Though houses signs “For Sale By Owner” are a more rare sight as the real estate transactions have become more complicated and present a bigger liability to an individual seller not backed by E&O insurance of a large brokerage, it is still worth an effort to research FSBOs in your area and contact them for a possibility of converting FSBOs into listings.
A quick search of Craigslist in your year can yield 30-50 houses for sale by owner and you can initially check over the phone if any of them are planning on interviewing any agents. There are numerous proven scripts for FSBO conversions so if you are committed to daily prospecting and mastering your techniques, including working on FSBO listings into your real estate marketing plan can bring steady results.
1. When talking to FSBO, don’t buy into their story (doesn’t mean that they are not telling the truth, it means that they are not trusting you and would tell anything to get you off their back now):
-we are just testing a market;
-we are not really motivated;
-we already have an agent;
-we already have a buyer.
2. FSBO will list with the person who convinced them that there is a value in paying real estate agent a commission.
3. Focus on how you can be of service to For Sale By Owner instead of focusing on converting it into a listing.
4. To be of service doesn’t mean that you’ll give them all tools and advice on how to do it themselves (same as with legal or medical profession: lawyer will not give you pointers on how to represent yourself in court or doctor will not give you advice on how to do your own surgery).
Talk about buying a house for sale by owner pros and cons. Don’t point just the negatives.
5. Even if FSBO gets a buyer, in today’s market, according to statistics, they have less than 50% chance of actually closing the deal (many fell out of escrow due to the buyer being un-qualified, buyers walking away after home inspections, etc). Just Google “how to sell a house by owner paperwork”.
6. FSBO doesn’t realize a huge legal and financial liability that comes with selling a property yourself when later undisclosed defects are found and they are hit with a huge lawsuit. Be prepared to explain all these for sale by owner disadvantages.
7. What does FSBO really want? Of course, “For Sale by Owner” would want to get more money from the sale of their biggest asset. Your goal is to help them to do just that but first, you would have to educate, explain, and convince.
8. Get the appointment as you can only do that in person. FSBO wants an aggressive and determined agent. Don’t be afraid to be open and honest about your intentions.
9. Never offer to bring a buyer or hint that you have a buyer for their home or tell them that you want to preview their home in case you have a buyer. You’ll be just validated for FSBO their hallucination that selling by themselves works.
10. FSBOs are the greatest leads for agents who need business fast as they are perfect leads who are ready & willing to sell and act now.
11. When talking to FSBO and answering a question, ask another question so you take control of the conversation.
To crack FSBO code, ask yourself:
1. What is their motivation? (Obviously, saving money on commissions one of the main “For sale by owner” benefits)
2. Why do they want to do it themselves instead of hiring a professional real estate agent?
3. Make them a no-brainer offer: “I’ll help you sell your house and get more money while I’ll do all the work.” Their answer could be no other than “yes” – that’s why you would need to talk (schedule an appointment).
4. The key is asking no-brainer questions which will always have a “yes” answer – then you gain momentum and it becomes easier to get “yes” to a question “Would you like to list with me if I can net you more for your house and do all the work?”
5. Every time you talk to FSBO, expect to get an appointment. With some sellers, it can take up to 5-7 contacts to get an appointment. “You miss 100% of the shots you don’t take,” said a great hockey player Wayne Gretzky. Expect to score each time you take a shot. After 5-6 contacts other agents won’t be calling – you would be the only one left. FSBO wants a determined agent who stays in touch and has persistence.
6. It is a reality that over 90% of buyers work with a real estate agent. If they are ready to buy, they want the agent to do all the work and find them a perfect house out of all available on the market at the moment (they want to search MLS, not a limited inventory of FSBOs on Craigslist).
7. If a real estate agent has a buyer, where would he/she go to find a home for that buyer? Not Craigslist – they will go to MLS. FSBOs only think that they have market exposure, in reality, they have their home exposed only to a very small pool of unqualified buyers searching Craigslist, reading classified ads in a local paper or driving them around the neighborhood. If they do get an offer, it is usually a low-ball offer.
8. Why would a motivated qualified buyer go to FSBO? With no doubt, they are hoping to get a better deal. Buyer is thinking: “If you are saving on commission by not listing with a real estate agent, I can “steal” that house by making a below-market offer.” Instead of giving a hard-earned commission to an agent who would do all the work and offer legal protection, FSBO would give it to an unqualified low-ball buyer for free.
Key mistake most real estate agents make when going after FSBOs is BS (Bad Sales or Bait & Switch) approach:
– Bogus survey approach: an agent will pretend to do a survey of all FSBO listings in the area and would like to preview a house. (In reality, you are looking for listings, not doing the survey). FSBO will immediately sensor the dishonesty and his distrust will only grow.
– The agent will state: “I’ll bring you a buyer (or acting as if he already has a buyer).”
You lose credibility if you do that. FSBOs are already distrustful, so don’t feed their frenzy. If and when FSBO will list with you, it will be out of respect that you were honest and open with them.