How do you feel when you see a 'For Sale By Owner' sign? Many agents I talk to feel betrayed and even angry. We go through a lot of studies and training to earn our certification as real estate professionals, and a FSBO sign can be really deflating. It's the sign of a person who has, through some means, lost faith in us.

One thing that is striking to me about our "training" to become real estate professionals is that it is very law intensive. Very little time is spent training agents on what is the most important part of our job ... marketing and sales. That is why many agents who got into this business during the market "boom" of the past few years don't see what an experienced professional sees on that FSBO sign ... an opportunity.

Rule #1 in sales: The sale begins at "No"

FSBO signs are very simple. There's a "For Sale By Owner" and a phone number. For any agent who is not afraid to knock or ring a door bell, this is an opportunity not only to gain a new client but to have a positive effect on the market, especially if the FSBO is asking an unreasonable price for their home.

In the wake of the "boom" where homeowners and agents got away with this, a homeowner is now more likely to stand pat on a grossly inflated asking price for too long, then become impatient, then panic, then cave in greatly on their price when push comes to shove. If you are an agent who sees a FSBO sign and thinks "Dead End," think again. True, not all FSBO's can be converted into clients, but many can. All it takes is a little initiative and to be mentally prepared for that initial rejection.

Research nationwide is showing that the market is leveling off and 2007 should be a much more stable year or, as I like to say, a more "normal" year. What we've seen the past 5 years has been an unrealistic market. Prices simply cannot keep climbing. It has to stop somewhere. Young homeowners have been looking at their homes as liquid assets and expecting too much profit when they sell. It was inevitable that this would end. What has happened is the market is getting back to what it should be. Prices of single family homes are getting back to where they should be.

As a result, younger agents have to hustle a little more for their earnings than what they've been used to for the past 5 years. Ask any experienced real estate professional who has seen the true housing "busts" of the late 70's and early 80's and they will tell you that the strong, career oriented agents plan properly and make it through the tough years almost without missing a beat.

Rule #2 in sales: People are always buying and selling

It is your willingness to hustle and to knock on that door or ring that doorbell that sets you apart from the agents who are giving up and leaving this profession. I saw an interesting article where the Massachusetts Association of Realtors (MAR) reported that the median price for a single family home fell 2 percent over the past year. The Warren Group, a real estate company, reports a 6.9 percent decrease. The public perception is that it has been more like 10 or 15 percent. The Warren Group's data includes FSBO's, whereas the MAR data does not. The MAR data shows a significantly small decrease. Coincidence? I don't think so.

So what's the story?

Rule #3 in sales: It doesn't take talent to hustle

How many FSBO's do you think are savvy with their sales and marketing? If you show that savvy as an expert agent, it is an important step in earning credibility with an FSBO prospect. The Warren Group found a steeper drop in the price of single family homes because their data included FSBO's. In the wake of the "boom," homeowners saw how easy it looked to sell a house and more of them decided they could do it themselves, selling at an inflated price and pocketing the money they would have given as commission to a professional, like you or me. In theory it may have sounded great, but many homeowners found their homes on the market for extended periods of time, bringing the value down and forcing them to cave in on their price when, with the help of a good real estate professional, it probably wasn't necessary.

The 80/20 Rule: The top 20 percent of agents are responsible for 80 percent of closings

Think for a moment. How many agents do you know that are willing to tell their prospective client that their asking price is too high? To the contrary, during the "boom," many new agents were coming into the business looking for higher prices to make higher commissions because buyers were paying the higher prices, creating the aforementioned "unrealistic market" and the mistaken perception that our profession is "easy money." These are the agents who experienced a huge dip in sales in 2006 and now must decide either to hustle or jump ship. (see Rule#3 in sales)

Many FSBO's see the home flipping shows and think they can sell their house themselves and make a "profit." They think the house will "sell itself." Truth is, they miss the whole point of the show.

The homeowners on these shows have typically done a horrible job in getting their houses ready for viewing. On these shows, they get help from experts to get their house ready to sell, which typically involves changing the way the interior has looked while the homeowners have been living there. They then get help from (surprise!) a professional real estate agent. You can see on these shows how reluctant the homeowners are to change anything, and how hard it can be to convince someone that their eccentric taste is what is preventing the sale of their house … especially when you don't have the luxury of hidden cameras so the homeowner can see firsthand the honest reaction of potential buyers.

Your willingness to approach the hard truths, in a respectful way, is what sets you apart from your competition. Where a FSBO will cave in on price before they necessarily have to, a smart agent will help their client make their house sell-ready. The MAR data showed only a 2 percent drop in the price of single family homes over the past year, and it makes perfect sense. It's no wonder the public perception is that single family home prices have dropped 10 or 15 percent -- they have for those who don't use agents.

The MAR's findings were entirely based on agent-driven closings and no FSBO's, which means overall we real estate professionals are doing a pretty good job of managing our clients' expectations and, thus, helping to stabilize what was a pretty ridiculous market.

Published: January 5, 2007

Use of this article without permission is a violation of federal copyright laws.