I have tried to sell two houses for sale by owner. The first house sold within a week. The second house didn’t sell, and I wound up listing with a real estate agent. In both cases, the real estate agents did little to get my business. A few dropped off business cards; a few dropped off packets that I never read. I wound up listing with an agent that I called myself because I had seen her name on a lot of listings in my neighborhood. The real estate agents could have done a lot more to get my business. Here is what I would do to convert FSBOs into listings if I were a real estate agent.
A huge segment of homes are listing for sale by owner. That means potential revenue for real estate agents. But a FSBO prospect can be a tough nut to crack. While you babble on about how the average seller who uses an agent sells their home for 16% more than the seller who flies solo, they hold on to their equity between their clinched, sweaty palms. They don’t want to pay 6%. They don’t care if their position isn’t good business. For sale by owners are on guard against real estate agents. They don’t want to talk to you. So how do you change that attitude and slip in where other agents fail? We all know that a huge number of FSBOs wind up listing with agents after failing to sell their homes in the first month or two. But how do you land those listings?
Give them something of value
If you want a home owner’s business, you have to give them something of value. It’s basic psychology. If you give someone something, they feel obligated to give back. As crazy as it sounds, my strategy is to help them sell their home by owner. It goes like this. You provide them a list of for sale by owner tips. You paper clip it to the top of your standard packet and drop it off. When they see, “For Sale by Owner Tips” in big, bold letters, they are going to read what you have left. When their house fails to sell, who will they call? You guessed it. You’ll be at the top of the queue. I have put together a 7-page list that contains 18 different FSBO tips. You are free to use my list, or you can develop your own FSBO tip sheet. Here is a link to the .pdf file:
http://www.reddoorhomeloans.com/fsbo-tips.pdf
The hungry mortgage broker
The second tactic can work stand alone or in conjunction with the first strategy. This approach involves having someone other than you contact the FSBO home owner. The best person for that job is a hungry mortgage broker. Have your go-to mortgage broker contact the FSBO prospect. If you have already given the prospect the above referenced FSBO tips document, the first tip suggests providing prospective buyers an estimated list of closing costs. Attach a handwritten note with the name and number of your favorite mortgage broker and a sentence or two mentioning that he or she will be happy to put together a list of estimated closing costs that can be presented to prospective buyers. Perhaps the FSBO prospect will contact your mortgage broker colleague, and the broker will have a chance to talk you up. If the FSBO prospect does not call your mortgage broker buddy, have the broker make the call. Your favorite mortgage broker can expound on the benefits of listing with you, starting with the fact that homes listed with agents sell for higher prices. It’s a win-win for both the real estate agent and the mortgage broker. The mortgage broker gains a prospective client, and your chances of converting the FSBO into a listing are much greater if someone other than you contacts the home owner.
Advice to mortgage brokers
If you are a mortgage broker trying to establish relationships with real estate agents, the FSBO tips technique gives you a reason to call. Instead of calling and sheepishly asking for business, you can call some prospective real estate agents and offer them the technique for how to turn FSBOs into listings. The strategy provides a good excuse to open a discussion. At a minimum, they will appreciate your efforts and you will be one step closer to gaining their referral business. Best case scenario, they will implement the strategy and send business your way.
Posted by: Wade Young Red Door Home Loans
RSS
{ 4 comments… read them below or add one }
Wade-
First, this is better than 99% of the Broker advice articles out there.
Second, let’s think about some ways a “hungry mortgage broker,” can deals from agents. Sheepishly calling for business isn’t it.
…but informing an agent of a program change is one thing to do.
…another thing to do is to call and offer a niche (I close conforming paper in 10 days, period–but it’s not the only niche). Most people will respect your niche, but not pigeonhole you.
Anyway, great ideas–I’m glad that you’re pushing it out there.
I would be interested to hear other brokers’ niche ideas. Chris brings up a great point.
Wade, do you really want to hear?
I had a niche I wouldn’t wish on anyone these days. I was the only FNMA lender doing pre-1976 manufactured housing. Happened when my processor promised an agent I really wanted to work with that we could do it. Nearly killed myself (worked all night and fantasized about murdering my processor) getting all the FNMA property guidelines, creating a checklist and finding an inspector who agreed to use the list and approve properties that passed. That, combined with an inspection from a licensed electrician was acceptable and i was able to close those suckers. Hard work but when everyone else was charging 14% and I could offer a normal FNMA rate–plus a little extra for my hard work–it paid off.