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© Copyright 2004, IRED.com, Inc. The Secrets to a Realtor's Success with FSBOsPat RiouxJoeann Fossland of Advantage Solutions Group recently presented her seminar entitled "FSBOs: The Secrets to Your Success" for the Massachusetts Association of Realtors. She emphasized that home sellers who use a Realtor earned, on average, 13% more for their homes. She told the audience that they could think of FSBO as standing for "frustrated seller batting zero" and that the biggest challenges for FSBOs are understanding the paperwork (30% struggled with that), preparing the home (26% found that difficult) and 19% had difficulty getting the price right. Fossland's background, which includes over 20 years of real estate experience and work as a regional sales manager for a national real estate publication, said that FSBO sellers are always trying to save money but they may not be doing that! Just look at the difference in the average selling price of the FSBO (145K) and the average selling price of the Realtor-listed home ($175k). Home sellers may think it is as easy as putting a sign in the yard and posting the home on the Multiple Listing Service but Fossland tells the story of one agent who listed the "123" items that someone has to perform to sell a home, so it is not easy. She believes that FSBOs are uneducated about what is involved in selling on their own and they are not objective about the value of the homes nor can they negotiate for themselves as well as an agent could. The changes in the marketplace that have allowed sellers to see opportunities to do it themselves include access to market data and more exposure for them through the Internet, FSBO magazines, and others. Some companies, such as IsoldMyHouse.com, have been advertising to home sellers that they can on their own, without a Realtor. Citing the Arthur D. Little strategic planning study done for the National Association of Realtors (NAR), Fossland explained that they predicted that the number of empowered FSBOs will double in the future. She mentioned that Massachusetts currently has a 9.7% market share for FSBOs whereas some states are much higher, such as Michigan, which has a 26% of the market as FSBO. Realtors need a strategy to meet consumer demands as consultants with expertise and knowledge. They should think about a menu of services they can offer. A FSBO may only need one piece of the services of a full-service broker, for example, negotiation or paperwork. Traditionally, 80-90% of FSBOs will list with a Realtor within 60 days of advertising their home for sale, according to Fossland. Seventy-four (74%) will list with the first agent they talk to. Be the first agent in and build a relationship with them! Other ideas include helping a FSBO find a house, be a buyer's agent or refer them to an agent somewhere else. Since they generate leads from ads and Open Houses; get them to give the leads to you. Offer to hold an Open House for them and bring a mortgage person. According to the NAR profile, Massachusetts home sellers need help from an agent as follows:
The NAR Profile also shows that FSBOs predominately use newspaper advertising for marketing. The study revealed that 61% of them use newspapers vs. 48% of the Realtors. And the FSBOs only use the Internet at a ratio of 20% compared to 61% of the Realtors. Forty-one percent (41%) of FSBOs hold Open Houses. Fossland believes that buyers looking at FSBO homes as not as qualified as buyers using agents and 44% of FSBOs sell to somebody they know while less than 10% sell to someone they don't know. According to the NAR profile, here is how buyers find homes for sale:
After discussing the background of the FSBO market and current practices, Fossland asked the Realtor audience, "Do you want to work the FSBO niche? If you do, you will need a system." By using the "Reciprocity Principle" in working with FSBOs (Robert B. Cialdini's Influence: The Psychology of Persuasion), she said there are multiple opportunities: getting the listing, generating other leads, selling them a home, referral opportunities. In the old days we waited to establish value. Now we must create value first. You need to create a feeling that they owe you something, Fossland said. Fossland noted that NAR has reviewed the Do-Not-Call registry regulations and they "do not see any problems with a buyer's representative contacting a FSBO owner whose number is listed in the Do-Not-Call registry about a client's potential interest in the property, as this call is not a telephone solicitation by the buyer's representative." They further advise that when calling you should only discuss your client's interest in the property and that your call should not be made in an attempt to obtain a listing. Also note that the position taken by NAR is only in regard to federal legislation. State and local laws may vary and excluded from this opinion, according to Fossland. According to Fossland, searching the big national sites is not nearly as good as using "town fsbo" in your search engine to find prospects. Fossland says to take advantage of the seller alerts and you will be notified of new listings. Use the call capture system to market FSBO homes. According to her, 83% of the population would rather call for a free recording than talk to an agent. Using this technique will increase your response rate fivefold. Offer a free report, e.g., How to Stage Your Home or How to Sell Yourself, and use the call capture system. Realtors can mail FSBOs or knock on doors. They should consider hiring a virtual assistant. Know your numbers, she says. If you want 12 FSBOs a year to list with you then you need to make 50 calls a week. She suggests that it will take 5 appointments to turn a FSBO into a listing. Use a phone script to get an appointment. Follow these six steps:
Some opening dialogue questions she suggests are "Is your home still for sale? Tell me why you are selling? Why are you selling it yourself? Are you cooperating with agents? If I had a buyer who would net you the price you needed, would you sell it to them? If you sell this home, where are going next? How soon do you have to be there? Have you already looked at houses? Have you bought something? Do you already have an agent chosen if you decide to list it? Who? Why did you choose that agent? Would you be offended if I stopped by to look at your house so I'll know if I do have the right buyer?" Fossland says that the question "Are you familiar with the techniques I use to sell homes?" is particularly good. She said be sure to mention your sales to list ratio and, if necessary, use the office statistics since, technically, they own the listing.
Follow up is important to build credibility, rapport and trust, says Fossland. Use mailing programs (templates or customized) and try Pat Zaby's Marketing Library, Top Producer, or Dave Beson's Letter Writing System. Her recommended Mail FSBO Listing Action Plan includes contact for 21 days straight – mostly postcards, letters, and telephone calls and appointments.
One agent uses a FSBO First Aid Kit with a big red cross on the front. She keeps them in her trunk and gives them to sellers when she stops by. The contents include her resume, past client referral list, 20 Questions to ask your Realtor, sample contract copies, video on "How to Stage Your Home", 450 Ideas to Sell Your Home Faster, and a personal video. Also, information about the current market, your statistics, home warranty information, home inspection information, seller property disclosure form, lead paint disclosure, documents needed. Differentiate yourself! Use fee-for-service, says Fossland. Offer services such as negotiation, paperwork assistance, yard signs, directional signs, and brochure boxes. Offer to sit Open Houses to get new buyers. Become a consultant as recommended by Julie Garton Good and read her book, Real Estate a la Carte. Join NAREC, the National Association of Real Estate Consultants. And don't forget to check out NAR's Field Guide on FSBOs.
Pat Rioux
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