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How to Add Over Six Figures to Your Income Prospecting FSBO'sby Dirk Zeller
For Sale By Owner's can be uncomfortable for real estate Agents to work with. They can often be extremely rude and inconsiderate. They also can be a great source of income if handled in the appropriate manner. The reality is you do not have to look for them, they are out there. They are advertising in the newspaper saying, "Come list me."The first task we have is to understand the FSBO. They have a specific reason for trying to sell on their own. We as Agents need to find out that reason. Certainly the most common reason is to save on the commission. For close to nine out of ten FSBO's that is the primary reason. The other reasons people try to FSBO are due to low motivation, the beliefs that REALTORS® as a group are incompetent, or their ego (because their neighbor or friend got lucky so it must be easy). Some of these reasons are hard to get around. In many cases, low motivation and ego are cause enough to move on to another potential client. In working FSBO's I subscribe to the three P's theory, Picky, Patience, and Persistence. You must work these three P's in some combination to be successful in FSBO's. The first, and I believe the most important P, is being picky. You must be highly selective working FSBO's. One of the first mistakes I made early in my career was trying to work too many FSBO's at a time. FSBO's must be screened very carefully and completely. The FSBO's need to be screened for motivation. You are looking for the ones who have to sell, not those who just want to sell. They have to move for a very valid reason, not just because they feel like it. The feeling may not be strong enough for them to lose 6% to 7% of their equity. This is clearly their mindset. This mindset is false, but often they feel that it is very valid. They feel that they are losing money. The truth is they were never going to get the money in the first place. They need to be motivated to sell because they are transferring, having a new child, divorcing, needing a one level house due to health, or some other clearly defined reason. They have no option but to sell and sell today. Once you have a motivated seller, you need to determine their maintenance level. By maintenance level, I mean you must decide if the seller is high maintenance or low maintenance. Do you remember the movie, "When Harry Met Sally", when Billy Crystal told Meg Ryan she was the worst kind of woman: the type who is high maintenance who thinks she is low maintenance. The FSBO is the same way. Most FSBO's who are high maintenance think they are low maintenance. They will really cause frustration for you and your staff. High maintenance ones will cause you to lose money. You need to be able to spot them and exclude them from being one of your clients. They will call you at all hours of the day and night. They will bother you incessantly. They often will try to tell you how to do your job. This pestering can be an on-going drain of time and energy for both you and your staff. The truth is it is only one deal. What are you willing to do for one deal? FSBO's often know just enough to be dangerous to themselves and others. They however do not realize this fact until it is too late. You must evaluate the owner before you take the listing. Do you want to be associated with this person for at the least 60 days and more like 120-180 days until the deal is closed and you are paid? The next evaluation I make is based on their integrity. Do they have the integrity to tell the truth regarding the condition of their home? Are they going to fight about the commission at the end? Are they going to be honest with you or are you the enemy just looking for a commission? You do not need to do business with people that have this attitude. Rarely will you create a win/win situation with people who have this philosophy of life. The more you exclude the difficult or unreasonable FSBO's the more time you will have to devote to the enjoyable people you can work with. You are not going to list them all. Focus on the really motivated and good people when you will enjoy working with. This will allow you to do more business with less effort. Life is too short to work with people for whom you will rarely meet their expectations. Another key to success in working with FSBO's is patience. You need to patiently wait them out. They will all run their course. They all have a length of time they will endure the process of selling on their own. The key is to find out the length of time if you can and be there at the appointed hour. Most of the FSBO's will not think about listing until they have tried selling it themselves for three to six weeks. They want to give it a good try before giving up. The higher the motivation the shorter the time they will try to FSBO. The more aggressive the follow-up will need to be with them. Your patience factor needs to be great because you know you can help them. You have to let them fall and get back up. It is almost like watching your children go through the process of their first steps or riding a bike for the first time. Early on I wanted to teach FSBO's and help them before they were ready. It was painful to watch them create all these problems for themselves. The problem was they did not want my insight or help at that time. If you move in too early and too hard you are out the door. You need to patiently wait till they go through the whole cycle. When they finally realize they cannot do it themselves then you can step in and help. At that moment you must step in aggressively and decisively. You cannot hesitate once they get to this point. The last is persistence. You must be persistent in calls, letters, updates, and on all communications. The focus on persistence is to be one of the three or four Agents that they interview for the job. Your goal is not to convince them to list with you, but to interview you. Just like expireds, they get fewer calls from Agents as the weeks go by. If you maintain a steady professional level of contact for three or four weeks, you will usually get an interview. Continue to contact them and continue to follow-up on their progress. Let them know you are there to provide a quality service if they have the need for it. If you have been picky or qualified them well, you will have to be less patient and less persistent. Meaning if they are more motivated, you will spend less time in follow-up and money on mail pieces to them. Their window of marketing the home as a FSBO is small. They will try for a few weeks and turn it over to you. I cannot impress upon you enough how critical qualifying can be. The biggest loss is the client you list who turns out to be a nightmare client. They can disrupt or ruin your or your staffs' whole day. You also lose all the time and money you have invested when they do not sell or when you release them because they are not worth it. Make that selection very wisely. You are going to spend time, effort, and energy on every listing you take. Make sure you get compensation for your efforts. FSBO's can be a wonderful source of income for many of you. You must look at them as a valid set of clients who truly need help. They just do not know it yet. By applying the three P principles. You can be able to add a fourth P, high profit! That fourth P is the most important P in any business.
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