How much attention does your real estate firm put into attracting the business of For-Sale-By-Owner (FSBO) sellers?
They’re not always the easiest crowd to convince—often they want to sell their property themselves because they’re either looking to save money, or they’re convinced they don’t really need the professional help.
However, many often find that FSBO is more difficult than they thought, and the statistics certainly aren’t in their favor for achieving a sale within a satisfactory time period at a good price.
For these reasons, it can certainly be worth your time to reach out to FSBO sellers, and the best way to convince them is usually by knowing the facts…
FSBO: The Facts
As a real estate professional, it’s always a good idea to keep up with news and studies on what is currently going on in real estate. The National Association of Realtors is a great source for regularly updated market statistics—we’ve grabbed some of their recent data on FSBO to present here:
From the marketing data in the National Association of Realtors report, we can infer that FSBO sellers are not generally getting a lot of marketing exposure—very low percentages appear anywhere with the potential for bigger audiences (including only 15% on social media and 10% on multiple listing sites).
Additionally, FSBO sellers cited the following difficulties:
- 18% – selling within their planned length of time
- 12% – understanding paperwork
- 6% – (for each) having enough time, preparing the property, getting the right price
Time, whether it’s having enough to deal with everything or being able to sell within a desired period of time, is a big issue. Other statistics show that while a sale by agent might take 69 days, the FSBO will average 88 days.
Why Do Sellers Choose FSBO?
Check out this graph from Realtor.org:
The most common reasons are by far that the homeowner wants to save money or that they’re selling to someone they know. Does this desire to save money always pan out? Not necessarily; if an agent can get them a better price as we saw in the previous statistics, they will probably come away with the same, if not more in proceeds (and this without any DIY hassle!).
Why Do FSBO Sales Often Fail?
There’s always going to be a marked difference between going with a professional and trying to take care of a relatively complicated transaction one’s self. FSBO sales fail for a variety of reasons, but here are a few of the most common:
The Homeowner Isn’t Really Prepared
There are a few tasks a good real estate agent will always recommend a seller prepares before listing their home that FSBO sellers may not be entirely aware of. Besides knowing about what to prepare, it’s often easier if an unbiased set of eyes checks the home over—owners may be too close to notice things that should be done.
You often get only one shot to impress potential buyers, so it is important that home preparation is done well in the first place.
The Work Involved With Buyers
Screening, negotiating, closing, responding to queries—there’s a lot of time-consuming work to be done when dealing with possible buyers, work your average seller simply doesn’t have enough time to deal with effectively.
The time involved can be dragged out when the buyer isn’t very familiar with what to do or say and how to negotiate. This is where experienced agents definitely have the advantage to get the sale.
There are a couple of aspects to timing that should be understood; one is that there are better times than others to put a property on the market (such as seasonal variations), and these will depend on the specific area the property is in.
Secondly, there is a concept of “golden time” that says a property will receive bigger offers within the first week of going on the market and go down after that. FSBO sales can fail when the house sits for too long on the market (perhaps because the owner doesn’t have a lot of time to deal with marketing or negotiations), and they then receive lower offers than they should.
This comes down to experience again. If an owner is unfamiliar with contract procedures and negotiating, they may either make a bad job of it or simply lose the sale.
We saw from those statistics earlier that in general, FSBO sellers are not doing a lot of marketing of their properties. This may mean they just don’t reach the right people.
On the other hand, part of the role of an agency is to get exposure for the properties on their books. An agency not only has many different channels for exposure at their disposal, but they usually have potential buyers coming to them, which shortens the process.
Many FSBO sellers overestimate the price they should put on their property, put off potential buyers, then have to sell at a lower price later on when they’ve had the property sitting on the market for a while.
If a house is priced too high, the property may struggle to attract any offers at all, leaving future prospects to wonder why that property is still sitting unsold. This may make it more difficult to close any deals.
Have Good Content
Why should an FSBO seller go with an agent instead? What are the benefits? If you want to convince a seller that they’d be better off coming to you, it’s a good idea to be forearmed with content that makes the benefits clear to them.
Have statistics and comparisons ready so that someone who is leaning toward going with FSBO can clearly see the advantages to of going with an agent instead. You could even consider keeping something like a “FSBO Fact Sheet” that you regularly update as part of your core content. At the very least, sellers should know what they’re getting into before choosing FSBO.
[tweetthis]Know your facts: be prepared with an FSBO fact sheet that is helpful to sellers.[/tweetthis]
It’s unlikely that simply calling up and offering to represent a seller’s property will work right off the bat, especially if they’re convinced that staying away from an agency is saving them money. This means you really need to start by building rapport with the FSBO seller.
Don’t go in for a hard sell (really, no one likes that!), but let them know you are there for them if they have questions. Agent Marketing suggests that if marketing is an issue for them, as it often is for FSBO, offer to help them market for 30 days commission-free. This at least gives them some time to notice the difference that using an agent can make, but obviously your firm needs to decide if offering free time will be worth it.
There’s no better way to “convince” someone that you are worth a second look than to deliver value to them. You could do that by getting results from a free 30-day trial, as highlighted in the last section, but there are other, less costly ways to deliver value.
For example, why not put out educational material that will help them, even if they decide to go FSBO? Have tips on preparing and marketing a home, negotiating with potential buyers, and what steps are required to complete a sale.
Try and get FSBOs to opt-in to a drip email sequence that delivers these tips. You could do this simply by calling them and asking if you can add their email address to receive tips on preparing a home for sale. This gives you a good opportunity to start with that rapport-building too.
By doing this, you are not only showcasing your expertise, but you are potentially putting your firm on their minds when they think about their home sale. They may even decide through reading all of your tips that they simply don’t have the time or expertise to get all of those things right and may look to you for listing.
If you want to get the business of FSBO sellers, know your facts and have solid evidence to show why they are better off going with your agency.
The key to bringing them over will lie in whether they can see more value in what you are able to offer than any potential benefit they thought they were going to get by going FSBO. Build rapport, be helpful and deliver them tips that will be of use to them no matter what decision they make.
The final decision often lies in that value—how much are you delivering to keep your firm at the top of potential clients’ minds?