October 5, 2016 by Jeff Lowen
Let’s face it, in today’s market, with home prices rising and a lack of inventory, some homeowners may consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO).
Although, it’s not a news flash, but there are FSBOs in just about every market around the country. It’s a popular source of business for new and seasoned agents alike, however, many don’t even try because of the ‘stigma’ attached to them.
Statistics show that nearly 9 out of 10 FSBOs will list within three weeks of attempting to sell their own home and if they don’t, they’ll sell it for 9-12% less than they could have with a Realtor.
Yet, many an agent will drive right by a FSBO sign and do nothing but say, “Hmm, a FSBO,” and do nothing else.
Further, some agents think if they were to bring a buyer to a FSBO, they’d have to do all the work because most homeowners are unaware of the inspections, contingencies, and disclosures that go along with every real estate transaction. C’mon, how is Joe Homeowner gonna know how to do all that stuff? Here’s a question: Is someone who sells their own home that does not have a real estate license bound by the same rules? The same code of ethics? In most cases, no; and though this isn’t another reason why a homeowner would try and sell their home on their own, what is the reason in most cases, is the money.
Of course, the commission. Giving up $5 to 6,000+ for every hundred thousand can feel a bit pricey, especially when Mr. or Mrs. FSBO just doesn’t see the value a great agent can bring to the table. Most FSBOs put anyone that has a real estate license in the same bucket. However, the cardinal rule of agents, as with any business:
“All agents are NOT created equal.”
As an agent, would you pass up a FSBO sign? Would you go knock on the door? What would you say to them? How would you articulate the value you bring as an agent that would help them accomplish their real estate goals?
A big problem with the approach is that many agents try to pump themselves up as the ‘best agent’ by comparing themselves to other agents. Attempting to articulate value by telling the FSBO why he or she should list with them because they’re the better choice… In comparison to something (listing with an agent), the homeowner doesn’t want in the first place.
Or, attempts to tell the FSBO that they can do a better job at selling their home than they can – which may or may not be true, but no one really wants to be told that, do they?
How about telling the wary FSBO that statistics show that they’re gonna end up listing with an agent, anyway, and if you don’t use an agent, you’ll lose money…
Stop! I can’t take it anymore! 🙂
Let’s turn the tables and ask if you were an agent, and you wanted to sell your own home, would you hire an agent? Most wouldn’t. **There’s the problem!** As an agent, if you don’t see the value in hiring an agent on your own home, then how can you expect a homeowner that wants to FSBO to see it?
Why do lawyers hire other lawyers to handle their own legal battles? Exactly! Because when an attorney hires another to represent them, the hired ones are unemotional and can keep level-headed when the roller coaster ride begins. Such is the same as working with a FSBO. Homeowners want to sell themselves because they don’t feel it’s worth the money, citing, “it’s not so hard,” or, “I’ve got a friend that’s an agent that’s running comps and offering free stuff,” rather than acting like a real – real estate business person. A FSBO wants to save paying the commission, and Zillow make-me-move says they can.
No matter the reason, and it’s usually the money, you as an agent know the stats. You know that chances are someone is going to list and sell this property. Somebody may even have a client for life. Some agent may even help them buy the home the want to move to and help their two kids buy homes, too.
What if you knew that could happen? Well, I’m here to tell you that it can and does. A FSBO often results in more than one transaction. Question is, will it be you that helps them?
Try this next time you’re in FSBO land:
- Offer to share some resources.
- Every FSBO wants you to bring buyers. Most will gladly pay a 2 or 3% buyer fee, so really all they are saving is 2 or 3%, anyway. Even though you may have access to buyers, buyer aren’t really a resource. Instead, you can share a list of your processes for listing a home. The 181 things you do that position a home to attract the best-qualified buyers.
- You can offer them your home inspector’s phone number in case they want to do a pre-inspection on the house to uncover potential issues and fix them before they lose a buyer.
- You can offer exposure to prospective buyers.
- Do you have landing pages, buyer leads or any marketing that is bringing in potential buyers? Do you think if you shared a list of potential buyers (without phone numbers), on the caveat that you’d want a one-time listing agreement for any buyer on the list that buys Mr. FSBO’s house, that he’d think about it? Of course, he would. Why? Because you’re trying to help.
- Do you have a call capture number? What if you offered to handle all the FSBO’s phone calls and gently qualify them so the seller isn’t wasting time showing homes to a bunch of people that may not be qualified to buy anything?
By sharing, building trust and actually helping the wary FSBO, who do you think they will turn to when it’s time to get serious and actually put the house on the open market? You guessed it. You!
Many agents and vendors who offer expired listing services, lump FSBOs and expired listings in the same bucket, so it’s easy to see how things don’t turn out very well when you treat them the same. A FSBO needs you to prove to them you care; before they will trust you enough to listen to what you have to say. So if you’re looking for a one trip pony, don’t bother. It will take your genuine interest, curiosity, and an intention to help them with their challenge.
And, just so you know…
- Recent studies have shown that 88% of buyers search online for a home.
- Only 21% are looking at print newspaper ads.
Where did buyers find the home they actually purchased?
- 44% on the internet
- 33% from a Real Estate Agent
- 9% from a yard sign
- 1% from newspapers
Seriously… Are you a good negotiator? Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:
- The buyer who wants the best deal possible
- The buyer’s agent who solely represents the best interest of the buyer
- The buyer’s attorney (in some parts of the country)
- The home inspection companies, which work for the buyer and will almost always find some problems with the house
- The appraiser if there is a question of value
The moral of the story…
If you’re an agent, the next time you see a FSBO, stop by and talk with them. If you’re the FSBO, you’ll be amazed how a great agent can benefit you. It’s definitely worth it!
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