The “For Sale By Owner” (FSBO) Challenge: Practical Advice for Agents
I. What is a FSBO?
A for-sale-by-owner transaction happens when a seller offers his or her property for sale without the assistance of a licensed real estate agent or broker. Usually this is because the seller wants to avoid paying a commission on the sale, but it also means that he or she has to assume all responsibility for completing the transaction without seeking the services of a professional with a real estate license.
II. Understanding the pros and cons
The Pros: Because a licensed agent is not involved in the marketing and selling of the property, sellers reap the financial benefit of retaining the percentage of the sale that would have otherwise been paid to a brokerage. In addition, many sellers enjoy the freedom of handling and marketing the transaction themselves, without the need for interviewing and choosing a licensed agent and brokerage with whom they can feel secure.
The Cons: Without a licensed agent, sellers must become real estate savvy. Pricing a home appropriately requires research and market analysis. An overpriced home can take months longer to sell than expected. An underpriced home devalues neighboring homes and, of course, leaves the seller financially short. And there are several reasons why agents are required to get a real estate license, including understanding the legal and financial risks, and how to best protect the seller through contract negotiation. This alone could be worth hiring a licensed professional.
In addition, agents are businesspeople who thrive on clientele – which means they have close relationships with potential buyers and know their desires in the real estate market. This advantage, along with custom advertising and marketing, can create the exposure needed to sell quickly and for the right price.
III. Approaching a FSBO seller:
For a new agent who has recently received his or her real estate license, FSBOs may seem like the ideal place to start drumming up business. However, be cautious in your approach. Typically, newly licensed agents are so eager to convince sellers to list that they unwittingly wind up using scare tactics: flashing intimidating documents, focusing on financial risks, and warning of the dangers of letting strangers into their home. It’s important to remember that while you may truly be more clever and knowledgeable, it isn’t professional to make a seller feel less so – your job is to empower, not intimidate. Granted, holding a real estate license does make you the expert, but being a straight shooter will garner more trust. FSBO sellers are smart, and they know why you came knocking on their door. They’ll see through intimidation attempts, and you don’t want to be “just another salesperson” in their eyes.
IV. How to be a professional
1. Be straight. Give an honest evaluation of the seller’s FSBO situation, be genuine in your offer to help, and provide authentic resources. Don’t just tell them what you think they need to hear.
2. Be eager, but not overeager. Don’t overwhelm FSBO owners in your effort to convert them. Persuade, don’t coerce.
3. Be flexible. A professional understands when the old adage “always be closing” isn’t appropriate. Sometimes it’s necessary (and professional) to take no for an answer.