home and never called me again.’ Unfortunately, the statement is more truth then it is false. In order to excel in your real estate business, it is imperative that you understand why agents do this. Sellers will claim that their agent just wanted to get the listing, put it in the MLS and wait for someone else to sell it. Though this may be the case sometimes, it is not often. Real estate agents want to sell the listing themselves if possible and earn more money yet exposing it to the MLS increases the probability of making a sale quickly.
So, why do agents fail to communicate with their seller’s on a regular basis?
Of course, the list of reasons could be very long, let’s look at the one that is most common. Agents avoid calling the sellers for fear that the seller will ask them what they have done to get the home sold. That can be a tough question for a lot of agents especially after a few months go by and they have already advertised the home, held a realtor open house, a buyer open house and still no results. As time goes by, the seller’s question gets tougher to answer so instead of communicating with the seller, they remain silent. Most agents are afraid to suggest a price reduction to the seller so they fail to return calls and ultimately the listing shows up on the expired list.
For those of you that are not familiar with the expired list, it means the listing contract is dead and you cannot make money off a dead contract. Often, the real estate agent knows they have a dead listing long before it expires. In many cases, they had a dead listing the minute they take it at a higher then market price.
The Top Producing agents around the country have the solution. As soon as they identify a dying listing in their inventory, they immediately apply CPR. They know they cannot make money by carrying dead weight in their inventory. They must bring the listing back to life or bury it. Let’s discuss how you can perform CPR and turn those dead listings into profitable transactions for you and most important for the seller.
What are the signs of a dying listing?
• Your listing is getting a lot of showings and no offers
• Your listing is getting very few showings and no offers
It is possible to have a listing that gets shown by agents all of the time yet never seems to get an offer or if an offer does come in, it is really low. If you have a listing like this, it is overpriced. The showing agents see enough value in the listing to show it yet the buyers do not see enough value to make an offer. Perform CPR quick.
It is also possible to have a listing in your inventory that never gets shown therefore never receives an offer. If you have one of those, it is overpriced. Not only do the buyers fail to see the value, the agents fail to see the value therefore won’t take the time to show the property.
You can conclude that a listing with no offers will not sell. Now is the time to start Creating Profits through Reductions.
Steps to effective CPR:
Step 1. Price it right the first time. Study the market and tell the seller the truth then back up your pricing presentation with market data. Inform them of the negative consequences of overpricing their home.
Step 2. Future Pace the seller. Avoid taking overpriced listings. In the rare case that you do take an overpriced listing, future pace the seller by stating the following script.
“Mr. (last name), I can agree to list at (their price) today and I want you to know that I am committed to keeping you informed throughout the entire transaction until closing. At any time that I feel we are not getting the activity that we need to get the home sold, I will immediately call you to discuss our options, which, one could be a possible price adjustment, sound fair to you?
Making a price reduction presentation to a seller after you future paced them for the discussion is much more effective then bringing up the conversation for the first time. You can start the conversation with the following;
Mr. (last name), I wanted to give you a quick call to discuss the activity on your home. Do you have a minute to talk? As you probably recall, when we listed the property we agreed to evaluate the activity and make the proper adjustments necessary, you do recall that, right? Great!…………. (discuss the lack of activity and ask for a price adjustment that will cause it to sell)
Step 3. Update your seller every 30 days. Sellers are evaluating your success by rather or not their home is sold. If their price is in the way of the property selling, remind them of the dangers of overpricing and have them reduce. Notify your seller that you will give them an activity report every 30 days. If you have a listing for 30 days and it is not sold, use the price reduction script and perform CPR.
Step 4. Consider giving the listing back. The only thing you gain by having listings not sell is a bad reputation. If you make 3 attempts to get a price reduction and the seller does not budge, give it back. The bottom line is your seller is not willing to do what it takes to sell in today’s market. They are lacking motivation. You cannot make anyone sell their property. Your job is to inform the seller as to what price it will take to sell. Their job is to give you that price and send you to work. Remember the old saying, “You can lead a horse to water but you can’t make him drink?” You can inform the seller over and over again yet if they are not willing to follow you suggestions then let them go.
If there is one area where you want to do the opposite of the majority of agents in the industry it would be in the area of reducing prices on the inventory that is not selling. What does WalMart do if something isn’t selling? Reduce the Price. What does Best Buy do when digital cameras stop selling? Reduce the price. What does Saks Fifth Avenue do to clothes that are not selling? Sell it to another retailer at a reduced price. It is common knowledge that when inventory is not selling, the solution is to reduce the price.
A few final thoughts on CPR:
- Always shift the responsibility to the market. Remember, you do not control the price, the market does.
- When going for the reduction the 2nd and 3rd time, act as if it were the first time. Pricing is a snap shot in time so you must evaluate the price over and over again.
- “Your price is being reduced by the market whether you change it or not”
- Go for the reduction that will make a difference.
- You do not lose money by giving a listing back that will not sell. You actually save time which you can use to make more money.
- Have price reduction time in your schedule.
- The longer you wait to make the call, the harder it will be.
- Getting a listing does not make you money, getting a listing sold makes you money.
Look at you inventory today and ask yourself which one of these listings needs CPR?