How to Cultivate The 'For Sale By Owner Market'
Without Ever Calling On The FSBO ...
Most of the agents dont particularly like the "For Sale By Owner" market.
They tend to be put off by the defensive attitude of FSBOs. And its true, the FSBO can be a tough nut to crack. They probably have a higher level of sales resistance than any other type of prospect. But, there are huge opportunities in the For Sale By Owner market if you have the right strategy.
Right now approximately 30-40% of the homes for sale across the country are 'FSBO'. More and more homeowners want to try selling on their own, before they list with an agent. But statistically about half to three quarters of them eventually wind up listing with an agent thats huge!
Personally the FSBO market is my favorite market because of the huge opportunities, plus I can relate to their feelings. I can appreciate the fact that they are trying to keep as much of their equity as possible. As a businessperson, its easy to see where they are coming from. And when you can relate to your prospects feelings, its easy to develop an effective strategy to penetrate their tough exterior.
Think about it. They are simply trying to save money. But you and I know that the vast majority of FSBOs do not have the wherewithal to complete the transaction smoothly. They dont understand all the little intricacies to the transaction process. This is where your opportunities are, in the little intricacies of the transaction process.
How to Penetrate Their Thick Skin of Sales Resistance
The first and biggest hurdle to the For Sale By Owner market is their defensive posture. Theres a huge barrier of sales resistance. You know what I mean. If youve ever called on a 'For Sale By Owner', there is a good chance they will hang up on you. They are always on their guard. And its understandable - theyre getting calls from Realtors all the time.
So how do you break through that shell? Well, dont prospect them at all. As a Realtor, your point of entry is so high that you shouldnt call them. You should have someone else contact them. Let me give you an example of how our agents list FSBOs without ever calling them.
An agent in Florida explains it this way, "When you suggested I start working FSBOs, the hair on my neck stood up. Ive always hated FSBOs. But when you explained the approach and how I should hook up with my lender, it made sense. I explained it to my lender and she got really fired up. Now she calls them, lends the recorded information service to them, and about two months later 50%-75% of them wind up listing with me because of her recommendation. Plus we wind up with some pretty good buyers, too. Most of the time the buyer isnt really interested in the FSBO. And with my lender doing the follow up, the buyer comes to me pre-qualified and ready to go."
Do you get the gist of it? The strategy is first to break down the barrier of resistance. Whats the best way to do that? Dont threaten their equity. Whenever an agent calls, the 'For Sale By Owner' is immediately defending their equity. They see you as being out to get 6%-7%, which may represent a huge chunk of their total equity! But the lender doesnt cost them anything. The lender is a service person who makes money without dipping into their hard-earned equity.
The "Hunger Factor"
So the first step to carrying out this strategy is to partner with a good aggressive lender. Find a lender who has what I call a good "hunger factor." The "hunger factor" is critical to the success of the partnership. Many of the agents we work with have great lending affiliates but they have a low hunger factor. If a lender has five or six top producers feeding them leads, they dont need or necessarily have the ability to handle more business.
Another thing to consider in selecting the right lender for this strategy is their attitude toward innovation. This is an innovative strategy and if the lender youre thinking about isnt really aggressive about new ways to generate more business they might not be the right candidate.
This strategy is worth taking the time to hand pick the right lending affiliate. Its been incredibly effective and if you have any doubts about your lenders commitment to it, you should move on to someone else. This strategy, executed well, will make you both thousands of dollars.
Which brings me to my next point. If the approach is making your lender thousands of dollars who should pay for it? Hmm are you with me? Your lender should be picking up the tab or at least a really good portion of it. In fact, I would estimate that about 20% of our agents dont pay for their service their lenders do.
Before Your Approach
If you are going to get your lender involved, you need to have a well-organized plan for your presentation. If you dont, your lender may say "yes" and pay for a portion of your bill but thats not the entire objective here. You want your lender to be fully committed to working the system to get maximum effectiveness.
Selling it to your lender should be easy because of your position. Youre a profit center to that lender. They already value your contributions, so they should be all ears. But this is really important if you are going to get the most from this strategy, you still have to present it well and sell them on whats in it for them.
The first thing you should do before your lender presentation is prepare a 'For Sale By Owner' marketing package for your lender. The FSBO marketing package should contain:
Then you should suggest to your lender that they develop a package of free services to offer the 'For Sale By Owner'. Things to consider for that package include:
Once youve prepared your presentation materials call your lender and set a time to get together with them to discuss the strategy.
How to Present This to Your Greatest Advantage
The main thing to keep in mind as you are presenting this to your affiliate is: "Whats in it for them." Really focus on how this service and these strategies will benefit them. Show them the potential for generating tons of loan apps from the 'For Sale By Owner' market.
Our agent in Florida explained the way he approached his lender like this, he said, "I first showed her my advertising and then a call report. After that I called my information line and gave her a live demonstration just like I do on my listing appointments. I went on to explain how this new system generates hundreds of calls and how she could benefit from those calls, too. Then we got into the FSBO idea. I explained how the FSBO market is a great market, but because Im an agent, it was a lot harder for me to get their interest than it would be for her. She was on the same page immediately. She could easily see the potential."
Now his affiliate "loans" the recorded information service to FSBOs. The FSBO advertises it in the newspaper and various other sources. The lender puts a sign in each of the FSBOs yards and then she takes the choicest properties and runs an ad in the local homes magazine.
In the process, shes careful to not identify the properties as 'For Sale By Owner' because it might alienate her from the other Realtors in the area. But the fact that she doesnt identify them as FSBO makes no difference, she still generates tons of calls and theyre all potential loan applications and potential buyers for you, if the FSBO property isnt of interest.
Now heres the best part. Two or three months later the FSBO is getting frustrated. Thats when your lender recommends they list with you. And guess what? About 70%-80% of time they will because they already have a trusting relationship with your lender. Its a win-win-win deal all the way around. The FSBO gets free advertising and a free group of services. The lender gets loan apps. And you get listings and pre-qualified buyers.
Now do you see why Im so excited about FSBOs? Theyre a great market!
My very best to you in your business building. Until next time...
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No matter what your product is, you are ultimately in the education business. Your customers need to be constantly educated about the many advantages of doing business with you, trained to use your products more effectively, and taught how to make never-ending improvement in their lives.
~ Robert G Allen
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