John Maloof, author of The Real Estate Agent’s Guide to FSBOs(AMACOM, 2008), responds to your questions about how to grow your business by attracting FSBOs to your services.
What’s the most common misperception that FSBOs have about the process of selling their own homes?
MALOOF: The most common misperception is that selling by-owner is easy. Once the seller realizes how much time, effort, and money are involved, they usually find themselves overwhelmed and ready for help.
In a slow market, sellers are looking to save money. How do you convince them that it’s still worth paying for real estate services, even if they’re not making as much money from selling their home?
MALOOF: Well, considering that, according to NAR, 51 percent of sellers go FSBO to save on the brokerage fee, this will be the most common hurdle you will face. The first thing you should do is educate the seller on the most recent NAR data. For example, in 2006, studies show that selling with a REALTOR® gives the seller 32 percent more at closing than going FSBO. This single fact seems to do a great job of convincing sellers that they stand to make more money with an agent. Click here to view more data on FSBOs.
It seems like if you contact FSBOs too much, you’ll be viewed as being pushy. What’s the best approach you’ve used to convince FSBOs to hire you, without pestering them?
MALOOF: I usually contact each FSBO every few days. If it’s the first call, I call them back after roughly 4 days so the mail I send to them has time to arrive. After that, it’s about once every 4 to 7 days depending on their personality. If you feel that a FSBO seller is taking you as “pushy”, let them know that you are very aggressive and that you would like to put your aggressive skills to work toward selling their home. Often times, they’ll see the value in your persistence and will list with you. Every seller wants an aggressive agent in this market.
How do you approach FSBOs who’ve already had success selling a home on their own in the past? It seems like they’d be more difficult to convince.
MALOOF: Good question. In this market, this is very common. The first step you should do is educate the sellers on how the market has changed from a sellers market to a buyers market. In a sellers market, it’s easier for a FSBO to succeed due to the lack of supply of homes up for sale. But in a buyers market, the sellers need maximum exposure to increase their odds of selling. I would show them how, according to NAR, 90 percent of buyers talk to REALTORS® to search for homes.
REALTORS® use the MLS as their primary tool to find homes to show their buyers. So, without the MLS, the FSBO, in today’s market, will not have nearly enough exposure to maximize their buyer turnout and get the highest price. Educating them on these facts can guide them in a new direction.
What’s the best way to make initial contact with FSBOs since you can get penalized with heavy fines if you violate the Do Not Call Registry?
MALOOF: If you are concerned with the DNC List, subscribe to a FSBO lead provider service. They check every number they provide you against the Do Not Call List. I recommend many of these services in my book. You can also subscribe to the DNC List yourself but this requires arduous steps that could be avoided by just having another company compile leads for you.
Also, you should keep in mind that real estate practitioners are buyers too. There’s no restriction on calling to find out more about the property for sale if you’re a buyer yourself. Not to mention, if you have buyers that you’re working with, it doesn’t hurt to ask the seller if they offer a cooperating brokerage fee if you brought in a buyer for their home. If they show an interest to talk to you, you can ask if they have considered marketing their home with a professional and go from there.
What do you do when you have — what you refer to in the book — as “a Class D” FSBO personality type, someone who is rude and believes they can do a better job than you. You suggest to keep going after them, but what’s the best approach when they’re making it obvious they want you to go away?
MALOOF: The “Class D” FSBO, or a FSBO whose personality is very hard to get along with, to put it nicely, is a great lead to follow up on. Each one will be different so use your best judgment as to how often to call them back.
For example, I had a seller swear at me and hang up on my first call. Then I thought to myself, every agent that calls this seller will probably abandon this lead. So, I kept calling this seller every week. Sure enough, when she became desperate to list, she had no agents calling her but me. She invited me over to hear my offer and I listed and sold the home shortly after.
So, I guess what I’m trying to say is, as long as they aren’t threatening you, keep calling them based on your judgment of how often you feel would be comfortable. Don’t give up on these leads!
Do real estate practitioners need to change their approach to converting FSBOs when in a slower market?
MALOOF: Yes. List more of them! With fewer of your inventory selling, just increase your inventory.
What’s the worst mistake you can make in trying to convert FSBOs?
MALOOF: You should make plenty of mistakes. This is all part of refining your selling techniques. As far as a “worst” mistake. I think that would be in the realm of unethical language. Here’s a rule of thumb. Don’t let your ego get in the way when trying to convince FSBOs to list. Some FSBOs may believe they are right by doing what they are doing so don’t try to prove them wrong. This is where selling techniques come in hand. For reliable sales techniques, refer to my book. They are too lengthy to include in one answer.