| October 13, 1998 |
![]() You know the look. The FSBO (For Sale By Owner) opens the door. You introduce yourself. And that look comes over his/her face. That tired, "you are nothing better than a thief here to steal all my hardearned equity and who needs you anyway" look. Believe it or not, despite the if-looks-could-kill expression, you still have a shot - if you can turn that look into a smile. You want to list the home or sell it to your buyer, and the FSBO is holding all the keys...with both fists. If you can just get him/her to listen for a moment, and reconsider using a REALTOR®, what would you say? First you have to evaluate what you are up against. What is the FSBO's attitude? Is he/she wary? angry? defiant? The more polarized the FSBO, the more certain it is that he/she are operating either under terrible misconceptions or has actually been "burned" in real estate before. Your job is to find out what the situation is. Before the bomb goes off, you have to diffuse it. Your skill is in knowing whether to cut the red wire or the green wire. Unfortunately, sticking to your own agenda can make you color blind and you end up cutting the wrong wire and the deal could blow up in your face. This is the time to concentrate on the FSBO's needs, not your own or your buyer's. Ask the FSBO if she have been burned by a Realtor and what happened? Don't defend yourself, the other Realtor or the industry - just listen. Every word he/she says will give you a clue as to how you can diffuse the bomb. You already know three important facts about FSBOs before they even open the door. One - they don't trust Realtors. Two, they think they can sell the home without a REALTOR. Three, they do not want to pay a Realtor to sell their home. These facts make the FSBO a tough challenge and one that you may never totally win over. The FSBO is obviously going to be more trouble than other sellers, but the rewards of finding a home for your buyer or getting the FSBO to list with you and to successfully close on the home, can be great. (A word to the wise - never mention the existance of a FSBO home to a buyer without first obtaining a signed buyer's representation agreement first.) Here are some suggestions for diffusing the red-faced FSBO and turning a bomb into a sale. 1. Keep Cool. The angry FSBO doesn't know you so any hostility isn't personal. Use that to keep your skin thick. Introduce yourself, and ask if you look at the home so you can add the home to the available list of homes in the area to your database. Explain that in a tight market, buyers are looking for other options besides MLS listings, but that out of town buyers have no way of knowing about this home without help. Ask if you can take a few of their feature sheets with you, if any are available. If there aren't, ask when the FSBO is planning to make them. If they don't know what a feature sheet is, whip one out and show them a really professional-looking one. 2. Ask How They Feel About Realtors. Begin by telling the FSBO that you appreciate that they want to save commission on the listing side of the transaction, but that if you bring a buyer, it is only fair that you are compensated. Not only will you bring the buyer, you will work to see that the home closes. Explain a few of the things that can go wrong with unrepresented buyers and the kinds of misunderstandings that can ensue, such as who pays for what in a typical contract and why. Explain that is how the professional real estate industry works, that homes would not sell in a timely fashion or fetch market value without the ability to put the home out among hundreds of agents who in turn, bring their buyers. Explain that only buyers that drive their area will see the home and that that if the home is on the market two weeks without an inquiry, no one is seeing the home. The home will go stale and buyers and agents will assume that without some activity on the home, something is wrong - the home either has problems or it is overpriced. 3. Ask When the Home Can Be Shown. This is a question that usually starts the FSBO thinking. Ask when they will be available to show the home, and if they are planning an open house for buyers. Ask what they will do about security while they show the home. Ask how they plan to qualify the buyers before they allow them into the home. Explain that most owners have other jobs and are seldom available to show a home when the buyer is available to see it. Are they willing to leave work to meet an out-of-town buyer? Are they willing to show the home repeatedly to the same buyer while they bring their parents, best friends, decorator or contractor to view the home - even before a contract is signed? If you have signed buyers' representation agreements, get them out and show them. Tell the FSBO what kind of homes your buyers are looking for. If you have a buyer that you think may be interested, show the FSBO which one it is. 4. Ask when the home will be featured in the newspaper and how else it is being advertised. Ask how they are following up with buyers. 5.Arrive armed with comparables. Ask how the owner arrived at their price? Did he/she have comparables given to them by another agent? If so, why did they choose not to list with that agent? Did the FSBO pay someone to get the comparables? If they got comparables for free, how is it they thought they would be cheated by a Realtor who is giving away their services? Comparables are the last pieces of information that have not been freely given away by the real estate industry. Does the FSBO understand that there is more information available about comparables than Realtors typically are able to share with homeowners? Does the FSBO understand how comparables work? If the FSBO already has their home priced and on the market it is obvious that they arrived at a price by using some hapless Realtor's time. If they didn't talk to a Realtor and only guessed at the price based on a few other houses in the area, they may be pricing their home too low or too high. The only way comparables can help you with a FSBO (who has probably already seen them and used some hapless REALTOR's time to arrive at a price for their home before throwing the agent aside) is if you back them up by viewing the homes yourself. When the FSBO stubbornly tells you their home is worth $15,000 more than any other home on the street, you will have seen the competition and can counter calmly and reasonably. The comparables may mention that a home has been remodeled, but it certainly makes a difference if the kitchen is granite or Formica, and there are hardwoods or marble instead of carpet. And you won't know unless you have seen for yourself and made appropriate notes. 6. Be willing to offer cherry-picked services. Although it is possible to turn a FSBO into a client, there may still be resistance to paying you for all your services. There may be things the FSBO honestly feels they can do as well as you, but they may want to take advantage of some of your expertise in other areas. If that is the case, do you know what your services are really worth? How much time did you spend on that comparable analysis? How much is an ad worth? What is a marketing plan for a home worth? What is your marketing knowledge worth? What is your training worth? What is your knowledge of buyers worth? What is your preparing a home for sale knowledge worth? What is your list of contractors, inspectors, loan offices, title companies and other contacts worth? What are negotiations worth? If you can answer any of these questions with a dollar per hour or set price that you can live with, then you are positioned to at least ask for part of the FSBO's business. Write a marketing plan for them, but charge accordingly. Help them stage the home, but get paid. Offer to get school reports, but charge a fee. Write an ad for them, but charge what any ad agency would charge. Creating a value for each of your services can be an eye-opening experience for both you and the client you are trying to convince. If you can estimate your time, effort, knowledge, correctly you may be able to effectively show your reluctant new client that the services he or she is getting are a bargain. If after all this, the FSBO is still throwing bombs at you and the industry, just smile and walk away. Anyone who is that hostile will likely transmit that same suspicion, arrogance, unreasonableness and unpleasantness to any buyers and other agents that come their way. Especially as soon as any disagreement arises and it inevitably will. Keep in touch with the FSBO and call weekly as long as you see the sign in the yard. You can always go back and try again after the home has sat for a few weeks and the realities of the market have set in. |
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