This is big source of business in a market that is flat or declining. If you know how to talk to them, it is a goldmine. In the appreciating market FSBOs will sell and will be less interested in working with agents. Assuming you are going after FSBOs in your prospecting, what are some of the points to keep in mind, so that you can be most effective?
- They almost always ask you “Do you have a buyer?” and many agents will say yes, we do. This takes the conversation in a bad direction. They see you as someone who might bring an offer, which, even you have someone interested, is a long shot. And when nothing happens you are done. To avoid this trap you need to be transparent regarding your intentions. You are calling them to sign them up. You might even have a buyer, but I suggest you don’t say this. Focus on what you are actually calling them for. Be upfront and you will get more listings.
- Only go after FSBOs that are unlikely to sell themselves or unlikely to do this within the time they want. If the average price point in your market place is $700,000, anything selling at $350,000 will sell fast, with minimal marketing or negotiation. FSBOs will be able to sell those homes and if they are getting offers close to what they are asking - and they will, it is going to be hard to convince them to list. Knowing where your market is at will help you estimate if a particular FSBO is worth your time.
- When you talk to them, it is sometimes a challenge to keep your emotions in check. When they are rudely giving you all sorts of nonsense regarding their views of the market and the selling process, you can get a wave of irritation and the persistent “I can’t believe I am hearing this” fog will start forming in your head. This is when you have to show “professional patience”. Imagine you are a teacher talking to a kid. Have patience with them, stay calm and gather intelligence on what they are trying to accomplish. This is the only way you can engage them and help them sell.
- On scripts. Use a well designed and well practiced script. You are not just having a conversation. You are taking them from point “A” - this is where they are now, to point “B” - where they want to be. Every word counts. A well practiced script will make you sound emotionally in line with the words you are saying. Instead of pressuring them by asking questions, like “…if I were to show you how I would get you more money…, would you list with me” where you are jumping a few steps and that’s an instant turn off. Instead of asking “would you list with me?” ask them “would you be interested in at least looking at this option?” and then gauge how you continue the conversation based on the response.
- Prequalify x 10. Be extra diligent about pre-qualifying them on the phone before getting in the car and going to the appointment. You have to know their motivation and who is helping them make a decision. Is this an investment property? Is it vacant? Have they already purchased something new and when is it closing? Are they hurting for money? Does the house have too many stairs for them to handle? You need to know what’s driving their desire to sell. Next are the questions about the price. Are their expectations aligned with what the market can bear? See if there is room for them to move down on the price and if they are willing to do this. If they have a plan B, as in “we will rent it out if we can’t sell”, engage with caution - they can change their mind at any time.
- Talk stats and show them that most FSBOs are netting 10% to 25% less by themselves than with an agent. And don’t just tell them. Plant doubt by asking questions and taking them to this realization step by step. A good line of questions would be: “1. Do you know how many homes an average agent sells in a year? 2. Do you think this kind of agent is going to be able to negotiate the best possible deal for you? 3. How many homes have you personally sold last year? 4. Do you know the list to sale ratio for an average FSBO?” - it changes depending on the marketplace, but no matter where you are, they will still undersell - “5. Would you say that this house is one of the most important investments you have? 6. Would you also say that it is in your best interest to walk away with the most equity, instead of getting an average or below average result?” Bring them to the point of seeing how what they get on their own, will be below average and go back to this key question - “what happens, if your efforts to sell the home fall short?” - how would that impact their plans to be closer to their kids, downsize, have more financial freedom or whatever else they want to achieve. In other words, always bring them back to their motivation.
- Consistently calling new FSBOs that come on the market isn’t enough. Not only do you have to stay the course with that, but you also have to follow up with the ones you already spoke to. What do you tell them when you are following up? You can ask them “did you have any offers?” How are the showings? Have you seen the latest market report? How about the latest sale or the property in their neighbourhood? It is a give and take. Give them some information and get some information from them. After a few calls like that you will build good rapport with them and they will know you by name. Well, sometimes. If your name is too foreign and too complicated - they will call you sir. So, just show up for your prospecting and follow up calls every day or even better a few times a day. And go get them.