The For Sale by Owner

The FSBO

Many listing agents cringe when their brokers encourage them to work the for sale by owner market.  In many ways I have found it rewarding and challenging and an almost untapped market.   I have found two primary reasons that homeowners try the FSBO market first.

When someone needs to sell their home they obviously want to make the most money they can out of the deal. With the recent reduction in home values nationwide, many home sellers feel that FSBO is one way to save a few thousand dollars.  Let’s face it, they are inundated with messages on late night TV and the internet on how easy it is to sell their homes themselves and save money. So why not give it a try.

Secondly the FSBO has either personally had, or knows someone who has had a bad experience with a REALTOR in the past.  Lets’ face it, people talk about their bad experiences much more openly than their good ones. When you list your home with an agent who never calls you back, never keeps you in the loop as to the weekly goings on about your home, and only calls to tell you to reduce your price or just lets you sit for weeks and months on the market with no advice, guidance or reassurance, why would you want to continue that type of relationship?  Obviously if one agent does that to you, then they must all do that.

I find myself talking to several frustrated FSBOs each week. Most entered into the FSBO marketplace with good intentions and high hopes.  Most of them also entered into the market not knowing what they were really getting into.   Their market price was a guess or based on an arbitrary number such as their tax assessment, or worse what they “felt” was a good price based on what they paid plus some appreciation in property value.  Many have no idea if their title is clear or what to do about it if it isn’t.  It’s not that these people are uneducated or unprofessional.  The inner workings of the world of real property transactions is confusing to most and a complete mystery to the rest.

Many FSBO’s have entered into contracts with marketing companies that promise to help sell their homes, and have paid large upfront fees to do so. They find themselves disappointed with the results and frustrated.  They have a nice home,  it’s priced well, it’s being marketed, but the phone never rings.  The “buyers” who do call are more often than not “just looking”, and the FSBO doesn’t have a good follow up plan to handle them.  They often feel tied to their home.  They can’t leave for fear that an actual buyer might show up.   

So what is a responsible, ethical hardworking Realtor® to do about the FSBO’s in their market area? First and foremost be honest, open and willing to lend them a hand.  Working with FSBO’s can be a long and drawn out process.  Understand that a few, a very few, will actually succeed in selling their homes themselves.  Kudos to them, they deserve it.  Many have a timeline for which they will use to determine when it is time to throw in the towel and hire an agent.  I find most will go eight or nine weeks before their frustration comes to a boil and they decide they need help.  Some are actually shopping for an agent.  What better way to find someone who will aggressively market and sell their home, then to put out a sign and say come list my home.

There are two schools of thought when it comes to working with FSBO’s. The first, and the one that I don’t like, says go after them hard and try to list them from day one.  You can hit them with all of the statistics and stories of how they will fail and they are better off listing with a professional.  To me this is like being a car salesman that is three months behind on his quota for sales.  As a consumer this turns me off immediately.

The second method, and the one I prefer, is to be helpful.  Assist them in any way you can.  Schedule a tour of their home.  Give them an honest and realistic CMA.  Don’t fluff it up to make the numbers look good.  It does you no good to promise them the world and tell them they can make twenty percent more than they really can.  You will just end up with a listing that sits on the market and expires will little or no activity.  Be a powerful and knowledgeable resource.  Ask the same questions you would of a client when you list their home.  Look for the trouble spots and advise them on ways to overcome them.  Are there possible title issues? Are there repairs that just have to be made?  Help them prepare and stage their home.

But what if you do all this work and they sell their home? Like I said earlier, kudos to them.  They did the work and they sold their home. Someday they will have a friend or family member who needs help in the real property world that doesn’t want to do it themselves.  If you did your job correctly and you continue to follow up with them as part of your sphere of influence, they will remember you and your help.  If you treated them right and with respect they will be glad to give you a referral.  Don’t forget that they have sold their home, and they will need a place to live after it closes.  They just might need you to help them buy their next home as well.

If they don’t sell and need to turn to a professional Realtor® you will be on the top of their list of folks to call.  You already have an established and good relationship with them.  If they know they can trust you and your advice, they will pick up the phone when the time comes.

We must all remember that real estate is a business of long term relationships, networking and referrals.  We all enjoy the quick and easy sale.  But ultimately without developing and nurturing these relationships our business will falter and fail.  So embrace the FSBO.  The market is out there for you if you are willing to put the time and effort forth.