The Right Way to Approach FSBOs
The vast majority of unrepresented sellers will eventually list with an agent. Whether you are the agent they choose depends on how you present your real estate services.
June 2, 2017
Eighty-nine percent of sellers work with a real estate agent to sell their home, according to the National Association of REALTORS®’ 2016 Profile of Home Buyers and Sellers. That should tell you what kind of opportunity there is to convert FSBOs, which made up only 8 percent of total home sales in 2016. The majority of homeowners who try to sell on their own eventually realize they don’t know how to handle a sale by themselves, and they turn to you for help.
But even though the FSBO market is ripe for conversion, real estate professionals struggle to get these potential sellers to work with them. The reason is simple: We’ve been taught to lie to these sellers from the very beginning of the relationship.
When someone is resistant to working with you and you want to change their mind, you first have to figure out what’s driving their resistance and then solve that problem in a practical manner. There’s only one reason sellers would decide to sell on their own rather than work with an agent: money! They need to make a certain amount of profit and don’t want to pay a commission, or something along those lines.
Well, the average FSBO property sells for more than 20 percent less than comparable homes that are listed by an agent, according to the NAR report. So going it alone doesn’t actually get FSBOs what they want. But that can’t be your first argument when trying to convert a FSBO; it comes off as combative, and you’ll lose them.
When a FSBO is talking to an agent, they want to know one thing: Do you have a buyer for my property? If you’ve taken any training in our industry, you’ve probably been taught to say yes. But how in the world do you know if you have a buyer for a property before you’ve even started marketing it? FSBOs understand this conundrum you’re in, so if you say yes, they know you’re lying. And you’ve just lost credibility with them before you’ve even gotten started.
Here’s what needs to change going forward.
The next time a FSBO asks if you have a buyer, simply answer: “I might, but I wouldn’t know without seeing your property first. I work with many buyers, and as an expert in this area, I pride myself on knowing the inventory, which includes your property. It turns out I’m going to be in your neighborhood tomorrow. Would you be offended if I stopped by to take a quick look to see if your house meets the needs of any of my current or future buyers?”
Any serious seller is going to let you see the house if it means that you might be able to bring it to the attention of motivated buyers. Once you see the FSBO’s house, it’s important not to sell them on listing with you unless they approach the subject. The point of your walkthrough is not to land a listing; it’s to build rapport and know your inventory. Remember, 89 percent of FSBOs end up using an agent. It’s just a matter of whether it’s going to be you. I can guarantee it won’t be if you lie to them or try to sell them when they aren’t ready to be sold.
After the walkthrough comes the most important question of all. Tell the FSBO that you will mention the house to some of your buyers who may be interested. Then say, “Regardless of whether my buyers are interested, you need to be aware of other listings in your neighborhood that are competing for buyers so you know what you’re up against. As an agent, I typically find out about new listings and other properties before the public does. Would it be OK if, from time to time when a property comes up that I think competes with yours, I contact you and let you know about it so you aren’t caught off guard?” Any serious seller will welcome having access to this kind of free information.
By getting a “yes” to that question, you just got permission to follow up regularly. The next step is to set weekly or biweekly reminders to search for new comps and reach out to the FSBO with market updates. When you call to let them know about new comps, you still should avoid trying to sell them on listing with you. Just educate them and see if they have any questions. By now, they’ll see your expertise and get comfortable enough to choose you once they make the decision to work with an agent.