When I first started my real estate career, I had no connections whatsoever. I didn’t come from a family of real estate investors. My friends were all in tech. I didn’t know how to find real estate leads, but I knew how to use software and Google.
One of my first purchases was a subscription to software that would search a given zip code and spit out real estate leads—expired listings, distressed properties, the works. At first, it seemed amazing; in just a few moments, I had a bird’s eye view of all the potential leads in my district.
But then I started to actually make the calls. And I quickly found that expired listings weren’t all they seemed to be. Here’s everything I’ve learned since then.
Understanding Expired Real Estate Listings
Expired listings are a popular method of getting real estate leads. Essentially, an expired listing is an MLS listing that already failed to sell. Whether it was priced too high, had problems, or the sellers just lost interest, the listing agent could not sell the property. Because of this, the owner may be amenable to an offer from an outside party—like you.
It sounds great, but when I started calling expired listings, I found that I might as well have been cold-calling strangers. Before I explain why, let me explain what’s so alluring about expired listings…
Why You Should Use Expired Listings
There are a few reasons why expired listings are so frequently recommended, especially for newer investors. First, it’s publicly accessible information. You don’t need to network and you don’t need to know anyone. You can just start calling.
Second, expired listings are associated with individuals who wanted to sell their properties but couldn’t for some reason. You know that they’re motivated sellers and that they couldn’t sell with a real estate agent. To an investor, especially a cash investor, that’s a great signal that they can’t sell on the open market (their property might need work, for example).
Third, you already have a lot of information about the listing. You know how much they wanted to sell it for and you have recent pictures in hand.
How To Prospect Expired Listings
Time is of the essence when it comes to expired listings. Many investors will start calling expired listings the morning after they expire. Other investors will send out mailers to listings that are about to expire. Here are three ways you can stay ahead of the competition:
- Send personalized mailers. Your prospects will be receiving a lot of mailers; consider personalizing yours. A handwritten letter often works best. Explain who you are, why you do what you do, and what the benefits would be if the seller chooses to work with you.
- Make timely calls. Don’t call at inconvenient times, such as dinner—people don’t need to be at home to receive a phone call anymore. To avoid having a distressful and time-wasting conversation, open by asking whether the homeowner is interested in offers.
- Send texts. Consider a text conversation instead of a call. It’s generally considered less obtrusive but still gets the point across. Make it clear that you’re not a big company; you’re a local investor or franchisee.
But even with all the above, what you need to understand is that you’re going to be one fish in a very big pond. Many expired listings are going to get calls—you’ll have to be persuasive. With calling and texting, make sure you comply with all laws regarding contacting potential sellers.
Making an Offer on an Expired Listing
With all that in mind, how do you actually make a competitive offer on an expired listing? First, make sure the listing checks all of your boxes.
Working with an expired listing is a balancing act. You already know something about this property is preventing it from selling. Your goal is to make an offer that compensates for those factors while still working with your investment strategy. Ask yourself these important questions:
- Is it in a good area? What do the comparable properties look like?
- What would your preliminary estimates of the repairs and updates be?
- Why did the property fail to sell? Was it related to price or inspections?
Calculate how much you would be able to spend on the property. Different investors look for different profit margins. As a real estate investor, your biggest advantage is that you can usually make a cash offer. Even if the property owner was holding out for more money, they may be willing to accept a cash offer right now.
The Drawbacks of Using Expired Listings
Now we get into the meat of it. Why wasn’t I having any luck when it came to expired listings?
Here’s what I uncovered:
- Anyone can purchase an “expired listings” list or use “expired listing” software. And a lot of people do. While there were tons of leads for me to work with, I was working with the same leads that other investors in the area were as well. Accordingly, those individuals were getting inundated with calls.
- Expired listings aren’t just used by real estate investors. In fact, they’re mostly used by real estate agents. While I was calling these leads to make them an offer, dozens of real estate agents were contacting them and offering to help them sell their homes.
- A lot of these listings are expired for a reason. Sometimes the buyers have entirely unrealistic expectations for a price, or the properties are completely trashed. The most common reason why a listing fails to sell is because it’s priced too high.
Ultimately, expired listings can become more hassle than they’re worth. A real estate agent can easily swoop up on the listing, increasing the bottom-line price of the house. And there may be a lot of reasons why a property didn’t sell that could make it a bad investment.
Get Listings to Come to You With HomeVestors®
As a seasoned real estate professional, I probably wouldn’t use expired listings today. Luckily, I don’t have to because I work with HomeVestors®. As the owner of an independently owned and operated HomeVestors® franchise, I represent a nationally-recognized brand that prides itself on limiting investors’ exposure to real estate risks.
After completing my initial week-long training, I received all the proprietary HomeVestors® tools and resources I needed to generate high-quality leads consistently. I don’t call leads anymore; they call me. And that’s a lot easier than combing expired real estate leads listings on my own.
Working with expired real estate leads listings can be challenging, but it doesn’t have to be with the right help. Contact HomeVestors® for more information and become a franchise owner today.
Each franchise office is independently owned and operated.