Finding the Sellers and Moving the Merchandise
"If you list, you last" sums up the sentiment of most brokers. It's not hard to appreciate why they feel that way. Listings are the basic inventory of the real estate business. They are what's for sale up on the shelf. It's been said: "When your last listing is gone, you've had your going-out-of-business sale." That's not much of an overstatement. Even though there are now brokerages that specialize in working exclusively with buyers, it's clear that unless there is something to sell, everything grinds to a halt.
Lots of positive things happen when a good listing comes into the office. First, everyone, including all those using the local multiple listing service, can start to look for a buyer. In most cases, no matter who finally sells a listing, the listing agent and broker collect their fees. Second, the listing can be advertised, which generates activity that benefits the entire staff. Finally, a "For Sale" sign can be placed in the yard-and having those in front of dozens of prime properties (with a rider with your name prominently displayed on many of them as the listing agent) is one of the best forms of advertising possible.
Your broker will also want you to have a success experience early on-a desire you will share passionately. It's generally easier to get a listing than to make a sale because there are typically more people who want to sell than there are qualified buyers who want to purchase. For all these reasons expect to be encouraged to develop your listing skills as your first order of business.
FINDING THE SELLERS
If, as they say, "old salespeople never die, they just become listless," then here are some suggested sources of listings to keep you alive and perky. In the discussion that follows, I am assuming a traditional relationship between the licensee (you) and seller in which the owner who lists a property is the client, pays the commission, and is owed a fiduciary responsibility.
- Former Clients of Agents No Longer in the Office. All offices have some turnover of agents, and not every broker does what would be in his best interests- that is, assign someone to take over abandoned accounts. For example, the Pearsons bought a home through your brokerage eight years ago from an agent long since gone. No one is keeping in touch with them. Research the situation. You would do that by reviewing the "deal files" that all brokerages maintain. When you locate these cases, ask to handle them, for legally they are your broker's listing, not that previous agent's. If you get the go-ahead, send the prospects a letter with your card and any other appropriate promotional material, and follow up with a phone call or a personal visit. I did this when I was getting started (with my broker's blessing) and came up with several leads that eventually resulted in a couple of listings - and sales.
- Builders and Remodelers. Be very selective in cultivating this source. Builders differ greatly in their perception of how business should be conducted. Naturally, you want to list the homes of builders who share your philosophy. If you are fortunate to establish rapport with one who does quality work and who will market his homes through you, it will add an interesting and profitable dimension to your activities. Of course, you could really strike it rich if you happen to land the account of a large-scale builder who is developing subdivisions of homes. I was fortunate. My primary broker was also a large-scale builder (we're talking subdivisions), and I also represented two young, enthusiastic, incredibly ethical young men who had their own company. They built one quality home at a time and I sold it for them.
- Absentee Owners. People who own real estate in your community but live out of the area are excellent prospects. This is especially true if they are absentee rental property owners, since the aggravation associated with that arrangement can provide a terrific motivation to sell. The first step is to pick an area and research a manageable number of properties. There are public records in the assessor's or tax collector's office that you can use, and there is probably a reverse directory for your community, published annually, which lists residences by address and indicates the occupants' names, along with a notation as to whether they are owners or renters. The Internet is also a great source of information.
After you obtain the addresses of the owners, prepare a letter in which you introduce yourself and your company and offer your marketing assistance to them, should they wish to sell. Personalize it with a handwritten note and call the particularly promising prospects. It is remarkable how positively most people react to long-distance business calls that are properly handled. Don't call before 9 A.M. or after 10 P.M. (their time, not yours). It is hard to establish rapport with someone you have just awakened.
- For Sale by Owner (FSBO). Every new real estate agent has probably been advised or required to call people who are attempting to sell their homes themselves. The reason for pursuing homes for sale by owner (FSBO-or "fizzbos," as they are fondly known) is simple. History shows that a large percentage of them find the whole process so daunting that they eventually list with a broker. If you can convince them that you can do a better job than they can and net them as much money (or more), they are likely to list with you.
Calling fizzbos gets mixed reviews from agents. Some very successful ones do it as a matter of routine and develop a real knack for it. Others abandon the effort after they secure other sources. Some never do it at all. No matter what course you select, there is one instance when you should definitely call. If you are working with a buyer for whom a particular fizzbo listing looks promising, call and ask for a one-party listing. This is a listing that would be valid for only the person to whom you showed the property.
Be prepared for skepticism when you call, however, for one of the gimmicks some unethical agents use is to call and indicate they have a buyer and would like to preview the property. The buyer is fictitious, but, for some agents, the chance to get their foot in the door seems to justify the dishonesty. Once they've been taken (or hear from someone who has), sellers understandably become wary, so when you approach them with the genuine article they are hard to convince. However, if you have a legitimate prospect, it is definitely worth your effort. The For Sale By Owner Kit by Robert Irwin (see "Real Estate Marketing," Appendix C) is an excellent source of information. It's written for the consumer-the potential fizzbo-and will give you a good insight on how you might tap into the market. Home Selling For Dummies by Ray Brown is another excellent basic reference, and there's even a website, www·myfsbo·com you might want to visit to see how the fizzbo market is being targeted.
My experience in working with fizzbo's is that they are frequently uninformed on one critical item-how to price their home. It's a sensitive area, but one in which you need to develop expertise so that you may offer sound guidance.
- Expired Listings. If a property has been on the open market for an extended period and has not sold, ask yourself why. If it was because the listing agent did not handle the marketing properly or did not try to get price reductions when it did not sell, there is a good chance that a fresh, more professional approach will get better results. If it was because the sellers were not motivated or some other factor you cannot change, it probably will not be worth your time. The fact of the matter is that the number one reason listings don't sell is price, so you need to factor that into your approach.
Whether you work expired listings or not, keep track of them. You may encounter a buyer who is looking for exactly the kind of property that was previously on the market. Very unique listings, especially extremely highpriced ones, may go unsold, so it is worth keeping tabs on them. In working expired listings, be circumspect in dealing with the owners, for they have had an unsuccessful experience with another real estate agent. Out of professional courtesy, resist any temptation (no matter how well justified) to criticize your predecessor's efforts. Never, under any circumstances, contact a seller before a listing has expired, in anticipation of being able to secure the listing later. That is unethical and could get you in serious difficulty.
- Ads Generated by Buyer Contacts. Some buyers are in no hurry. They will describe an ideal property to you, whether it is a home, a small acreage, or a business. If you can find what they are looking for, fine. Otherwise, they will stay put. If you occasionally run short newspaper ads indicating that you have a potential buyer for a specific type of property, you may be able to generate some excellent listings. Again, you will probably encounter skepticism, for an advertisement for a prospective buyer is a ploy used by those few who are willing to bend the truth to make the phone ring.
- Farming. The prospecting technique known as farming is covered in almost all real estate training programs. In its classic form, it involves an agent deciding on a specific area of town (typically a section with 200 to 300 homes in a homogeneous, contiguous neighborhood) and "farming it" for listings. The tactic most usually advocated is a series of personal visits to each home on the farm, spaced throughout the year. The objective is to become so well known to the home owners that they will automatically think of you when it is time to sell.
Suggested farming procedures include leaving gifts (calendars, pens, pot holders, memo pads-all with your name and phone number on them), writing a newsletter (including neighborhood information, such as who baby-sits, who is moving out or in, and so on), and organizing neighborhood activities (get-togethers for newcomers, block parties). The recommended initial contact is through a door-to-door "cold call" (no previous contact), using a rehearsed, introductory speech.
Some agents have gotten rich farming and stay rich by doing it faithfully. Others are not comfortable with the door-to-door solicitation approach (in some places there are laws against it) and remain unconvinced that it is a wise expenditure of time. Others farm, but use techniques such as phone calls, printed newsletters, and e-mail contacts.
If you decide to farm, do your homework. We've owned a modest condominium that we've rented out for a decade or so. Several years ago, an eager real estate agent decided to farm that neighborhood. He never bothered to check to see who owned the property. Our tenant was delighted to keep receiving the gifts, but the potential payoff for the agent was nonexistent.
Let's assume you do decide to homestead a nice little farm. What information do you think would be of most interest to those in your area? Hands down, it's the price of homes that have sold. A college friend of my wife's lived with her husband in Austin, Texas, for many years. She informed me that for the entire time they were there the agent who sold them their home originally sent out a monthly newsletter to all the neighbors. In addition to general real estate information, the selling price of every home that ever sold in the area was always included. When they moved from Austin to Dripping Springs, Texas, (really, there is such a place) they listed with that agent.
- Focused Fandango Farming. Here's a suggestion. When you get your first listing (after the celebration party is over) use that as a vehicle to develop a well defined, focused farm. You will have printed flyers promoting the property, there will be a For Sale sign in the front yard (hopefully with your name on it), and you'll schedule an open house early in the listing. What better justification for knocking on every door in the neighborhood and introducing yourself? Your first step will be to define the geographic area precisely and get information on each household, including naturally the names of the owners. Make it a manageable farm. Believe me, they will all be interested in how much their neighbors are asking for their property. They will also be paying close attention to how you handle the listing. And when that "sold" sign appears on the sign what do you think their reaction will be? Right, in addition to being impressed with you, they will really want to know how much it sold for. In this situation every time you contact the people in your nice little focused farm, you'll have a legitimate reason. From that point on you'll keep in contact with printed or e-mail newsletters and perhaps an occasional phone call and maybe even a personal visit. Let's move down the path a couple of years. You've had a dozen or so sold listings. Think of the incredible number of contacts you will have. You know them. They know you. Keep it personal and keep it informative. As with all your projects, you'll want to coordinate with this one with your broker.
Here's a variation of Focused Fandango Farming. As soon as you license is activated, get a list of names and addresses of all your neighbors. Send them personalized letters announcing your entry into the profession. Include your business card. Also include information on sales within the neighborhood (you'll need to define the territory you want to cover) for the past year or so. Let them know that as soon as any other sales occur in your neighborhood you will keep them informed. Don't be shy. Ask for their business and their referrals. Amonthly newsletter would be a good vehicle to get this done.
And why Focused "Fandango" Farming? Because you will be dancing all the way to the bank.
- Cold-Call Telephone Canvassing. This is another traditional prospecting device. Homeowners are called (sometimes at random, other times with a plan) and asked if they are considering selling their home or if they know anyone who might be. Specific scripts are generally used, with recommended answers to just about any conceivable home owner question or objection. As is the case with farming, cold-call canvassing has its share of both converts and detractors. Some swear by it, others at it.
- Whatever Works for You. It will be impossible for you to follow completely all the suggestions for getting listings that will be given in your training program (or, for that matter, in this discussion). Much will be dictated by local circumstances and by your personality. Simply become familiar with all the potential sources and concentrate your efforts on those that appear to have the greatest potential. It is entirely possible that you may end up spending most of your time on one specific program that turns out to be particularly productive.
When you are considering the alternatives, don't be too quick to write off procedures because you react adversely to the basic concept. For example, you might conclude that a traditional prospecting program does not suit you, but with some adaptation and refinement, it might have real possibilities. Whatever system you decide on, give it some time before you expect it to start paying dividends. Finally, don't be discouraged. Remember, getting started is the hardest part, and almost any organized approach that is followed diligently is almost certain to be better than no system at all.