Scared of prospecting FSBOs? Now there’s an easy way to turn that reluctant FSBO into a satisfied customer.
According to NAR’s Profile of Homebuyers and Sellers in 2003, only 14 percent of home sellers actually sold their homes without the help of a real estate professional. This represents a 30 percent decline over the last two years in the number of people successfully selling their home “by owner.” There are many reasons FSBOs do not succeed without an agent. Some simply price their property too high. Almost none have the resources and sophistication to obtain a top search-engine placement. Few know about virtual tours or how to import them to a Web site. Thus, the FSBO is left with newspaper advertising and a sign. At best, these two strategies reach less than 20 percent of all potential buyers. Granted, some FSBO companies will place the seller’s listing on the Multiple Listing Service through an IDX or VOW agreement, but agents are often reluctant to show these homes.
FSBOs who list with online real estate companies or discounters who provide a menu of services also have challenges. With the exception of Help-U-Sell and Foxtons, none of the online FSBO companies place as highly as traditional real estate companies in terms of search-engine placement. This means there are fewer visitors to these Web sites. This results in lower purchase price for the seller due to less exposure. In fact, according to NAR’s 2003 Homebuyers and Home Sellers Survey, the average FSBO sale was $145,000, compared to $175,000 for the average Realtor-assisted sale. This means on average, listing with a Realtor translates into 21 percent more for the seller.
Agents are often reluctant to prospect FSBOs because they fear rejection, yet FSBOs are one of the best sources for listings. The challenge is few agents have a strategy to keep in contact with the FSBO long enough for the FSBO to give up on selling themselves and list with a broker.
As an agent, how can you capitalize on this situation? A new company, www.FSBORE.com has an interesting strategy to keep you in front of the FSBO in a way that can easily convert the FSBO into a signed listing. Its approach is to offer a service where you provide FSBOs with a means to place an ad for their property online. Like many of the lead generation companies, you purchase a specific territory. Your FSBO leads post their ad using a pass-code-protected system. You do not place the ad for the FSBO. Instead, you only pay for the service. Each FSBO maintains its own ad. Instead of trying to educate the FSBO why they should list with you, the strategy shifts to providing the FSBO a service to help them sell their home. Since you are giving something away, you are not telemarketing your services. Consequently, the “No Call” list does not apply, provided you make no attempt to solicit the FSBO’s business. When you offer the service, you can ask the FSBO’s permission for the “area representative” (you) to contact them in the future to determine if they need anything else. At this point, you have “permission marketing,” i.e. you can contact them in the future. If they say “No” to this question, you can still contact them by e-mail. You can try this service for 90 days at no charge.
As an agent, your goal is to be in front of the FSBO when they decide to list their property. Using this strategy, you now have a means for contacting the FSBO on a regular basis. If you provided this service on your own Web site, the FSBO normally assumes you will be directing buyer inquiries to your full-commission listings. By using this approach, however, you can call the FSBO repeatedly, suggest they change their ad if they are not generating enough buyers, and be helpful without inserting yourself into their sale process. An important point to note: do not give the FSBO any real estate advice because you could be creating an agency relationship. If the FSBO relies on your representations and something goes wrong, you can be on the hook for damages.
If FSBOs are curious as to why you are helping them, let them know you would like to earn the right to receive their referral business. Also, given that you are providing the FSBO with a service, there’s nothing wrong in asking for the contact information of buyers who contacted the FSBO but were not qualified to purchase the FSBO’s home.
Working with FSBOs is one of the fastest ways to build your inventory. Are you up to the challenge?
Bernice Ross is an owner of Realestatecoach.com and can be reached at bernice@realestatecoach.com.
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