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Real Estate News and Advice |
November 23, 2009 |
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 Market to Your Seller's Fears
by Blanche Evans
 Selling a home even with the help of a qualified agent can be like a stroll through a minefield. At every turn, problems with the market, the home or buyers can erode seller confidence. Some arrive at the point where they don't want to involve an agent at all, preferring to represent themselves in the home sale transaction. As a Realtor, you want to prevent this at all costs. And as the old adage goes, an ounce of prevention is worth a pound of cure. Look at a few of the results from the 1997 home buying and selling survey conducted by NAR between sellers and FSBO's you will see some interesting facts that reveal quite a bit about the home owner mindset. The advantage to knowing these facts can make a difference in whether you land the listing, and how smoothly the marketing phase of the transaction will go. It is all based on your seller's confidence in you. First you have to isolate what it is that your seller fears the most and finds the most difficult to handle. If the answer is a standard response such as one found among the survey, you will be better able to counter the seller's objections, hesitations and downright rejection of you. Before any seller makes a change, the primary concern they will have is where they are next going to live. This is a motivating force in the seller's mind and the number one issue for the Realtor to address. A telling statistic shows that over 32% of home sellers looked at homes to buy without an agent before putting their homes on the market. That is a fact that can be interpreted one of several ways. The seller is exploring how much home they can buy, where they want to live next, or perhaps a change in lifestyle. They may want to have their plans more concrete before selecting a Realtor. What is significant is that they wish to do this experimental stage without the services of a Realtor. Only 17% of the same sellers chose to include an agent at the beginning of their plans. Therefore, the first thing you must do in a listing presentation is ascertain where your seller is in the home selection process. Are they actively looking at homes? Where? Have they just gone to a couple of open houses? New home communities? A different neighborhood? What kind of homes and where they are looking is significant. If they are looking at new homes, the chances of their finding a home without using an agent have increased dramatically. 42% of home owners look in new home communities without an agent before they list their homes. Knowing the answers can help you to help them meet their new goal for a new home, but this information is vital to helping you understand immediately whether they have a realistic or unrealistic idea of what their home will bring and how closely the selling price will allow them to meet their goals. Sellers The "Biggest Worry for Sellers Before Selecting an Agent" are the following:
It is no surprise that 18% of sellers listed equity recovery as their number one concern. The next move is simple. Find out exactly what they have invested in the home, the approximate pay off amount of their loan, and compare that figure with the estimated sales figure - less commissions and closing fees. That will give a clear equity picture and an estimated down payment amount for the next home they are planning to buy. Coming in a close second is keeping the house straight. That one is easy. Convince your client to clean out as much clutter as possible quickly before the home is listed. Advise them to store the clutter in boxes at an inexpensive storage facility, that they can visit at their leisure and discard unwanted items off premises. This idea is a double whammy. It gets the clutter out of the house which will make it show better, and reduces housework during showing preparations. Can you help your seller write a contract to help hold that house before their current one is sold? Help your client realize that if time is of the essence, a lower price and better staging of the home can make an immediate difference in a quick sale. Can the seller take out an equity loan to purchase the other home? Offer to lease the second home while it is being marketed. If there is a contract for lease, the bank will approve the second home's loan with no problem. It raises the liability exposure for your client, but it is a gamble that could help them meet their goals. FSBO's The most important reason FSBO's chose to sell a home without an agent was having to pay the commission fee. Although about 59% of FBSO's felt this way, only 13 percent soldiered on to sell their homes without an agent. Getting paid is a matter of convincing the FSBO you can do what you say will do. Can you get them more money for their home than they can? Prove it. What value-added services can you offer? Can you be specific? FSBO's, because they are skeptical by nature, will want more specific solutions than most sellers. If you say you will advertise the home, for example, offer where, how often, and for how long before the FSBO has to ask you. Once FSBO's decide to market a home themselves, where they run into the most trouble is in the following areas:
Curiously, getting the price right was the least concern for FSBO's. This figure is impossibly low. Why are FSBO's so confident they will have their homes priced correctly? Because they received their comparables from other agents - for free. If you can keep your own running talley of for sale by owner homes in your farming area, complete with your own personal CMA of FSBO vs. MLS listed homes, you will have a lot to surprise your reluctant-to-list seller. Show your seller that FSBO homes take longer to sell, have more "fallen" contracts, and sell for less than comparable homes in the area - until they are listed with an agent. Then show what the same home went for after an agent was on board. A 1992 study showed that agents can get 9 1/2% more for a similar home in the same neighborhood than a For Sale by Owner. At 5-7% commission that is still 2 1/2 percent higher than they would have obtained on their own, and at a fraction of the time, trouble and expense. Instead, hit them between the eyes with the security and logistics issues of trying to market a home on their own. Use the open house as an example. Show that you can bring another agent as added security if you are protected by a listing agreement and that the ad for the open house will bring qualified buyers - not bargain hunters. FSBO's think they are the only ones who want to save money, but buyers who respond to FSBO ads think they will save the same commission the seller saves. Ask if they know how to qualify a buyer and how to assist them through the home loan origination process. By addressing the fears of your seller, and fanning them where it is appropriate, you can use the surprise and shock of your client to gain positioning. And when you are in a position of strength, you can demonstrate what you do best - the sharing of knowledge and practical solutions to the problems of selling a home. Published: October 19, 1998 Use of this article without permission is a violation of federal copyright laws. 
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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68.
