The Second Mouse Gets the Cheese

By
Real Estate Agent

Years ago, I heard the expression "The early bird gets the worm but the second mouse gets the cheese."  Makes sense once you think about it, especially when it comes to real estate. 

So often, an agent takes a listing, spends a bunch of money and time on it, only to lose it when the listing expires.  

   When I started in this business more than 20 years ago, I had just moved back to the area and knew relatively few people.  The "Sphere of Influence" approach was going to leave me pretty hungry and door-knocking and cold-calling from the phone book seemed an effort in futility.  "Farming" took months, if not years, to cultivate and I didn't own a home so working my own neighborhood wasn't an option.

   Then I remembered the second mouse gets the cheese and I turned my attention to expired listings.  I decided to become the very best at "expireds," learning how to talk with them, how to listen to them and how to market their unsalable homes.

   Yes, unsalable homes.  One fundamental principle you must accept about expireds is that no matter how long the home is listed, at its current state of marketability, it is unsalable.  If they were marketable, they would most likely be sold, right? 

   What I discovered is that there were three primary reasons a home is unsalable: 

1. Price - No surprise here.  Most expireds are simply priced too high.  90% of expireds can be made saleable simply by changing their price.  Sometimes it requires only a small adjustment - 5 to 7% -- but often, the adjustment is in the 20 to 30 % range.

2. Location - How many times have we heard "Location, location, location" as the key to real estate value?  Let me be clear: If the home is on the edge of a landfill or fronting an eight-lane highway, on final approach to LAX or in a swamp, it will not be as valuable as a comparable home in a subdivision at the end of a cul de sac.

Agents must take a home's location into consideration in establishing the price.

3. Condition - Most expireds are not in great condition.  Remember: Sharp SELLS.  From the first impression a buyer gets from the exterior of the home to the color of the towels in the bathroom, every aspect of the home - the way it looks, the way it smells, the way if feels - must appeal to the buyer.

 4. Quirkiness - After working expireds for many months, I realized that many expireds have a certain "quirkiness" about them.  I can't really explain it as clearly as price, location or condition, but they don't quite fit our expectations.  A home with five bedrooms and one bath, for example.  Or a 3,500 square foot home with a one-stall garage.  Sometimes, it is an unusual floor plan or architectural design.  A southwestern-style, stucco-finished ranch with rounded corners and a flat roof would be "quirky" in a neighborhood of Cape Cod two-stories, for example.  Or a one-bedroom condo in a project where everything has two bedrooms or more.

   If you want to work expireds, sharpen your senses to identify why the home hasn't sold and then fix the problem.  Is it location, condition, its quirkiness, price ... or all of the above?

   Then, remember this:  You can improve its condition, you may even be able to mitigate its quirkiness by adding a bathroom, for example, but you cannot change its location.

   There is only one of the four things that will work every time:  Adjust for the home's shortcomings in condition, quirkiness or location by adjusting the price.  If a seller doesn't want to adjust their price to compensate for poor location, poor condition, an odd floor plan, they can: 1) Move the house, 2) repair and redecorate, and 3) fix the oddity.

   In most cases, changing the price is the more cost-effective solution.

   Are you a mouse that enjoys the taste of cheese?  Or are you just looking for a listing?

 

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Rainmaker
524,356
Kathryn Acciari
Century 21 Real Estate - Shrewsbury, MA
Brand Ambassador and Business Coach

Don, this is timely (for me).  Just getting started on an approach to expired listings.  This helps, especially the Quirky category.  Thanks!

Aug 20, 2009 11:12 AM #2
Rainmaker
453,651
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

The second mouse also applies to making an offer on a short sale too!

Aug 20, 2009 10:51 PM #3
Rainmaker
70,314
Dean Curtis
Coldwell Banker Kittitas Valley Realty - Ellensburg, WA

Don, good post.  How painful to see one of your own expired listings come on with another agent, at the lower price which your seller would not consider with you.  Oh my, then it sells in a week.  Expired listings can be a good source for income, your advise is sound.  Also, encouraging your current listings in the same areas is productive.

Aug 21, 2009 10:21 AM #4
Rainer
31,610
Linda Landry
HomeSmart Realty - Tucson, AZ

Great advice Don; inspirational to newbies like me comming around the corner.  I liked your mention of 'sharp sells' especially in this market of distressed inventory.  "The second mouse gets the cheese" is just as catchy as the well known phrase "Who stole my cheese?"  Kudos!

Aug 21, 2009 01:38 PM #5
Rainer
157,124
Tom Boos
Sine & Monaghan Realtors, Real Living - Grosse Pointe Farms, MI
Providing the very best of service to Sellers and

Very good information here Don.  Many of us are getting our "shot' at a listing on the second go-around and Sellers truly do want to know why their home didn't sell in the first place.

Aug 22, 2009 03:40 AM #6
Rainer
13,232
Alma Fernandez
DRE 01236358 Keller Williams - Northridge, CA

Don, I hadn't thought about expired listings.  Thank you for the heads up. 

The second mouse gets the cheese is applicable to short sales from a buyer's perspective, as well.  The initial offer on a short sale doesn't usually stay around long enough for the bank's approval.  Short sales that I have sold are the ones wherein my buyers were the second, third, or fourth offer 6 weeks into the listing.

Aug 22, 2009 08:31 AM #7
Rainer
147,192
Coleen DeGroff
eXp Realty - Gainesville, FL
Haile Plantation Real Estate - Gainesville FL

Don--

Great post.  My goal is to start aggressively pursuing expired listings.....you've made some great points here!

 

 

Aug 22, 2009 03:01 PM #8
Rainmaker
244,734
Bonnie Vaughan
Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

Don,  Everything you pointed out is right on.  The combination of less than excellent condition and over pricing a home will torpedo it every time.

Aug 22, 2009 03:16 PM #9
Rainmaker
193,804
Mary Strang
Viroqua, WI

You are a pro to point out the quirkiness factor. I have one right now, the kitchen. It is too small, cabinets too high to reach and is cut shut off from the rest of the house by a wall that needs to be taken out. The price will need to come down.

Aug 24, 2009 12:46 AM #10
Rainer
117,648
Beverly of Bev & Bob Meaux
Keller Williams Suburban Realty - West Orange, NJ
Where Buying & Selling Works

Don, with all of your experience in expireds, what's the one key thing that helped you overcome the initial listing objection for you to be the agent they ended up signing with and how long did it take you to contact them after the listing expired?

Aug 24, 2009 12:49 PM #11
Anonymous
Don Phelan

First, I contact them immediately.  Our MLS updates at about 5:00 a.m. so I am up early, pulling expireds that ran out at midnight, researching sellers' phone numbers so I can be ready to hit the phones at 9:00 a.m.  Evening calls work well, too, because most sellers work during the day.  However, some sellers are single income families or work second shift, so daytime calling can sometimes be productive (because your competition is waiting to call them at 7:00 p.n., after they've come home, had dinner, etc.) 

One KEY thing:  Really listening to them.  You cannot SELL yourself to get an expired listing. You MUST listen first.  You must be mentally prepared to hear their frustration, anger and disappointment.  They are often angry with their previous agent but don't make the mistake of jumping onto the agent-bashing bandwagon.  You might find out it was their brother-in-law and they will defend them and you'll look like a schmuck.  Whatever you do, don't defedn -- not yourself, other Realtors, the market, their home, nothing.  Just listen and collect as much information as possible. 

Picture the seller as a balloon, filled with air to the point of near-bursting.  Ever time they express another thought -- angry, disappointed, wahtever -- a little more air is let out of the balloon.  Just keep listening and keep your mouth closed.  Eventually, the balloon will be deflated and you can start to have a conversation with them about their hopes and dreams about their next home.

Listen, listen, listen.  Then ask questions.  Lots of questions. In your phone conversation and in your in-person meeting.  You MUST discover the reason their home did not sell and figure out how you are going to make it sell.  Never make any recommendations about what they should do util you have ALL the information you need. 

Remember these three questions you MUST get the answers to:  1) Do you still want to sell?  2) Do you have ANY idea why your home did not sell? and 3) When you put your home on the market, what did you hope to do?  (Buy up?  Downsize?  Relocate to another city? etc.)  These three questions will tell you their motivation and whether they have any insight at all about the marketability of their home.  Until you can get the answers to those questions, you do not have enough information to make marketing suggestions.

Hope this helps!  And yes, I do seminars on working expireds!!

 

 

 

 

 

 

Aug 25, 2009 02:20 AM #12
Rainer
8,415
Dan Perkins
SmartZip.com - International, IT

Don- Great attitude towards the post- So many people bemoan this situation, but you give excellent tips towards guarding against a lost listing. Positive and proactive is the way forward!

Aug 25, 2009 09:05 AM #13
Rainer
117,648
Beverly of Bev & Bob Meaux
Keller Williams Suburban Realty - West Orange, NJ
Where Buying & Selling Works

Don, WOW! What a great and thorough response. Thanks for taking serious time to give this answer. We will definitely take heed.

Aug 25, 2009 10:19 AM #14
Ambassador
884,960
Janna Scharf
Keller Williams Realty Coeur d'Alene - Coeur d'Alene, ID
Coeur d'Alene Idaho Real Estate Expert

The second mouse definately gets the cheese.  And the early bird DOES get the wrom!

Aug 25, 2009 07:16 PM #15
Rainmaker
1,235,760
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

Excellent direction to take and REALLY GREAT information

Aug 26, 2009 10:37 PM #16
Rainmaker
512,911
Lisa Wetzel
RE/MAX Realty Affiliates - Carson City, NV
CDPE, SFR carsonvalleyland.com

Very good!  I think you have found your niche!

Aug 27, 2009 04:39 PM #17
Rainmaker
50,755
Yoana Toth
Toth Real Estate Group, Inc - Sunny Isles, FL
P.A.

Thanks for the Post Don !!!! Excellent information.... This happened to me years ago and the new agent even used my photos! Yes, believe that !!

I have also been the second mouse who eats the cheese and really enjoyed it!!! However, I took my own pictures.    

Aug 28, 2009 04:33 AM #18
Rainmaker
208,834
Marc Iafrate
Capital City Real Estate Group, Inc. brokered by eXp Realty - Raleigh, NC
MBA - Wake County Real Estate Search

Hi Don,

What a great post.  Right now I am afraid of being the early bird instead of the mouse.  My client won't even consider the simple changes I've been recommending - stop smoking in the house and have the carpeting and drapes cleaned.

Sometimes clients just are not willing to listen until their house has been on the market for months. 

Marc Iafrate, MBA

Colwell Banker HPW

Raleigh, NC

Aug 29, 2009 02:57 AM #19
Anonymous
Don Phelan

Hey Marc,  Try this:  Before you go through the home, sit with them, ask them a bunch of questions (to know their motivation, etc.) THEN ask their permission to make suggestions.  It tends to reduce their defensiveness when they've given you permission to tell them their house stinks from cigarette smoke or the drapes are yellow from smoke stain.  After they say, "Sure, of course" (they will every time!) ask one more question:  "If I make a suggestion that I am certain, with my years of experience, will help you get more money for your house in a shorter period of time, will you do it?"

Who would say "No?"  Not many, I promise.

THEN go through the house and tell them EVERYTHING they need to do AS YOU GO.  Do it nicely.  "You know, I think it would really help if we eliminated the cigarette odor before we market the house and while it's on the market.  When can you schedule the carpets and drapes cleaned and is there a place in the garage or patio you cna go for a cigarette till the house is sold?"

Aug 29, 2009 07:46 AM #20
Rainmaker
223,439
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate

Don,

Great post!  I don't think most agents have the backbone to tell sellers what they need to hear.  There are better ways than others to put it but it if needs to be said, you'll save your seller's a lot of time and money by being honest.

Aug 30, 2009 11:37 AM #21
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