By Barry Lebow
When I was developing my first seminar on using appraisal as a tool for superior listings and sales, an experienced manager told me, “Never show the public expired listings. They will get those prices into their heads.” I did not agree because the opposite is true. Expired listings have power.
When I present for a listing, I do a two-part process. First I take the potential clients through the real estate process and explain what services they need, what they do, what the market is like and how we market. There is a bit about me but I minimize that, because the awards are not that important to most clients.
The second part is all about pricing their home to ensure a sale. In the past six years, I have had a single expired listing and that was more about the personal relationship, not the actual listing. Things sometimes happen. My goal at their table is simple; I want not just a listing but a listing that will sell.
There are three sets of data, in three separate folders when I present. The first one is Your Competition and this includes all relevant listings that are currently on the market that will be competing for the same buyer. Obviously, the more that are on the market, the more realistic our pricing must be. When there are few competing listings or sometimes none, then your pricing can be more aggressive.
My next folder is Sold or Historic. Here is the thing about a sold listing; no one can buy one. I put this to you: if you have a happy buyer right now with a deal pending, can I come along and buy their offer at the same price they just paid? What if I offered them $10,000, $20,000 or $50,000 more? Maybe for the right figure they would assign their offer but few would sell it to me for what they paid. No more than I can buy a stock at the same price as yesterday, I cannot buy a sold house. Sold data is historic and reflects what was.
Which brings me to my last and always red folder with a banner printed across it, Rejected! What is an expired listing? It is a listing that was offered on the market, it was seen by the public and rejected. They did not buy it because the price was out of line with the market. Rejected or expired listings set a ceiling on valuation. One must reason, if we have three or more expired listings at a certain asking price range, then we cannot list at that range. I emphasize that powerful word, “rejected” as that is your and our seller’s future if you take an overpriced listing.
In my classes I show Realtors how to establish their hourly rate. We estimate the time that goes into preparing for a proper presentation, for attending a presentation and then the hours that one works during the listing period on that property. Most attendees in my seminars end up with figures from a low of $1,000 to $3,000. In my own case, I estimate that I invest about $2,000 per listing. Knowing what it costs is paramount to establishing not only our worth but our costs.
If a listing costs you at least $1,000 and it expires, not only have you wasted time, you may as well have burned a pile of $5 and $10 bills. Just poured kerosene on the bills and tossed in a match. That makes no sense. A sold listing gives us bragging rights. Our SOLD banner rides high on the sign post and we send out printed material promoting that sale. We celebrate and high five. But have a listing expire and we slink into the night. We failed our clients and ourselves and lost money. It does not help our confidence either.
To recap, use three folders: Competition, Historic and Rejected. Have those words printed neatly on the covers of each folder. Ensure that the Rejected is a red folder.
And finally, after I show all of the data I ask this question, which I believe I learned from Jerry Bresser training decades ago: “Mr. and Mrs. Price, based on all that I have shown you, at what price do you believe that we should market your home?”
I have never had one person answer, nor do I expect them to. I love it when they turn and look at each other and one will usually say, “This is not what we believed to be the pricing.”
Most ask then for my opinion, which I can support with pure data. Rejected is a powerful word, a powerful image and powerful to establish what ceiling of value cannot be achieved.
This topic forms part of my newest seminar, Pricing the Luxury Property to Sell.