Selling off a property isn’t a cakewalk and requires expert sales tactics, so it is best left to property agents to execute the same. Real Estate Consultants have a pool of prospective buyers and sellers, – so the whole ordeal becomes a bit easier than expected. But this comes at an expense, a real one. If you open any real estate portal you will notice many properties being advertised for sale directly by owners of properties. These owners are trying to sell off the property, all by themselves. This class of real estate is labeled as FSBOs (For Sale By Owners). FSBOs are classified as warm leads in the business. You clearly understand one fact for sure – they want to sell their property.
Now, there are two classes of FSBO’s – one is the Soft-sell FSBO’s, and the other class is Hard-Sell FSBO’s. These two classes have a different place in the market despite the fact that the product they are dealing with is the same.
But why do the FSBOs want to sell their own? There are many reasons behind that:
- FSBOs aren’t interested in paying real estate commissions. They often see it as an expense.
- FSBOs believe they are capable enough to sell their own home. They believe that they are thoroughly aware of the USPs of the house – better than any agent.
- FSBOs aren’t aware of the dynamism of the exposure that listings by top property consultants can give them.
- FSBOs rarely understand the legal implications of selling their own homes. Not many of them are real estate experts. While FSBO sales make up just 10% of the total real estate sales in any property market, they account for 50% of the total real estate lawsuits. Shocking numbers, aren’t they?
When dealing with FSBO’s it is critical that we as property consultants, understand our prospect’s mind completely. It is also essential to decide whether this is the right fishing hole for us. Realtors, who have worked in partnership with FSBOs successfully, acknowledge three things:
- Converting an FSBO into a listing requires a lot of patience, and it is a slow-selling approach. The Realtor needs to provide information and stay in touch with the FSBO every week. When dealing with an FSBO, we advise our agents to stop in every now and then when they are in the vicinity. Drop by to see their home, especially when they have an open house. But one has to be careful, to not hang around for long. Just get in and get out of the property, so that you can give them a reminder. The FSBOs don’t want you hanging there, while they are trying to present their home to potential buyers. It gives the prospective buyers a wrong impression, you see.
- We know one thing for sure; you will be investing a lot of time pursuing prospective FSBOs. They may eventually want to list with the small time local broker who they or their parents have been dealing with for years.
- The time taken by FSBOs to change their mind is unpredictable, so the time for listing varies with every seller. An FSBO may tell you they are not going to list with ANY Realtor. But this is their stance for three months, at least 🙂 They only change their minds after nobody shows up for buying the house. That is the right time to approach the FSBOs.
Now, if we are choosing to pursue For Sale by Owner properties, we keep some things in mind:
- Buyers who chase FSBOs do so for a reason – they believe they can negotiate a lower price. There’s the loophole and the USP – both the FSBO seller and the FSBO buyer expect to save their expenses on the commission. Both of them believe that cutting out the middleman will save them from investing extra money. If a seller has only one property up for sale but the buyer is considering multiple properties, which party is more likely to save the commission? The buyer. So the selling parties should think carefully before negotiating the deal with the buyer.
- As Realtors we believe that we can give the FSBO seller’s home more exposure by means of adding more competition. We show the FSBOs the better offers. Through our own website and through multiple listings on other third-party real estate web sites and our social media channels, we can provide major exposure to FSBO properties. This puts a positive impression about us in the homeowner’s mind.
- You can also bring a sales force to the homeowners. We employ dozens of commission-hungry cooperating real estate agents in every area in Mumbai – who want to get a paycheck by selling a house.
Here one should be careful about one thing. One has to do everything to avoid misunderstandings between buyer and seller such as coming up with clearly-written purchase agreements. This will reduce their likelihood of winding up the case in court.
Despite all this, we always remember one thing –
Never try to change a FSBO’s mind
Only the FSBOs can change their own minds! All your persuasion and offers could result in zilch if the sellers are not convinced by you. Many of them might accept lower offers than you could have gotten them, even after adding up the commission. Why so? That’s because they have convinced themselves that a Realtor would have also cut the price. Only time will tell whether they will change their minds or not. You as a realtor or an agent just have to be patient 🙂
Give The “For Sale” Deal Some Time
One has to allow the deal to cook properly, before you finally dig into it. After this waiting period, if the property is intact you can slowly and steadily carve it up just the way you like. You just have to tell the homeowner that you are acting on their behalf, taking those steps only that they would have taken, had they been selling the property. Once the property gets listed with us, we follow our own devised protocol to sell off the house at whatever price we want to, keeping the commission we have in our mind.
Whenever a homeowner tries to pitch the property by himself to potential property buyers or investors, he / she misses out on one vital point.
He has never been in the market before, so he’s unaware of the forces that are acting in it.
They pitch, they fail, and they repeat the same process again and again. After they have marketed the home themselves unsuccessfully, that too for several consecutive months, the property is now “market weary”. In other words, it has lost its “glam” factor. Buyers do not find interest in such properties because it does not tick one of the desired checkboxes. It is then that such home owners decide to list with a known Realtor like us and approach us.
In fact, after this failure to sell their property on their own, around 80% of the FSBOs eventually list with a Realtor. FSBO specialist agents know that if they stay in contact with these For Sale by Owner homeowners, they will finally be able to get listings. FSBO leads are always better than cold calls. The most productive warm lead in the market is the expired listing which is just like a free takeaway gift 🙂
All our associates are always expected to contact FSBO’s on a constant basis. If you are a new real estate agent ask yourself this question – are you ready to tackle FSBOs? Gear up and get ready to play, for the market is all yours!