How To Convert For Sale By Owner's (FSBOs) Into Real Estate Listings
The key to all real estate agents' success is leads — high-quality leads give you great listings. These listings are the foundation of your real estate business, as without these leads there are no clients, and without them, there is not much a real estate agent can do to sell or buy property.
Now although most real estate agents are constantly striving to get good quality leads, there is one section of home-sellers who are avoided by many real estate agents. Those are the FSBO sellers. You may have frequently come across this term and may have wondered, what exactly are these FSBO? Or you know what they are, but you have never bothered to try and persuade them for listings, as you may have considered that to be an exercise in futility.
However, today we are going to not only address what are FSBOs and why some home sellers opt for an FSBO but also going to give you a clear strategy to win over these hard to convince FSBOs.
What Are FSBOs?
Let us start with what exactly are FSBOs? For Sale By Owner (FSBO) listings are those where a home or a property is being directly sold by the property owners themselves, without relying on the help and assistance of any real estate agent, realtor, or broker.
The FSBO seller bears the entire responsibility of carrying out the sale. Right from the listing, to staging the house, to showing the house, to negotiating with prospective buyers, getting all the paperwork and legalities completed, and finally closing the deal.
An FSBO seller is basically shouldering all the responsibilities and risks of successfully selling a home all by themselves.
Why Some Sellers Go The FSBO Route?
Now, why exactly do some home sellers choose to go for an FSBO instead of the more standard approach of hiring a real estate agent or realtor? It is obvious that when there is are real estate professionals by their side, they would save a considerable amount of time and effort. Everyone is well aware of this reality.
Despite knowing this, what are the reasons which drive an average home seller to decide that they would try to get their home sold by listing it as an FSBO?
In a survey of home sellers conducted by a leading online real estate company, the results showed that three leading factors make a home seller believe that they do not need the assistance and guidance of any realtors or any real estate agents. Those factors are:
Factor 1 —Save Money Or The Listing Commission
This is the primary motive that drives most FSBO sellers. These home sellers are looking to save the listing agent commission that they would have to pay. Close to 49% of the respondents of the survey chose this as their reason to opt for an FSBO.
Now although both the buyer and the seller would have their own agents, the commission for both the agents comes from the sale proceeds. It is usually around 6% of the final sale value. The agents would split this commission between them. This 6% commission is what all the FSBO sellers are trying to save and thereby increase their profit from the sale of their home.
Factor 2 — Confidence In Their Own Abilities And Skills To Conclude The Sale
In the same survey, around 35% of people claimed that they were very much confident that they would be able to close the deal of the sale of their house, without requiring the assistance of any listing agent or realtor.
These people firmly believed that they knew their residential neighborhood very well and could manage all the necessary processes for selling homes on their own. These people were motivated by their own abilities to opt for an FSBO.
Factor 3 — Had A Potential Buyer
The third common response in the survey, which was around 34% was that the sellers already knew a potential buyer. For this group, the fact that they wanted to sell their house and they already had a potential buyer made the entire process of hiring real estate agents' services entirely redundant.
They commonly assume they can conclude the entire process and complete the deal with the potential buyer through mutual discussion and that they do not have to hire an agent for merely carrying out the negotiations.
How To Successfully Convert FSBOs Into Listings?
Before we can share with you our strategy to convert FSBO sellers into listings and some additional guidance tips on handling the interaction there are few vital points that agents must keep in their minds.
No matter what do not try to apply any of the usual approaches you utilize to convert listings. Most of these normal methodologies are what is termed as a hard-sell approach. Given the unique position of an FSBO seller, you need to rely more on the soft sell approach.
Remember, these are sellers who have basically decided not to hire an agent. So when dealing with these clients you are not selling your skills, but trying to help them understand that how it will benefit them if they hire your services. So in these scenarios, you are trying to sell them the advantages and benefits and not your skills, that is why you need to follow a soft-sell approach.
However, keep in mind that these sellers do in fact need your assistance and guidance. According to the latest statistics compiled by the National Association of Realtors (NAR), the proportion of FSBO sales has been on a decline. Only 8% of home sales were FSBOs. This is far fewer when compared to the total number of FSBOs. Most of these sellers ended up engaging the services of an agent after failing to sell their home.
Moreover, on average according to the data from NAR, an agent-assisted sale was $295,000 whereas, an average FSBO sale managed only $217,900. That is a clear $77,100 that the FSBOs lost out on and which is far higher than the 6% listing agent commission which would have been around $17,700.
So all you need is to have a friendly conversation to build a rapport and our tried and tested strategies to successfully convert these FSBOs into listings.
The Right Approach To Win Over FSBOs
Step 1: Carry Out Research On The FSBOs
The first step is to qualify the FSBO leads. For this, you will have to browse through the Multiple Listing Service and take note of all the FSBO sellers. Then check your local newspaper classifieds section for any seller listings. Also, scan your local Facebook pages and other social media platforms where FSBO sellers might mention their listings. Finally, take a drive around your neighborhood and check for any 'For Sale' signs on the yards. Once you have gathered all this information add it to your Customer Relationship Management System (CRM).
Now you have your potential leads in one place. Now try to start with those FSBOs who have not been approached by multiple realtors and those whose properties have been listed for a long period. These are going to be the sellers who are most approachable. They will also be open to having a discussion with you.
Try not to approach recent FSBO listings and keep an eye out for terms such as "Must sell soon", "Ready for quick possession", or "Quick sale" as these denote an urgency for the seller to sell the house.
Step 2: The First Contact
We do not intend it to seem as if you are approaching an alien, but the truth is you are approaching someone who expressly does not wish to meet you and that is why they have listed their house as an FSBO.
So, what should your strategy be? We would advise against cold calling. An FSBO is not a lead you should subject to cold calls it would not be of any use. Rather you can send a polite congratulatory email wishing them luck for their sale and happiness in their new home.
This would immediately make you stand out from all the other agents and realtors who are also probably trying to get their listing. You simply did not try to obtain the listing.
Once the initial mail has been sent to the seller, you can drop by the house and ask if it is possible to come and see the home at a later time? Be clear that yes you are an agent and no you are not trying to get the listing. You simply wish to see the home in case you find any potential buyers.
Now, this is where you have to be a little smart. Keep this first face-to-face conversation very short and simply ask something like whether you can come back on Wednesday at 4.00 pm or would Friday at 5.00 pm will be more convenient for them?
It is vital to always give two choices to the seller. The reasons for that are:
When you offer 2 choices to the seller in this manner, they are going to pick one out of them. It is hard for most people to say no twice in a row.
By making the seller choose the time that is convenient for them, you have made them invite you back. So the chances are higher that they will be more friendly when you visit again.
Step 3: The Actual Contact/ Home Visit
This is where you are going to do the crux of your work. You are going to build a foundation of trust and expertise in the FSBO seller's mind. When you go back for your house visit, you politely take the home tour. Always appreciate one thing about each room and tell the homeowner how nice it is. But you should also try to notice at least two issues or drawbacks in each room. Do not disclose these. They can be of use later when you have obtained the listing.
Once the tour is complete and before you leave ask a few casual queries or a few normal real estate-related comments, which will make the FSBO seller start doubting their capabilities to sell the house independently.
For instance, you could say something like:
- Well, I do hope you are able to close the deal soon on your wonderful home, as it is challenging for most to pay two mortgages.
- Have you got all your legal disclosures prepared?
- How are the marketing strategies working out so far?
Now, there is a high chance that an FSBO seller is not prepared or has not even considered these aspects. So, now you get to show your expertise as an agent. You can give a few short but clear replies to the queries you have raised.
Remember, at this point, it should all be verbal information. And while leaving thank them heartily, once again appreciate a unique feature of their home and give them your business card and tell them to approach you for any advice if needed. Again remember you are not asking for the listing.
Step 4: Offer Value/Service
After three or four days approach your FSBO seller for a quick chat, though this time you should be prepared to come bearing gifts. These gifts could be in anything, such as a regulatory form that they will require or maybe a business card of a professional stager you use normally. Talk about how beneficial they are for conducting open houses.
You could also show them a few of your marketing strategies. In this portion, we would advise you to show them your real estate agent profile on an online real estate platform like Dorrmat. In Dorrmat, which is a leading real estate platform for real estate agents and home sellers, and buyers, you have a range of services provided, one of which is an agent profile.
Open up your agent profile page on Dorrmat, show them the glowing reviews you have received from happy clients. Connect your success stories to their current home selling situation/experience.
After you have shown the sellers how it can be beneficial for them you need to give them some time to reconsider their decision. While leaving again give your business card and this time gently remind them that if they do change their mind you would be more than happy to help.
As you have already built a good rapport with them and also showcased your knowledge, expertise, and helpful nature for someone who is not even your client, you are going to be leaving a very positive impression on their minds.
Step 5: Converting The FSBO Into A Listing
In the last step, you can either wait for the seller to give you a call, of which there is a high chance or you can call back after a few days and offer some more additional help or advice.
In case they do agree to hire your services as an agent, then do not give them a very long-winded listing presentation. Keep in mind you have already shown them small portions of it over the past few meetings.
Remember, the few drawbacks in each room we had asked you to observe in step3? Now you are going to put them to use. You can do is share a few of the improvements that can be carried out to make the house more appealing to potential buyers. This should effectively convince the FSBO seller that they do indeed need you.
So these are our step-wise strategy and some tips to help you convert the elusive FSBO seller. Yes, we are aware that it seems like a lot of effort, but from a quality-lead point of view, an FSBO is a very rich untapped lead resource for getting listings.
These are all determined sellers, possibly with a tight time frame of moving into their new homes. They are often ignored by real estate agents as difficult prospects; however, they are also the ones who are in dire need of an agent's assistance in most cases.
So if you are an enterprising real estate agent, then armed with our expert advice you can surely manage to convert most FSBOs into profitable listings.