Training Tip #3: Working with FSBOs
FSBO 101
The key to long term real estate success boils down to one word... LISTINGS! Listings attract buyers, and buyers eventually turn into listings. Getting listings isn't easy though - it has traditionally been approached through a traditional farming system based on monthly mailings which requires cash... monthly. Farming can be very effective, but even a small farm of 200 homeowners requires a budget of $1200/year, and results typically take at least 6 months.
An alternative avenue for getting listings is to create a program to target FSBO's, or For Sale By Owners... people who want to sell their homes now, but want to try it themselves before hiring a Realtor®
The bad news is that in today's market there aren't that many FSBOs out there. Many of them realize that it's just not feasible in a buyer's market. The good news is that there aren't as many agents chasing them now, and most of those agents aren't very good at it.
Why do we think most of the agents aren’t very good? Well, this is basically what most of those agents are saying in their approach:
"Hello this is 'Bob' from 'XYZ Realty' and I’m calling about your house for sale."
"How much are you asking"?
"May I ask why you are trying to sell without a professional agent?"
This is all OK (not great but OK) but most agents feel the need to begin to insult the homeowner's intelligence (and decision making ability) at this point. Here are 3 things you should never say to a FSBO over the telephone:
1- "Do you realize that you will actually make less money trying to sell it yourself than you will with an agent?
2- "Most homeowners have no idea what they're doing. Do you realize the dangers and the trouble that you can get into trying to sell your house yourself?"
3- "Most owners that try to sell their homes themselves admit that it was a pretty stupid move. You'll be in that same category soon, I bet."
You get the idea. Please... don't ever imply, suggest or say anything that even remotely sounds like, "Mr. Homeowner, you're an idiot, and I am here to save you because I can do this better than you can" or "Call me when you get tired of wasting your time". Seriously. The majority of these folks decided to do this without an agent because THEY think WE are stupid. We have to change their minds, but it's not going to happen over the phone, is it?
Let's try this a different way. Put yourself into the shoes of the homeowner:
Hello, this is 'Bob' and I am a Realtor® with RE/MAX Beach Towne. Do you have a moment? Great, I'd like to see if your home on Apple Street is still for sale?
Great, how much are you asking?
OK. It's really a great looking/roomy/affordable home, can you tell me a little about it?
<This is critical! People love to tell you about their homes. It makes them happy. Happy is good.>
Well, it sounds like you really have a great home there. How long have you had it on the market?
OK. Are you willing to pay me a commission if I bring you someone who buys your home?
OK, 3% sounds great sir. <excited>
I really like to take a look at your home soon, would it be possible for me to come by so you can show me around?
Great, I'll see you tonight at 6 PM.
Now, if you were the (for sale by) owner and you got both of those two calls, which one would you be more receptive to?
Remember this-
Don't try to solicit the listing over the phone.
Don't lie and tell them that you have a buyer that you want to show the house to, even if you do! If you do, tell them once you have a verified appointment with the buyer, after touring the home and bonding with the owners. We find that many agents say these things... and the homeowners already distrust agents... that's probably why they're For Sale By Owner!
We recommend an approach that is a little different. Your best bet with these folks is 100% honesty, courtesy and a friendly attitude. Remember- you're selling yourself, and you're selling to someone who has already decided that they can do a better job than you can. You have to earn their trust, and prove that you have something (valuable experience, marketing and contacts) to OFFER them, so that when they decide to list their home you'll be the one.
When you visit, we suggest that you constantly keep this in mind. We don't recommend following a script or game plan on the first visit, but here is a brief list of Dos and Don’ts.
Do-
Be enthusiastic about the property.
Ask a few choice questions that demonstrate how much there is to selling a house. Example- Where are you going to hold the escrow money?
In conversation, make sure that they hear that you are a busy, successful agent and that sales are strong at YOUR office.
Be supportive.
For example- "wow, what a great looking home you've got here". If the home is not so great looking, "wow, what a great location"! If the home is not great looking and it's in a bad location, "wow, what a great deal your home is at this price!" If the home is ugly, in a bad location and over priced... You're going to have to decide whether you want this listing at all!
Don't-
Don't try to list the home on the first visit. You're there to sell yourself... period.
Don't be critical. It is their home sweet home, so any negative comments should be kept to yourself at this point.
Don't be a know-it-all.
Make sure they understand that you LOVE their property AND that you are on their side. Express the fact that you want them to succeed and that you came to take a look at their home so that you can hopefully bring them a buyer when you have one who is right for the home. Which brings us to the most important part of your initial visit.
After they have shown you around the house, and you've bonded with them a little, walk over to the kitchen table and ask if you can just get a little more information about the property for your "book". Have a brief form made up (or use a legal pad). Run through some quick questions about the house with them so you can “share a copy with the agents in your office”. Get their name, phone, email address, and the features, square footage, price... etc of the home. Then verify that they will pay commission if we bring a buyer and the amount. Bond with them some more... be enthusiastic and positive. Ask for permission to snap some quick photos, and take 10-15 nice shots.
Now it's time to say goodbye. Ask them if they have a contract for offers... If they do not, offer them a them a copy of a FAR/BAR contract (with your office info whited out) if they would like one.
That's it for FSBO 101.