Anyone who has ever walked down a café-lined street in an unfamiliar foreign city understands the draw of a crowd. Whether a packed restaurant or a bustling store, interest reflects desirability. A few years ago, my wife and I were in Tokyo looking for some good sushi. We had already enjoyed the guidebook’s suggestions and a couple of recommendations from our hotel, but this night we wanted to try something “local.” We walked past several seemingly nice choices, which had plenty of space available, only to get in line with people who we assumed to be “in the know.” Although we had never heard of the restaurant, we knew we had found something desirable. It turns out the sushi was delicious, and I would later find myself with a useful anecdote for a newsletter article.
The same phenomenon occurs with real estate every week. Otherwise rational buyers get into bidding wars over a hot new listing despite other similar choices languishing on the market at prices significantly lower than the ultimate selling price of the well-priced and well-marketed property. That is why it is so important for sellers and listing agents to hit the market strong.
That leads us to the topic of expired listings. What can be done to make a home that has been on the market for months seem appealing? Put another way, how can you make a buyer want a home that no one else wanted? Although there is no single right answer to these questions, it is safe to say that doing the same thing and expecting a different result is, well, illogical.
Consider Changing Listing Agents
It is natural that the prior listing agent will want the seller to extend the listing. Typically, agents will ask for an extension, promising that they will do more marketing or implying that there is a promising buyer circling around. Neither of these arguments ring true. Ask yourself, “If they were capable of doing better marketing, why haven’t they done it?” Leopards don’t change their spots. As for the “lurking buyer” argument, under the PRDS listing agreement, all the listing agent has to do is identify that particular buyer and the agent will get paid if that buyer does get into contract within 90 days after termination of the listing agreement. Thus, do not let these sweet promises fool you.
Termination of a listing agreement is a good time to interview new agents. A new agent will bring a different perspective to the marketing and “vibe” to the property. Of course, if a seller is completely satisfied with the service and marketing materials received from the current listing agent, then extending the listing agreement may be a reasonable decision. However, in a close call, a seller should switch to a different agent.
Make Changes to the Appearance
Taking steps to change the look of the property can pay big dividends. Whether it is something as simple as painting an accent wall, or as significant as updating an aging bathroom, sellers need to make the property look different. Also, landscaping can make a significant impact on curb appeal at a relatively low cost. At a minimum, sellers should require the listing agent, at the agent’s cost, to update the staging so as to create a different look.
Perhaps the most important thing to keep in mind is that expired listings require even more marketing than a typical listing. Many agents are reluctant to invest too much money in marketing an expired listing for fear of suffering the same fate as the previous listing—expiration without commission. Before relisting with the same agent, or engaging a new agent, the seller should require the agent to include a comprehensive addendum laying out, with specificity, what marketing the agent will do.
Reach New Buyers
Finally, it is important that the listing agent reaches new buyers who have not watched as the property withered on the vine. Strategies such as marketing the property to buyers in different cities or in different venues have shown to be quite effective. For example, we have had significant success in marketing expired listings as value opportunities to buyers in more expensive nearby areas, such as Palo Alto. Additionally, we have received a good bit of interest from potential buyers (who were not actively looking for a home) after seeing ads for our listings on TV or hearing about them on the radio.
In short, some strategic changes and an aggressive marketing campaign can breathe new life into expired listings—especially if the property was poorly marketed the first time through.