FSBOs: How to Succeed in a Market Many Salespeople Ignore

They’re out there, and they’re not going away.

August 1, 1999

Converting for-sale-by-owner listings--or FSBOs--is generally thought of as a tough way for a salesperson to make a living.

“It’s a high-level rejection business, and most people can’t deal with that,” says Mike Ferry, president of the Mike Ferry Organization, a sales training firm in Irvine, Calif.

“It isn’t easy, that’s for sure,” says Bruce Hackel, a salesperson with RE/MAX South Suburban, Flossmoor, Ill. “It’s not one of the things I’ll miss when I retire.”

But the payoffs can be considerable. According to a recent study by the NATIONAL ASSOCIATION OF REALTORS®, FSBOs account for about 18 percent of the national residential real estate market, a figure that has stayed even for most of the last decade. (In other words, the Internet hasn’t yet proved the marketing tool that put FSBO sales on the map.) The more interesting figure, however, is that one out of five FSBOs eventually winds up listing with a salesperson.

“Last year I sold 26 units, and seven were FSBOs,” says Chad Dion, a salesperson with Coldwell Banker Hickok & Boardman Realty, Burlington, Vt.

The important things to remember when dealing with FSBOs, say experts, are persistence and a low-key approach.

“Most salespeople make one call to a FSBO and then don’t go back,” says Ferry. “But it’s the salesperson who makes three or four calls who gets the listing.”

Most salespeople say they start off with a phone call after noticing a FSBO either while driving or looking at newspaper ads.

“I ask how I can help them, and usually they say I can’t,” says Dion. “My goal at that point is to see how motivated they are to sell and also to let them know I’m available should they decide to list.”

Some salespeople go even further. “I have a standard package that I send out to every FSBO,” says Dean Nikodemski, a salesperson with RE/MAX Metro Realty, Charlotte, N.C., who estimates he converts 10 FSBOs a year. “It includes a RE/MAX folder, a personal brochure, a cover letter, several newspaper articles on FSBOs, and a package of sample forms, contracts, and disclosures. The idea is to be helpful but also to make them realize that selling a house is a complicated business that requires a salesperson.”

The next step is staying in touch. “If the motivation is there and it’s a good salable listing, I probably call every 10 days for a month and a half or so,” says Dion.

“The key is to go back repeatedly and offer some kind of value when you do,” says Ferry. “You have to be able to explain to them what you can do that they can’t do themselves. FSBOs generally rely on three things to sell their houses: signs, open houses, and newspaper ads. At the very least, you should be able to improve on whatever they’re doing in those areas.”

Don’t be afraid to get to the heart of the matter. “The issue for most FSBOs is paying a commission--they don’t want to do it,” says Hackel. “The way I handle that situation is to say, ‘Look, if I do all the work and net you close to what you want to net, isn’t it worth it?’ And many--not all, but many--say yes.”

When representing buyers interested in FSBO properties, salespeople say they begin by calling the sellers and asking whether they’ll agree to pay a commission.Some also tack on a transaction fee.

Salespeople in those situations say they often feel they have to do the work of two. “It’s definitely more work,” says Dion. “You have to get all the forms and meet with the sellers and tell them what the requirements are. Sometimes the sellers know what they’re doing, but sometimes they don’t.”

Some salespeople, however, say they actually prefer being the only salesperson working with both the buyer and the seller. “I get to control the whole transaction,” says Hackel.

“There’ll always be FSBOs, and you have to learn to work with them,” says Nikodemski.

5 reasons FSBOs need you

  1. You know the market and correct pricing for their home.
  2. You understand the transaction process.
  3. You can save them time in dealing with showings and transaction details.
  4. You can give them MLS exposure and most likely national Internet exposure through Realtor.com and possibly your own Web site.
  5. You have access to people who are actively looking to buy.

FEE FOR SERVICE

Many salespeople struggle with whether or not to deal with FSBOs on a fee-for-service basis. Most aren’t crazy about the idea. “I don’t need to cut my commission, and that’s what fee for service is,” says Chad Dion, a salesperson with Coldwell Banker Hickok & Boardman Realty in Burlington, Vt.

“Fee for service is a form of discounting,” says Mike Ferry, president of the Mike Ferry Organization, a real estate sales training firm in Irvine, Calif. “I believe you should take a full listing at a full commission and service it properly.”

Others, however, are keeping an open mind. “I’m intrigued by fee for service,” says Bruce Hackel, a salesperson with RE/MAX South Suburban, Flossmoor, Ill. “I can see a time when I might sit down with a client and ask, ‘Do you want a sign or not? Do you want feedback?’ ”

“Whether salespeople like it or not, fee for service is the future,” says Dean Nikodemski, a salesperson with RE/MAX Metro Realty in Charlotte N.C. He adds that he’s currently developing a program with different services available on a sliding scale: “The sign and the MLS listing will cost $1,500, negotiating services another $1,500, and open houses and an ad program yet another $1,500. That sounds pretty good to me.”

Robert Sharoff is an architectural writer for The New York Times, Washington Post, Chicago Tribune, and Chicago Magazine. With photographer William Zbaren, he has produced books highlighting the architecture of Detroit and St. Louis. He is a former senior editor with REALTOR® Magazine.

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