SELLING THE LISTINGS YOU'VE GOT

So you have got plenty of listings

One of the essential ingredients of a successful real estate business is the size and quality of your listing bank. Undoubtedly there are other key factors such as:

Your focus, competency and consistency
The quality and number of your sales force
Your training and coaching skills
The quality and consistency of your marketing programmes

… but as I travel I see business success linked directly to the quality and quantity of the office listings bank. This applies equally to individual sales people as it does to the business. When I talk of a listings bank, I mean Controlled listings: Sole Exclusives, Auctions and Tenders. I don’t intend to discuss the value of “Joint” or “General Listings” as from a business perspective they require a marketing investment generally paid for by the business, with no control over the sales process. Such a behaviour is financially irresponsible and demonstrates a lack of skill required to be successful long-term in this business.

Consequently we see a lot of training and marketing focused on the obtaining of controlled listings. The ever- perennial “Listing Presentation” training session is conducted over and over and hopefully the office-listing bank grows. This does not appear to be followed by equally required training in ensuring these listings sell.

Unless you are one of the minor percentage of offices that has developed the skills and culture of Vendor Marketing Contributions the office is committed to an ever increasing marketing cost as the listing bank grows.

So it is vital that the office maintains a high clearance rate of these listings to sales. Once you obtain an Exclusive Listing you are committed to providing a range of services in an attempt to turn this listing into a sale and therefore retrieve a fee and pay for the expenses. The market last year showed several instances where the clearance rate fell below 40% of listings taken in some offices.

When you look at the cost of holding a listing and realize that some offices lose 60% of their listings, and therefore the marketing investment made in them, you can understand the many closures that we have witnessed. Quite clearly when the market slowed in many areas over the last couple of years the average office lacked the skills and systems to ensure that their listings met the new market levels and attracted the buyers. What we saw was lots of listings creating expenditure and no income. Let’s take a look at the possibilities for a new listing.


The above chart shows the clear consequences of not managing the listings correctly. Firstly let’s take the dotted line that charts the path of a poorly managed listing. For a period of 90 days someone has performed all the marketing and service actions but at no time has any adjustment been attempted to educate the seller as to market reality. The key is to understand the high cost of allowing such a high percentage (in some cases over 60%) of listings to bring no return on your investment in time and money. All you do is educate the seller, through their frustration, ready for the next agency that reaps the reward of your investment.
The green arrow points to the typical listing that sells. From the listing presentation through to the eventual sale, this sales person is gradually providing the seller with sufficient information to adjust their pricing expectations. Consequently a sale eventuates within the agency period.
Once again, from a business point of view this is not the most efficient return on the investment of time and money.
Clearly we see her the impact of a well-run auction campaign where the strategy is to achieve a sale in a shorter timeframe. That’s not to say that any listing can’t sell in the first few days! My point is that too many listings are not selling at any stage and the costs of that are too high, especially if you are a traditional office where the marketing is company or sales person funded.

So having trained your people to list more properties and understanding the consequences of them not selling how do you change things for the better?

If you are working in a market where values are down or have eased it is vital that your sales people have a strategy to help their sellers understand the change in the market place.

“Traditionally in New Zealand you could buy a house one year and sell it the next for about 10% more than you paid. Some of you will remember the great price increases in the early seventies when house prices really escalated. We all remember too, the busy weeks in February and March 1996, when some days the Fair Market Value jumped beyond even the “Vendors Expectations”. My how it has changed.
Let’s demonstrate that in a graphic form.
Every property has at least three prices.
1. The Price the Vendor would love – “We hope to get Price”
2. Fair Market Value
3. The price an Investor or Speculator would pay.

Traditionally you could put your property on the market and eventually “TIME” would get you your price.

What has happened in some areas is that the market is undergoing a correction and prices have eased. That means that if we hold out for a price that is already above market value the odds are, that the position will get worse before it gets better.

How do we use this information to ensure our people are educating their sellers to the new market realities?

Firstly, evaluate the quality of you listings.

1. Put all the listings you feel are priced or positioned correctly, that you are certain will sell in the next 30 days. This is where you focus your immediate efforts. Track these listings and if they don’t sell in the time-frames suggested, you need to assess the skills of your people, the quality of your marketing or the sellers reason for being on the market.
2. Now list all the properties where the seller has a real need to sell but their expectations of price are unrealistic. This is the fastest place to generate extra fee income. These are the people you need have your sales team make an appointment with and go and demonstrate the ideas displayed above. Only by giving the seller enough information to change their expectations will they adjust. Remember “Evidence defeats Disbelief”. Careful monitoring of the appointments and the results of these visits is required. Ask yourself why you should continue to spend your money marketing properties where the pricing expectations are way above market value.
3. Now list the properties that are simply taking up space. These are the listings that you don’t actually know why you have them. These are the ones that will probably never pay you. Make a decision. Are they going to be converted into one of the above categories or terminated?

Certainly, if you are still funding the marketing of your controlled listings you need to make another decision. How long will you continue to fund the marketing of a property that fits in the last category? Indeed why would you fund it at all?

So now monitor and follow-up these appointments to educate sellers.

The key is to focus your efforts on increasing your clearance rate of listings sold compared to listings taken. If you don’t know that figure, then it’s important you make an accurate assessment and set in place a strategy to improve it. It’s frightening to see companies running clearance rates at less than 50%. Others assume rates of 80% and are often horrified that that is not the case. In some highly competent companies we see success rates quoted at over 80% and more, for their auctions over a 90 day listing period. Just imagine the impact on your business if you could continue to list the numbers you currently list but sell over 75% of them. Not only would you have a queue of recruits at your door, but you would have a lot less competitors. That is already happening in some markets. You need to check that your business has a strategy and focus on ensuring your clearance rate is improving. Otherwise you run the risk of being the office that is losing people and market share.

Take a look at your current performance and see what changes you need to make to protect your business from the gradual in-roads being made by those that have already implemented such a plan.

IAN KEIGHTLEY


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