Usually, agents only think in terms of how much they would pay for a referral fee, how much they would like to spend for marketing, and how much it costs to buy a lead. Let’s review an expired at $200,000 for $6,000 in GCI.
Referral Fee - Most agents would happily pay a 25 percent referral fee of $1,500 at closing. Please note that 25 percent is a very large number, but it is no risk because nothing is paid unless the deal closes. Smarter agents who are willing to invest cash in advance for marketing efforts seek to pay less than 25 percent.
Marketing Costs - Overall, Billion Dollar Agents should spend about ten percent on marketing. For expired or farm marketing of sellers, they should spend up to 20 percent because it is more profitable and raises the average sales price which increases profits on the buyer side. This amounts to 20 percent of $6,000, or $1,200.
Seller Lead - How much would you pay for a seller lead? People are spending about $20 a lead to purchase buyer web leads. Some seller lead companies sell seller leads for $25 to $100. Often, they are about $50 to $75 each. Let’s invent something new; figure out how much it is worth to speak to an expired on the phone or on a listing appointment.
Expired Listing Appointment - Assume we spend $1,200 in total marketing costs. Assume you win 70 percent of your expired listing appointments and end up selling 70 percent of your expired listings. That means your close rate is 50 percent and an expired listing appointment is easily worth $600. To keep it simple, if you could buy expired listing appointments for $500 each, you would buy those ALL DAY LONG. It is worth giving an expired a $100 gift card to come to your office for a market research survey since more than one in five will end up becoming a listing appointment.
Expired Phone Consultation - How much is it worth to speak to an expired for a scheduled 15 minute phone call when the expired is expecting to speak with you, answer questions about their situation, see if they qualify, or have you help them sell their home? We just proved that an expired listing appointment is worth $500. Let’s assume that 20 percent, or one in five expired phone consultations, lead to an expired listing appointment in the future. You should be willing to spend $100 for an expired phone consultation ALL DAY LONG. Based on this, we invented our idea of an expired market research survey and gave them a $20 gift card for 15 minutes of their time answering questions about why their home did not sell.
You may have noticed I love bullet points in all my blogs. Why? Well, would you have read the whole blog if it were in paragraph form? Would you have remembered it? I read a long time ago that people with short attention spans or ADHD, such as many of us tend to have in the real estate industry, often scan articles rather than thoroughly read them. Bullet points are an easier way for the brain to parse information. Either way, I’m just happy you’re reading.
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