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By far, the most common reason sited by For
Sale by Owners (FSBO) to sell themselves,
is to save the commission. That makes
sense. Yet, only 50% of FSBO's who
actually sold their home said they would do
it that way again. Only 50%?
There could be even fewer repeats, if they
knew the real story.
Here's a story of a FSBO who thought she was
successful because she eventually sold her home
and paid only 2.5% to the buyer's agent:
Nancy wanted to move up to a larger home and
she had her eye on just the right home.
In order to save the commission on the sale
of her current home, she contacted a FSBO
company and, for $495, bought one of the
least expensive packages (sign, lockbox,
workbook, listing on their national website,
800#...). So for a few hundred
dollars, she was in business.
Nancy spent hours reading the workbook,
completed the worksheets and followed the
recommendations. She started by going to the
suggested websites to determine her asking
price. She found other homes like hers
and looked a appreciation rates, because the
information was for homes that had sold in
the last year. With that information,
she set her price, bought "Open House"
signs, started to run local ads and launched
the workbook's recommended marketing
campaign. What she didn't know (market
times, comparable home features, market
trends [regional, local, neighborhood],
financing, qualifying buyers...) would come
back to haunt her and her family.
Activity seems to be good at the beginning
so she was optimistic. Six open
houses. 20 showings and several low-ball
offers later, Nancy sold her home for a 3%
discount and saved 2.5% commission.
Success, right? The problem was it
took her 10 months to do it when it should
have taken only a few weeks. She saved
$3,750 on the commission but during that
same time period the new home had
appreciated by $15,000. She had
expenses of $1,200 in ads and materials, the
$495 for the FSBO company and her time to
setup the plan, schedule showings, follow-up
with prospects...
Here's another story of a FSBO who bought
into the TV ads, but didn't get her home
sold on her own:
Jane put her home up for sale and hired one
of the many FSBO companies you see
advertised on TV late at night or early in
the morning. They promised a
compelling marketing plan (Internet and
their own FSBO magazine). They
advertised with people who said: "...we put
our home up for sale and sold it that
night... and we paid no commission..."
Jane's experience was very different than
their ad described. After Jane paid
this FSBO company over $2,800, immediately
on her VISA card (non-refundable).
They showed up, took pictures, put a FSBO
sign up in the yard and place a general
description on their website. They did
everything they said they would, the only
problem was it just didn't work because she
wasn't willing to sell at the steep discount
buyer's expect on a FSBO. Buyers
wanted to save the commission, too.
Three months later no one, NO ONE, had
called or looked at her home and all the
FSBO company could say was "it works for
other people." They offered no
expertise and no suggestions to alter the
marketing campaign. She was out $2,800
and completely on her own. She hired
an agent who sold the home and she closed 95
days later.
How to Attract Buyer's as a FSBO
Now there are plenty of FSBO success
stories. The fundamentals law of
supply and demand always work, the more
buyers become aware of your home for sale,
the more demand there is and the higher the
price. Excluding the professional
agents, who sell over 80% all homes reduces
demand by 80%. Those are measurable
facts, not opinion.
Many FSBO's handle this by offering to
cooperate with agents. You'll see this
one their sign: "Buyer's Agent Welcome."
You'd think agents would go for that and
some do. But, here's the problem the
agent has:
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FSBO's are know to be unrealistic about
their price, condition, time and effort
required to close.
-
There's nothing in writing and the agent
knows the offer on the sign will cost
too much in legal fees to enforce.
-
The agent realizes the seller doesn't
know how about or know how to complete
the 120+ tasks required to close, so the
agent has more work to do and the risk
of the sale falling through are higher.
-
There isn't a professional on the other
side of the transaction that knows the
market and can reason with the seller in
their best interest.
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Liability, because the seller is not
represented by a professional agent and
the lawyer doesn't have the time or
market knowledge to negotiate, the
buyer's agent runs the liability risk
should the seller make a mistake.
The agent has to be very careful and
that creates risk.
Facts is that the busiest most productive
agents just don't have the time for homes
with so much overhead and potential risk.
Your absolute best source of buyer's as a
FSBO comes from people you know.
Almost half of successful FSBO's, sold their
home to a friend or relative.
How FSBO Price Their Home
With all the information on the Internet,
finding the sale price of homes that sold in
and around yours, is straight forward.
With a large percentage of FSBO's selling to
friends or relatives, finding out what
others have paid and determining a price
from that seems fair. But, it's not
and here's why:
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What do you know about those other
homes, really know?
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Where there any major improvements or
fixes required to be done after the
contract, but included in the sale
price?
-
Did the buyer excuse any fixes in
exchange for a lower price?
-
How long was the home on the market?
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Did the seller contribute to the buyer's
closing or loan costs?
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What's been the pricing trend over the
last 5 years and how has that changed in
the last few months, or even yesterday?
-
What's the trend in your city,
neighborhood and subdivision?
-
If homes are selling fast, why?
How much under valued are they and how
far is too far to push the price of your
home?
-
How many showings should generate a
contract in this market and if they
don't what do you do, other than lower
the price?
The critical point about pricing is that it
is fluid and dynamic. Internet sales
information by nature of the process is
months old. Without working daily in
the market, the FSBO may miss a significant
move in the market.
Some self-help literature suggests that you
call agents and have them do a CMA, their
listing presentation which includes pricing.
Not a bad suggestion, if it weren't for a
couple of facts:
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Agents will often inflate the price to
get you to list with them (buy your
listing). Use this price to sell
yourself and you run the risk of having
many showings but no offers, becoming
stale and entering the price reduction
free-fall.
-
The honest agent's price estimate is
based on their marketing plan delivering
buyers. Without their plan and the
money they spend on it, you won't have
the competition to support the price.
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Most people pick weak agents not because
of their ability to deliver but because
they are a friend or relative. You
pay for that favor with weak advise
resulting in a lower sales price.
That's a fact.
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Reported sales pricing and actual sales
price vary, sometimes significantly.
The only way to know the difference is
to be daily immersed in the market.
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Without daily watching information that
won't go public for months, you lose
both a perspective of where the market
is today and where it will be tomorrow.
You don't want yesterday price base on
the latest, but dated, public
information. You also don't want
the agent's lack of education or
experience to miss a trend that you end
up paying for.
Most importantly, there is no real estate
Santa Clause. Your home's selling
price is earned by you, the people on your
team and the programs they own and use to
attract buyers. As much as 25% of a
homes value comes from your team's plan and
execution. The other 75% is determined
by the underlying value of the home in the
market.
Of all the 5P's of marketing (Price,
Product, Place, Promotion & People), Price
is the key, to you and the buyer. You
can find a buyer immediately at the right
Price, for the buyer not you, the seller.
It doesn't matter what condition the home is
in or where it's located, someone will buy
it at the right price. Plan and
execute the 4P's and you earn a higher
Price.
In our workshop on the 5P's (click
here to attend), we go into the 5P's in
depth. In review, the formula looks
like this:
Price = Product + Place + People + Promotion*
The basic foundation of this law says that
you earn a higher Price by planning and
performing the other 4P's (Product, Place,
People & Promotion). Fall short on the
4P's and you will only be able to sell your
home by cutting the Price. If you
don't understand the 4P's or don't have an
established, proven campaigns the deliver
high levels of performance, your home will
end-up on the stale reduction table.
Think about it. What's the difference
between a designer dress on the runway at a
Paris fashion show and that same dress in a
neighborhood garage sale? People,
Place and Promotion. If one of the
buyers (People) in Paris were at the garage
sale (Place), your Promotion would have
worked (you got them to the garage sale),
they would recognize the value and buy the
dress, though they'd still want a discount
because of the Place and lack of buyer
competition.
Identifying buyers and delivering buyer
traffic creates demand. Demand creates
the perception of scarcity and scarcity
raises prices. We suggest you look at
the Marketing Program required to create
extraordinary buyer awareness (Click
here to see our campaigns), critique
your ability or the ability of someone you
are thinking of use, then make up your mind
about what it will cost you on your sales
price. Then compare the cost. We
know you'll come out way ahead when you use
our services (click
here to contact us).
What Can a FSBO Save
What Can a FSBO Save
How We Can Help a FSBO
In cooperation with local lenders, we
arranged for free ad space on our site as
well as a number of other incredibly
valuable, but free services. We can
help you accomplish your goal and it's free
to you. So what's the catch.
There really isn't one and we don't want you
to have to comb through the find details to
figure out why we are do this.
Honestly, we do this not only to help you
and your family but to generate business.
We earn compensation by originating loans
and selling real estate. We know that
the majority of FSBO's will eventually list
with an agent and we want to earn the right
to be your agent, if you eventually decide
to list. If you don't, our lending
partnership wants to help you qualify and
attract buyers. Here's what we freely
offer you:
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Loan Origination2--One
of the most challenging and threatening
tasks FSBO's face is knowing if a buyer
is qualified. Our lending partners
have agreed to track prospects for you
and give you a lender's opinion of the
prospect's ability to buy your home.
-
Free Website--We provide a home for your
home on the areas most highly regarded
real estate site. Your ad on our
site provides prospects with the ability
to view your home, contact you, qualify
for special financing and much more.
-
Massive Local Internet Pull--As a part
of our website, you benefit from our our
50% ownership of local Realtor.com
listing ads and our Organic Marketing
Campaign which resultes in our website
being awarded over 500 #1 and 3,000 Top
10 positions in search engines like
Google, MSN... Remember Traffic =
Higher Prices. A local buyer sees
our ads once every 5 seconds, 24/7.
-
Get Free Ad Space--By placing your home
on our free website ad space, your home
becomes part of our Realtor.com ad
campaign. This campaign draws
buyers from the web's #1 real estate
site where only list, MLS homes appear.
You'll be on our site, one of the local
areas top sites, which is legally one
click away from the Internet's #1 real
estate site. That's worth 30,000
impressions a day.
-
24/7 Prospect Registry--When you have a
prospect call or visit you, simply go to
the website we provide for your home,
input their contact information and one
of our lending consultants will be
e-mailed and/or paged, at which time
they will contact the prospect with in
24 hours. They will then log the
results of the call on the password
protected section of your home's ad.
You can log-in anytime and contact the
consultant by e-mail 24 hours a day, 7
days a week.
We provide all this for free and all we ask
is that you let us qualify your prospects
and consider us, should you decide to list.
That's all we ask, reciprocity. One
last thing, we'd love to include you in our
referral network. Please let everyone
know about us.
Set your price by
researching on the Internet, looking at
other home prices in your area, and visiting
the county tax records office to see what
the homes actually sold for.
Attend the LITTLE IMPROVEMENTS = BIG RETURN
Seminar and make sure your home is in the
best shape inside and out.
You might want to invest in a few books
and/or videos to support your efforts.
Set your advertising budget. Most people who
sell their homes themselves spend between
$1,000 and $2,000.
Create a color fact sheet, including a photo
and necessary information about your home.
Color increases visibility of the fact sheet
and perceived value of your home.
Put a prominent FOR SALE sign in the yard.
Display your fact sheet at work, in local
supermarkets, and at other high visibility
locations.
Run daily and Sunday ads in the real estate
section of your local newspaper.
Send letters to every real estate office in
a 20 mile radius.
Create a small website and list the web
address on all materials about your home.
Return all calls to interested buyers
promptly.
Make appointments to see them as quickly as
possible. If they’re seeing your house,
they’re also looking at others.
Be available days, nights and weekends to
show you house.
Constantly monitor the market and be ready
to adjust to the trends.
For your own safety and security, try to
pre-qualify buyers before you invite them
into your home. Ask questions over the
phone, including:
- How will they pay for the home?
- Can they get a mortgage?
- Are they pre-qualified for a
mortgage?
- Is their home sold or just on the
market?
- Is the buyer of their home a
qualified buyer?
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