By Mark Leck
In this ever changing economy, agents throughout the country have been employing a myriad of different tactics to help bolster their business to avoid going bust. The once taboo practice of working expired leads has, out of necessity in most cases, become an integral part of most successful agents’ business strategy. Similarly, more agents have also begun prospecting FSBOs, who only a year or so ago, would never have volunteered for that type of abuse! In the past, I have frequently been questioned about the merit of prospecting in general. However, now more than ever before the question is less about whether or not to prospect and more about what to prospect. I would like to help answer that question, by comparing and contrasting the differences between your two major lead choices.
I have always been surprised by how many agents get caught up in the question of going after another agent’s expired listings as opposed to focusing on selling a home for a potential new client interested in moving. Expired listings represent an incredible opportunity for agents that are capable of tackling the problems inherent with this type of lead source. However, understanding this lead type is the key to not getting frustrated in the process.
Q. What are the pros of working expireds?
A. First and foremost, this is a lead that wants to sell their home and has already demonstrated a willingness to work with an agent. They understand the value an agent can bring; they just have not met the right agent yet. So get in there, and let them know you are the right agent for the job! Another pro is that many agents do not meaningfully work expireds, so there is often little to no competition in any given market.
Q. What are the cons?
A. The first problem you are going to encounter with Expired Leads is trying to contact the owner. In most cases the only information you have is an address, and unfortunately, not every address has a phone number associated with it. If you have ever prospected Expireds on your own, you will understand that finding the owner information is not a science, but an art. Expect disconnected numbers, wrong numbers, and tenant numbers. It is all part of the game. Like panning for gold, you have to sift through the dross before you get to the gold nuggets – and gold is exactly what good expireds are. Using an automated system to do most of this legwork can save you a tremendous amount of time and give you a real competitive advantage. You will still have to make the calls and sift through the dross of wrong/disconnected numbers, but in the end it will be worth the effort when you find those golden home owners.
Once you get in contact with the homeowner, the second likely obstacle you will encounter is “the dissatisfied customer.” They have been hoping to sell their home for the last six months – their agent swore on the Holy Grail they could do it, but they did not deliver. What makes you any different? This, however, is not as difficult of an objection to overcome, and may actually help with the next hurdle: price objections.
By far, the number one cause for a listing to expire is due to a poor listing pricing. Unfortunately, most real estate agents allow the homeowner to act as the professional and set the listing price on their home, instead of the other way around. Far too few agents are willing to walk away from a listing, when they know that the seller has an unrealistic price and that the property will not sell. What is the result? The listing expires, and the agent ends up with mud on their face because the homeowner blames them. If more agents had the courage to walk away from these types of listings, they could save themselves the disappointment of an unsatisfied seller along with its associated repercussions. Down the road they might also be surprised to find that the homeowner is willing to work with the agent on their terms, once they have seen that the agent predicted their folly.
In today’s market, this problem has been exacerbated significantly by the depressed home values. Homeowners are in denial that the value of their home has dropped substantially and they frivolously hope they will be the exception to the rule. The ensuing disappointment felt by the homeowner, however, can actually work to your advantage. Many times, the homeowner of the expired listings has already experienced a reality check and is now more willing to do what it will take to sell the home.
All in all, if you understand that finding homeowners is an art, not a science and that correctly positioning the home is the key to selling expired listings, you will find this lead source an incredibly commission-rich opportunity for you as an agent.
For Sale By Owner Leads
For Sale By Owner (“FSBO”) leads are another excellent source of listings for the willing agent. Void of the taboo felt by some agents towards expired listings, FSBOs provide agents with an opportunity to compete for listings that have yet to be spoken for. This perk does not come without its price, however, and many agents have been led unsuspectingly into the challenges of FSBOs merely because of their desire to avoid working expireds. The key to these leads, as with all leads, is to clearly understand the obstacles you will encounter before you begin your prospecting.
Q. What are the pros of working FSBOs?
A. As I mentioned before, FSBOs represent a source of potential listings that have yet to be claimed by an agent. Once you have aggregated your list of FSBOs, they are relatively easy to get in contact with. Unlike expired listings, locating the contact information for the homeowner is relatively easy because just about every listing has a phone number. When calling FSBO listings, you rarely experience disconnected or wrong numbers because the individual selling it is expecting phone calls from interested buyers.
Often times, FSBOs experience the difficultly of selling their home solo; this experience can often make them more open to your professional advice and experience. With the right approach, this new found humility can be your ticket to acquiring a golden listing with a seller that is ready to work with you on pricing.
Q. So what are the cons?
A. The difficulty in working with FSBOs often depends on the individual, but one thing you can count on with any FSBO is objections. Typically anyone that puts their home up for sale also considers working with a professional who makes a living trading those assets. Something has made this person choose to go solo, and your task will be to determine what it was, and then resolve their concerns. Most likely they have a concern related to pricing and the cost of commissions, but it could also have been a negative experience with another agent, or a new found streak of independence. This article is not intended to be a treatise on resolving those objections, but instead to point out that there will be objections.
Prospecting FSBOs also tends to be more popular than prospecting expireds. As a result, you may find more competition. This should not deter you from prospecting them, but it may cause you to consider alternative strategies (such as prospecting “aged” FSBOs that are 30-90 days old, using mail-outs, etc).
Aggregating a list of FSBOs in your area can also be a challenge if you are doing it on your own. However, utilizing a FSBO leads provider can easily help you overcome this obstacle and help you get on the fast track to prospecting this valuable lead source.
Agents who find success in this ever changing industry are not afraid to work; and while prospecting definitely takes a higher degree of commitment, energy, and even skills; the return from these golden nuggets makes it worth sifting through the dross. No longer are agents asking “should I prospect”, but instead: “what should I prospect?” Understanding the differences between FSBOs and Expireds will help to prepare you to prospect either one – or both! So get after it! — Good hunting!
Mr. Leck is the Founder/CEO of Real Estate Data X-Change, Inc. (REDX)