Marketing to a FSBO

I was recently contacted by a home owner attempting a for-sale-by-owner (FSBO) transaction. The interesting thing is, I had just been reading about how to market to FBSO sellers, so I had already rehearsed a small script in my head and was prepared for the conversation.

Naturally, the seller's first question was about our commission rate. I hate this question with a passion! Nobody goes to a surgeon and asks them what they charge; they look for the surgeon that is best suited to fix the problem. Anyway, this is (approximately) how I answered:

"Our commission is X% of the sales price, but there is much more to an agent than just a commission rate. What we really need to do is sit down with you to determine your goals. If I can understand where you are trying to go, I can demonstrate how I will help you get there. After I've shown you the value of my services, then we can talk commission. And keep in mind that I won't earn a dime unless my services enable you to meet your goals!"

Most FSBO sellers are listing on their own for one of three reasons:

1. They don't see the value of a REALTOR and their services.
2. They have had a bad experience with a REALTOR and don't trust the profession.
3. They believe they can save money by not paying REALTOR fees.

Our job is to educate the seller; getting a foot in the door is the first step. In this case, it worked and we were given the opportunity to sit down with the seller to discuss our services and how we can help them achieve their goals. By demonstrating our value, we knock the socks off the first two objections above. then, armed with a current market analysis and a proven track record of sales, we show how the seller can typically earn more by using a REALTOR, even after paying our commissions!

I have personally made the same mistake. I used an agent to purchase my home and then sold it FSBO just 18 months later due to a mandatory move with the military. I assumed there wasn't much equity after such a short time and I didn't want to spend it all on an agent. I had it under contract in just 24 hours, which tells me it was woefully under-priced. But I thought I knew it all...until it took over three months and a LOT of pain before the official closing and we nearly lost the deal a couple times. Looking back, I now understand that using an agent would have brought a higher asking price, fewer problems, and I would have probably walked away with about the same cash in pocket. Lesson learned!

If you are thinking of saving money by going it alone, please talk to one of our agents today and get the truth about the value of a REALTOR!

For Sale By Owner (FSBO) Statistics

FSBOs accounted for 9% of home sales in 2012. The typical FSBO home sold for $174,900 compared to $215,000 for agent-assisted home sales.

FSBO methods used to market home:

• Yard sign: 48%
• Listing on Internet: 32%
  • For-sale-by-owner websites: 20%
  • Sites with real estate listings (e.g. Yahoo!, Google, etc.): 11%
  • Social networking websites (e.g. Facebook, Twitter, etc.): 10%
  • Video hosting websites (e.g. YouTube, etc.): 2%
• Friends, relatives, or neighbors: 30%
• Print newspaper advertisement: 14%
• Open house: 12%
• Direct mail (flyers, postcards, etc.): 2%
• Video: 1%
• For-sale-by-owner magazine: 1%
• Television: <1%
• None: Did not actively market home: 31%
• Other: 2%

Most difficult tasks for FSBO sellers:

• Understanding and performing paperwork: 18%
• Getting the right price: 14%
• Preparing/fixing up home for sale: 11%
• Helping buyer obtain financing: 6%
• Attracting potential buyers: 6%
• Selling within the planned length of time: 6%
• Having enough time to devote to all aspects of the sale: 1%