Why People Sell FSBO and Why They Fail
FSBO implies that the owner must know how to professionally market, show the property, negotiate a selling price for the house, and (of course) manage to get all the necessary paperwork completed for the eventual home sale.
That last aspect usually includes finding an attorney to draft the necessary sale contract, as well as a title company to support and help complete the sale. All these aspects can turn out to be pretty challenging for someone who is not fully prepared to take on this challenging task.
It is also important to do extensive market research on the matter before you market yourself to them.
The Cost of FSBO
Before you speak with or interact with a FSBO, get to know all the unexpected costs they will have. Most owners won’t know them.
- Loan Prepayment Penalties = $_________________
Some loans, usually non-government loans, have a prepayment penalty. A prepayment penalty means if they pay off their mortgage, typically within the first five years, there is a penalty for doing it too quickly.
- Holding Costs = $ _________________
Holding costs are costs that an owner still have while they wait for your their to sell. Most experts suggest that they will need to pay 4-6 months of payments after listing, at the very least. Some of these costs include:
· Monthly mortgage payments
· Monthly taxes and insurance
· Utility bill: electricity, water, gas, trash
· Maintenance: lawn care or snow removal
· Pest control
How To Convince FSBOs It Isn’t Worth It
In 2015 the average FSBO was sold for $210,000. The normal home with an agent’s help went for $249,000. It’s not a surprise what we can offer.
But there is a difference in just telling them everything you will do for their home verse why it makes such a big difference when they list with an agent.
This is one of the most difficult, and not thought of parts, that owners run into when selling by themselves. According to the National Association of Realtors’ 12% of FSBOs said that it was the hardest part of the whole process.
It varies from state to state but there is a whole lot of forms and legal paperwork they get stuck with. The sales contract, disclosures, maintenance records and more are what needs to be done.
Even if they have a pre-made contract that doesn’t mean they will understand each part of it.
Being an Expert and Authority in the Market
As founder and CEO of ForSaleByOwner.com, Colby Sambrotto naturally put his own techniques to work selling his personal property. Unfortunately, despite his best efforts, nothing happened. His trendy New York condo sat unsold for six months!
Eventually, he gave up. Mr. Sambrotto not only hired an agent, he even agreed to full commission terms. His surrender paid off, and his condo was soon under contract.
What was the key? Experience
Showing Them Your Marketing and The Difference a Realtor Makes
Attract Interested Buyers with Smart Marketing
Use all of these to paint a picture of what would happen when they list with you.
The most obvious method, signs have limited reach. The buyer pool is limited to locals, and unless the home is on a busy road, exposure is mostly neighbors only.
-Word of Mouth
Again the limitation is to local buyers only. The other downside of having a friend or acquaintance as a buyer is the closing price. Owners who knew the buyer before selling leave the most money on the table.
Don’t Pressure Them To Much Just Demonstrate Your Value
Most For Sale By Owners end up listing with a realtor.
Another giant key is to not lay it that thick on to FSBOs. Prospecting is great, but you can get these listings without prospecting the standard way.
Do you look forward to going to a car dealership and experiencing a salesperson try to shove you into a car that you don’t want? No one enjoys it.
When you try and “sell” someone you usually push them away.
Listing Presentations and Scripts
FSBO Converter Phone Script
YOU: “Hey (contact name), my name is (Your Name). I’m calling because I saw you had tried out my real estate information hotline and wanted to use that to get more buyers interested in your home.
I want to get that setup for your home. This service is something I offer to local home sellers to help them sell their home.
The service is completely free with no obligation. I know that if the info line enables you to successfully sell your home, then you may refer your friends and family to me.
It only takes a few minutes for me to stop by and get the info line setup for you. I could swing by this Wednesday around 3.00-ish. Would that work for you?
Part 2 of Chapter 7
A Home Warranty is a Great Idea
A home warranty is becoming a greater and greater incentive to prospective home buyers. These warranties are purchased by you, the seller, at the close of your property. Most often, a basic package is below $500 and guarantees a number of different home features for a year. These could include major appliances, electrical, plumbing, and heating and air systems, among other things.
You’ll want to really research and understand what you’re getting, because there are all sorts of home warranty packages available. Having the one you’ve chosen on hand while showing your property can really put your potential buyers at ease.
Land FSBOS With No Prospecting
I hate prospecting.
Yep, that’s right. I’ve done my fair share of it. In fact, I’ve been pretty good at it. I’ve even made a lot of money from it. At one point most of my income came from prospecting.
But, I still hated it. It’s true. Which is why today I know that…
Mastering Hard to Sell Homes (FSBOs That Have Sat on the Market)
When I first started in real estate, I made a good living chasing FSBOs. I would call them, ask what price they were asking for their home, and see if I could sell it for more money on the MLS. Because the market was so hot I was able to sell a lot of homes and net the former FSBO more money in their pocket.
To be honest with you, I was terrible back then at getting price reductions. I got the FSBOs to list with me because I had promised them a higher price and now I was telling them that I couldn’t sell their property for that price anymore. I was scared to tell them the truth.
First Listing Price and Overpricing
How to Price The Home Right and Show The Owner Its Importance
Pricing their home right is crucial to a quick sell. This is another key we use to show FSBOs the difference agents make. There are serious dangers to pricing too high or too low, although pricing too high is really a death threat to the prompt moving of your property.
Danger Zone #1: Pricing Below Value
Possibly, a home that is priced too low could eventually aid you in the start of a bidding war so that the price is driven above what the sellers wanted to make in the first place.
The Best and Worst Ways to Contact FSBOs
FSBOs are pestered by agents all the time, you have to take the right steps to earn their trust.
Realtors already don’t have the best reputation.
Then an owner decides to sell fsbo and gets calls and emails for the next month.