Real estate agents are always encouraged by their brokers to prospect For Sale By Owner listings. Brokers believe that one hurdle has been cleared: at least the agents know the sellers want to sell.
It's natural for real estate brokers to ask agents, "So, what's holding you back?" For some agents, it's fear and inexperience. For others, it's a concern they'll discover a seller with a sign in the yard who doesn't truly intend to sell, referred to as a seller who is "on the market" but not "in the market." A time waster.
Especially in buyer's markets when there are so many overpriced listings on the market.
However, John Maloof has made me think twice about tracking down FSBOs with his new book, The Real Estate Agent's Guide to FSBOs, and it may encourage other agents to reconsider this avenue as an additional income source.
Reasons for Selling Homes as FSBOs
Maloof sites the National Association of Realtors® 2006 Profile of Home Buyers and Sellers, and gives the following reasons why sellers often want to sell their own homes without hiring an agent:
- 51% wanted to save the real estate commission.
- 22% sold to a buyer they knew.
- 8% did not want to work with an agent.
- 12% had buyers come directly to them.
- 3% were unable to sell through an agent.
- 2% had a real estate license.
- 2% had other reasons.
Maloof says the biggest obstacle for FSBOs is exposure to buyers because agents attract the buyers, either through MLS, holding open houses or extensive home advertising. He again sites a NAR study when he says that selling with an agent increased a seller's sales price by 32% in 2006 over selling as a FSBO.
And he liberally sprinkles that example throughout the book.
Practical Tips to Working FSBOs
Being organized and keeping a positive attitude are key, as is knowing how to handle rejection and never, ever giving up. If you pick up no other pointers from this book, realize that persistence coupled with consistency does pay off. He goes into great detail about how to set up a FSBO system using Microsoft Excel software that tracks phone numbers and journals your activity.
Once your system is in place, Maloof suggests ranking the FSBOs by personalities such as:
- Class A sellers who simply don't know there is a better way.
- Class B sellers who operate on bottom-line numbers but are open to suggestions from you.
- Class C sellers who are so talkative they can talk themselves right into signing a listing agreement with you.
- Class D sellers who are tough because they had past bad experiences.
Winning Over the FSBO
Three chapters are devoted to sales techniques and dialogue you can use over the phone and in person. Some of it sounds a bit corny and canned, but if you can memorize his techniques, you can change them to suit your own personality.
He uses the well known "one egg or two" approach, as in "Do you want one egg for breakfast or two?" Not "Do you want an egg?" He says, "We can meet tomorrow at 3 PM; or would 5 PM work better for you?" There's a lot of validity in this approach, as I've often used it myself.
The common closing mistakes that agents make, Maloof says, are:
- Monopolizing conversations
- Not listening
- Forgetting to ask questions
- Not asking for the listing.
The FSBO Listing Presentation
I could not with a straight face repeat Maloof's line, "Well, if I can prove to you that selling by owner will leave you with 32% less in your pocket at closing, would you consider a new approach?" That's because it's canned and it sounds canned, and it's not really true of all FSBOs. It's an average figure, but Maloof milks it for all its worth, and it seems to work for him. Who am I to say it won't work for you?
His listing presentation is comprehensive. He starts by talking about what an agent should wear to a listing appointment and ends with pricing the home. But he leaves the meaty part of what makes a truly great listing presentation -- the marketing of that listing -- for a chapter in the back the book titled, "Servicing Your Listing."
The cornerstone of every successful real estate agent's lifeline is building referral business. Maloof gives you 10 mailing examples for keeping in touch with your previous clients and seven ideas for meeting new people in group-style settings.
Even if you're an experienced agent, you will come away with a new piece of knowledge from this book. For inexperienced agents, The Real Estate Agent's Guide to FSBOs is a gold mine. I give it a 9 on a scale of 1 to 10.
The Real Estate Agent's Guide to FSBOs, by John Maloof. ©2008. Published by Amacom. Paperback. 218 pages.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.