It is a sad commentary on how ineffective our industry has been at educating the public to the value of a real estate agent that most For Sale by Owner (FSBO) sellers believe that it is easy to sell a home. They think a sign in the yard, an ad in the paper and an open house will get their house sold. Sometimes they are right!
However, more often, using a real estate agent will net them more money because of the myriad other marketing actions we take and the wide reach of the MLS for qualified buyers willing to pay market value. Furthermore, we all know that just getting a contract and having someone who wants to buy doesn't always mean the house is going to close. There are so many things that can derail the agreement along the way, losing the seller precious time, since his house has been withdrawn from the market.
The good news for you is two-fold. History has shown that a large majority, often as high as 80 percent of FSBO sellers will end up choosing a real estate agent and listing their home on the MLS, usually within 6-8 weeks.
The second bit of good news is that the media campaign and education that the National Association of REALTORS® has undertaken in the past few years is working. According to the 2003 NAR Profile of Home Buyers and Sellers, 14 percent of homes sold For Sale By Owner last year as compared with 18 percent in 1997 and 16 percent in 1999. So, nationally, fewer people are successfully selling their homes themselves. Another interesting part of this study, also, shows that the percentage of sales to people they already knew has gone up considerably from 20 percent years ago - to nearly 50 percent last year. This reinforces the conventional thinking that bargain hunters or investors who don't want to pay top dollar are the majority of prospects for the FSBO seller.
So where does this leave you? With all sorts of opportunity! As the FSBO seller begins to understand the value of our services, from our marketing, to our knowledge of the paperwork and disclosures, from our ability to bring qualified prospects and to the tools to give availability for showings all the time, they begin to see it is not going to be as easy to sell their homes themselves as they have imagined. Most agents are finding this is when the conversion becomes common. They have experienced one or more situations that cause them to question their ability to get the job done and realize you have value. Over 80 percent of FSBO sellers indicated they would not sell on their own in the future. Hallelujah!
Now, develop a handout or a cheat sheet for yourself of what some of the problematic areas might be. By giving them this list, they start to see what they didn't know or think to consider.
Here are the Top 10 questions to ask a FSBO seller:
- When do you want to be moved, and do you know how long it will take to complete all the steps to close on time after you have found a buyer?
- What data have you used to set the price and how much negotiating room have you factored in?
- Do you know the difference between prequalified and preapproved and what a Conditional Loan Approval letter is?
- Do you have a copy of the Lead Paint Disclosure form?
- Do you understand all of the closing costs that you will be expected to pay?
- Do you know which other environmental disclosures, such as hazardous waste and Superfund sites, that would apply to your situation?
- Do you have a CLUE report available?
- What identification or information will you get from strangers that want to see your home?
- Are you available to show the home most of the time?
- Do you know where to run ads and how to word them to get the best response?
Feel free to just use the list below as a starting point. There may be certain disclosures or processes that are unique to your state or area that should go on the list. Or there might be other challenges you know are hot buttons, such as personal safety. So, adapt the list in any way that would suit your market. This becomes valuable because you have prepared yourself and feel self-confident in the value you bring.
A strategy and system to work the FSBO market is important. The more automated you can make it, the more effectively this will become a foundational part of your business that you can count on, month in and month out. This is reassuring if you typically have production that looks like a roller coaster track. Even if your goal is to add just one FSBO listing per month to your production, you'll have 12 more deals this year!
FSBO sellers need you. Show them you can provide value and everyone wins!