Here is a gloomy scenario from every real estate agent’s war chest. You just gave your best listing presentation and the homeowner responded like this: “I think I’ll try to sell it on my own first.”
Even worse, a few days later you follow up and the homeowner says, “It was incredible. I stepped out in the yard, sign in hand, and two buyers drove up. I sold my home right there. Never even got the sign planted.”
If you have been in real estate for any length of time at all, something similar has happened to you. It has happened to your colleagues and competitors as well. Sometimes it feels as if you are at war against an unseen enemy—the mysterious “For Sale By Owner.”
But even though this is a tough market segment to engage, you can stage a successful FSBO campaign if you are willing to change your tactics a bit.
First, break free from the bad habit of calling sellers “fizbo” when they choose to go it alone. Think of them as sellers who are representing themselves. Several years ago, the National Association of Realtors adopted the term “Un-represented Sellers” to fight the unintentional branding of that market segment. Do the same now in your own business.
Second, homeowners are not your enemy. They are your customers and clients. So, if you would like to get more listings from this ready-to-sell list of homeowners, stop fighting them and use this two-phase system instead.
Phase 1: Triage Your Prospects
Triage literally means to sort into 3 groups. The term arose during the Napoleonic wars, when swamped medical staff would sort the wounded into the following categories: (1) badly injured with little hope of recovery, (2) lightly injured and (3) badly injured with hope of recovery.
In triaging un-represented sellers, the categories are not nearly so glum. You have the Type I sellers who don’t need help or want help, the Type II sellers who don’t need help yet and the Type III sellers who need help now and are ready to list if they find the right agent.
Type I Sellers
The first group of un-represented sellers do not need you at all. They may be sophisticated, lucky or in possession of a hot piece of property. In short, they do not have a problem that you can solve. Let them go. They are fine without you.
Type II Sellers
The second category of un-represented seller needs you but does not want you. They are most likely trying to increase their bottom line by avoiding a real estate commission, and they may have a very good reason. You can talk to them all day and night, but if they do not recognize their own need or appreciate what you have to offer, words will have little or no effect. This kind of seller says things to friends and relatives like this:
“I don’t need a real estate agent. I can do it myself. What do they do anyway? I’ll never list my home with one of ‘them.’”
This seller will eventually move into either category I (house sold without help) or category III –sellers who want you and need you. It is this third category that is the source of listings.
Type III Sellers
Type III sellers need your services and they know it. However, they may be reluctant to admit it. They had this kind of conversation when they were contemplating selling their home:
“We may need to list with a real estate agent, but before we do, let’s try it on our own.”
They have questions, doubts, challenges—all of which they are not telling you, because, if they do, they know they will talk themselves out of their course of action and into a listing.
This is the key point. Let them do the selling.
Remember, Type I and Type II will not list with you. By definition, they have already made this determination. Stay in contact with them, but never pressure them. Type I can be a source of referrals if you treat them right. Type II may eventually turn into Type III and, if they do, you want to be the agent they call.
Phase 2: Show, Don’t Tell
According to the most recent National Association of Realtors Profile of Home Buyers and Sellers, the Type III seller needs to know two things about you: Are you reputable and are you trustworthy?
Don’t tell them. Show them. Every other real estate agent in town is calling with the same old song and dance—“I can sell your home quicker than you can for more money than you can because I’m the best.” Your prospects have heard this a hundred times.
If you are ready for a different approach, try this 5-step process based on the concept of “showing” rather than “telling.”
– Step 1
Your first objective is to make a preview appointment. Identify a bone fide buyer from your list of clients or wait until the right one comes along. You don’t need to sell the house to this buyer, in fact, you don’t even want to. It would be splendid if they fell in love with the house and bought it, and that does happen occasionally, but that is not the specific objective of Step 1. The goal is to preview the home.
– Step 2
Preview the house before you bring your buyers over to see it. Have the homeowner show you everything. Listen. If you open your mouth and start talking about how great you are, you lose. Shut up and listen. Take notes. Listen. Did I say that already?
– Step 3
For now, make sure you get a single-party listing with the owner. Your local MLS or your broker should be able to provide you the proper forms. You want to make sure that the seller agrees to at least the selling agent portion of the commission before you bring a buyer. Make sure you show professionalism by including agency disclosures and any other documents required by local law, including a blank property disclosure and even a blank purchase and sale agreement with all addendums. If you package these up ahead of time, you will not even have to think about it. Just grab a folder and go.
– Step 4
If, and only if, you think your buyers might be interested in seeing this home, make an appointment and bring them through, just as you would if the home was listed with another broker. If they are not interested, don’t bring them. For instance, suppose the buyers you were previewing for specifically asked for three full bedrooms on the main floor with no stairs, and this home had two bedrooms on the main floor, but the third one was down a short flight of steps. Be sure to report to your clients, but if they don’t want to see the house, don’t press the issue.
– Step 5
Follow up with the sellers. Provide them with the same market analysis that you gave your buyers. Give them feedback on the market—what did your buyers ultimately choose? Are they still waiting? What other homes did they look at, and how did they compare. Be honest but tactful. Don’t try to sell yourself. Be professional, objective and confident. Show them how good you are—don’t tell them. Let your actions speak.
The point is to avoid trying to “sell” yourself.
With selling, you try to convince a customer to take action—“list your home with me!” In marketing, you make connections and you open doorways. In other words, you demonstrate your competence—if the homeowners are ready, willing and able, they will list with you because they need you and they trust you. This is marketing, and it is more fun and more effective than selling.
What to Expect
After all of this, you may get nothing. However, as you get better at identifying the Type III sellers and as you get better at listening and at demonstrating rather than telling, you will find that you are representing more and more of the formerly un-represented sellers. Some of those sellers who do not list with you will send you referrals. Sometimes they will come back to you later to sell another house, or for help buying or investing. You cannot predict what the outcome will be; the only thing you have control over are your own thoughts and actions.
If you do this right, you will find that contacting un-represented sellers can be an effective source of listings and sales. It might even get to be fun.
Better yet, in this kind of campaign, everybody wins.
Joe Cooke is an author, speaker and entrepreneur with over 25 years of experience in marketing, management and real estate. In 2005, he helped launch a national campaign to replace FSBO with the term “un-represented seller. Visit http://www.joecooke.info/ for more information.
By Joe Cooke, RISMedia