Not every homeowner wants to use an agent to sell their home. When this happens, they list it as “For Sale By Owner”, more familiarly referenced as a “FSBO”. As agents, we know we could do a better job of selling that home. But, if you’re reading this article, you probably already know this-- and what a FSBO is-- which is what brought you here in the first place.
So, let’s say you’ve finally made the decision to work your way into this niche market of grabbing leads. How do you convince a homeowner they should forget the FSBO and let a licensed agent handle the transaction after all?
Converting FSBOs are not as difficult as some might have you believe. In fact, how prepared you are before you pitch your services could be the difference between landing the listing and getting rejected.
How to prepare to win the listing.
Once you’ve decided that you’re going to pursue converting FSBOs into listings, you have some leg-work to do before you make that first call.
Learn the FSBO fundamentals.
Just as you’ve spent time becoming an expert in your local neighborhoods and with client personas, it’s imperative to do some research on FSBO homeowner personas and where FSBOs have their place in the real estate market. Search for statistics about FSBOs from reliable sources such as the National Association of Realtors® and other industry leaders.
- According to the National Association of Realtors® in 2016, 8% of all home sales were FSBOs. And, the average FSBO sale was only $190,000 compared to the $249,000 that an agent-listed sale brought in.
- Most homeowners that opt to sell their home FSBO do so to avoid having to pay commission to an agent. However, FSBO sellers generally don’t have the expertise that a licensed real estate agent has.
- Throughout the country, time on the market as a FSBO can vary from state-to-state. Based on a 2017 report conducted by Trulia, in Los Angeles, FSBOs tend to sell in 40 days LESS than homes listed by agents. But, in Detroit, FSBOs stay on the market for 36 days LONGER than a traditionally-listed home. Understanding your local market will give you the upper hand when making decisions about which FSBOs to approach, when to approach them and what listing price would be appropriate.
Gather up resources.
Part of your prep work should be to create a resource packet for yourself. Put together a binder--virtually or physically-- stocked with information that you can refer to at any point.
- Make a marketing plan. How you intend to market FSBOs may not differ too much from your traditional listings, but it’s crucial to spend some time drawing up a plan so you’re ready at the helm while pitching your services to the FSBO owner. Your expertise and knowledge will reach thousands more buyers than the owner may get from a random drive-by.
- Write a script or two. Consider different scenarios and personas of the FSBO homeowner you may encounter. Take into account the different arguments you may hear or questions you may be asked when you make the initial phone calls or meet the owner for the first time. Write the scripts out and keep them at your fingertips. Eventually, you’ll become so experienced in FSBO pitches that you won’t need them, but they are crucial when just starting out.
- Run your numbers and keep a spreadsheet. How much are you willing to take on a FSBO for? Would you be happy with 1% commission after the buyer’s agent takes their share or will you not even consider converting one without a guaranteed 3%? Running your numbers will keep you from pursuing a FSBO past the initial call that won’t pay out for the work you do.
TIP: You may not want to discuss numbers thoroughly during your initial call. That first conversation is a critical time to focus on creating a rapport with the potential client and explaining how your services can benefit the homeowner.
Prepare for the call.
Before you make any pitch, being prepared before you dial will make the first call go smoothly.
- Ensure you have the correct address and phone number. You don’t want to call the wrong person or worse, reference the wrong home when talking to the owner. This can cut your credibility before you even begin your pitch.
- Have an open calendar and be ready to access it quickly. FSBO sellers that accept your proposal to meet and discuss what you can bring to the table are generally ready to make an appointment for that same day or very soon. Be flexible and try to accommodate their schedule.
- Research the neighborhood and pull nearby comps. It’s important to know what other homes have sold for and how this compares to what you’re going to be up against when the FSBO owner gives you the asking price.
- Have your resources handy. Don’t get caught fumbling for your numbers spreadsheet or scripts you’ve prepared.
- Smile. Although the person on the other end of the line won’t be able to see your face, smiling when talking will help reduce any stress or anxiety you may be feeling. Smiling will put you in a good mood and facilitate the professional and friendly demeanor you should have during your phone call, helping to put your listener at ease.
The business of converting FSBOs into listings is a profitable one. The more frequently you work with FSBOs, the more experienced you’ll become. You'll know which have potential and how to successfully pitch your value and services to the FSBO owners. Dedicating time for prep-work and research will set you up for success.
To educate and inspire other agents to learn more about how to convert a FSBO into a listing, we invited John Doering, a Phoenix-based HomeSmart agent that specializes in converting FSBOs, to speak about the topic. Click below to watch!