Converting FSBO listings involves a process that in a number of ways is similar to working with expired listings. However, the key differences between the two areas are i Timing. Most expired listings are re-listed and back on the market within a matter of days while FSBOs convert at a much slower pace. If you contact the owners of a FSBO, you can usually expect them to take at least a few additional weeks to try and sell on their own before they commit the listing to you.
i Sales approach. When working to convert an expired listing, you need to take control in order to prevail over a bunch of other unknown agents who are vying for the same listing. The owners of the expired listing rarely have an agent preference at this point. Their "first-choice" agent was the one whose sign just came down. This isn't always the case with FSBO owners, who sometimes have an agent in the wings just in case they don't have success on their own. For this reason, you need to take a lower-key approach and work to build a relationship in order to win over the FSBO listing.
Why bother with FSBOs?
When the marketplace is active and everything in sight seems to be selling, as has been the case over the last few years, FSBO listings abound and FSBO owners achieve a reasonable sales success rate without the services of an agent. So, you may be wondering why an agent would even spend time trying to convert FSBOs to agent-represented listings. Here are just a few good reasons:
i FSBOs are simply too tempting and attractive a market segment not to work. You know who these owners are because they're actively marketing their presence in the marketplace. You also know they have motivation or they wouldn't be spending the money to advertise their home for sale. It doesn't make sense to ignore this great market segment, though most agents do.
i Owners of FSBOs are qualified, motivated sellers. Clearly, they want to sell, but they likely don't realize the odds of the game they're playing. According to NAR, less than 30 percent of the people who try to sell their own homes accomplish the task of selling and closing their transactions.
m i Owners of FSBOs are viable client targets. Unlike other prospective clients, you don't have to wonder whether they own their home, whether they're serious about selling it, and whether they have the authority and ability to conduct the deal.
i Owners of FSBOs are easy to find and reach. One of the most difficult steps in the sales process is locating prospects in need of your service. With FSBOs, like expired listings, you know who your prospects are, and you know how to get in touch with them. Reaching FSBOs is easier than reaching expired listings because FSBO sellers want to be found, as detailed the section "Finding FSBO listings" later in this chapter.
i The vast majority of FSBOs fail to sell without an agent. Even in a robust market, fewer than 30 percent of FSBOs sell themselves. This means that more than 70 percent of the owners, if they want to sell, will eventually enlist the services of a real estate agent.
i FSBO sellers often net lower prices than those achieved by agent-represented sellers. Among the 30 percent of FSBO homes that result in a sale, most are priced right at or below fair market value. In fact, to FSBO sellers, price is the primary marketing ammunition. The only reason a buyer would take the additional risk of working with a FSBO is that they're trying to buy a home for less money than they'd spend on a traditional transaction. The problem is that low price is exactly the opposite of what the homeowner is trying to achieve.
More than eight out of ten serious FSBOs end up as agent listings within a reasonable period of time — usually four to five weeks. Originally, owners set out to sell their own homes for one reason: They want to save money by not paying the agent commission. They view the real estate commission that an agent earns as too much pay for such an easy job. They think that money would be better spent when put toward an additional down payment or a get-out-of-debt plan. They ask themselves, "How hard can it be?" as they pound the FSBO sign into their front yard. In the back of their minds, many think, "Let's give it a go. We'll probably meet a few agents along the way, so we can always change our minds." And most do. After a month of the hassle, time, energy, emotion, and stress of trying to sell their own home — after running ads, fielding phone calls, holding open houses, and showing parades of people through their home — 90 percent of homeowners rethink their situation. Fortunately for agents, selling a home isn't all that easy.
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