I spend a lot of time talking about winning over for sale by owners (FSBO), and during a recent conversation with a Power Agent — the term for agents who are part of my coaching program — she asked me what I thought about going to the open houses hosted by FSBOs.
She found that most of them wanted to work with buyer’s agents only, saying, “Just bring me a buyer and we can talk.” She wanted advice on how to talk to a FSBO at their open house. Here’s what I told her.
What not to do at a FSBO open house
I’m not opposed to the idea of going to the open house of a FSBO, and if it’s something that works for you, great! I always tell agents to find what works for them, but I do caution them that if this is an approach you like to take, there are things you should and shouldn’t do.
One thing that you do not want to try and accomplish during this open house is to have a listing conversation with them, nor do you want to discuss what commission you charge.
As soon as you start talking about that, they no longer have any reason to meet with you later. They heard what they wanted to know (even if they haven’t heard anything about why they really should use an agent), and they will no longer be interested in anything else you have to say.
‘I don’t know what to say!’
It’s alright if you draw a blank on what to say to the owner to handle their “just bring me a buyer” stance.
I want to offer several different dialogues for you to use (but putting into your own words) that will help you serve a FSBO, because without realizing it, they have just handed you the best “in” that you could hope for! You can coach them while proving your value at the same time.
Why the phone can be your best friend
This is why I love the telephone. You haven’t seen the house yet, so it’s really easy to say:
“Listen, I just want to come see your house, to find out if it’s something any of my buyers might like, or how I might be able to help you out. You have nothing to lose and everything to gain. You are currently letting complete strangers into your house now, and you don’t even know if they can afford your home even if it were free!
“Meanwhile, I’m licensed by the state and the safest appointment you could have. Not to mention the fact that I could potentially have a buyer, but I don’t know because I need to see your house first. So why don’t we do this: let’s find a time when I can come see the house and we can sit down and have a conversation.”
Now, if you attend an open house, then you are seeing the house, which takes away one of the reasons to sit down and have the heart-to-heart, face-to-face conversation with them.
Things to say (and not say) to a FSBO at their open house
Now, if you do like going to FSBO open houses, and one asks you how much commission you charge, you can say:
“As for my commission, that’s a marketing fee that depends on the seller’s situation and timeline, when they are looking to accomplish the sale and what they need to net. I customize my fees for each seller because again, it’s the marketing that helps motivate other agents.
“But why don’t we do this — you are in the middle of your open house, and I don’t want to get in your way. Would you be offended if I just came back tonight after the open house? I can bring over some other information about marketing, some sales strategies and a report that will share with you your home’s current value, and we can sit down and chat about it then.”
It’s possible to roll your visit to a FSBO open house into a listing appointment that way, though many agents end up hearing this in response: “We’re not signing anything because we aren’t interested in paying a commission. If you have a buyer, you can bring them.”
The truth about when the commission is owed
This is the point I was referring to earlier when I said they were giving you an “in.” We need to coach FSBOs by informing them about the truth on how commission really works:
“Sounds great, but there is a challenge there, though. I feel like I should tell you that when you tell agents to bring a buyer and then you will work with them, you can actually end up owing more than one commission in that model of selling.
“See, the real estate industry is a service industry, and the commission is usually built into the price of the property. Now, most people assume we earn our commission when the deal closes, and keys are exchanged, but we have legally earned our commission and performed our full duty when we bring you a buyer ready, willing, and able to pay the full price.”
Let’s talk legalities for a minute. Most FSBOs aren’t lawyers, which means they aren’t going to know the legal ins and outs of the process, nor will they know about fiduciary duty.
They don’t know the laws regarding commissions being owed or what really happens with a potential multiple offer situation. They need you to education them:
“When you say to agents, ‘Here’s my house, just bring me a buyer’, let’s say two agents from two different companies, or two buyers come to see your house, and they both love it and offer full price, you have now legally sold your home twice, and legally, you would be liable for both contracts. That’s the problem when you don’t have something in writing, like when you hire a real estate professional.
“The other problem is when an agent brings you a buyer, they are representing the buyer, not you. If you go to court, they wouldn’t be on your side because their duty is to the buyer. Would you go to court and pay their attorney to sue you? No, you wouldn’t. If you lost the case, you might have to, but even before the case begins, you are paying them to sue you.
“This is the same thing when you tell an agent to bring you a buyer. You are paying them their commission to work against you. If you are willing to pay them to work against you, why aren’t you willing to pay that other half commission to have a licensed agent working to protect you?”
Why they need a licensed agent (you!)
It’s not just about legal issues or the details on when a commission is owed or to whom. There is also an objectivity that the FSBO doesn’t have. They have a sentimental attachment to their home, or they believe it’s worth more than it really is — or worse, they don’t realize how much it’s worth.
They need that objective party who isn’t emotionally connected to the situation who can provide options they didn’t even know they had:
“Here’s the thing: When you are emotionally attached to the outcome, you can make mistakes. There is a saying I love: When you are in the picture, you can’t see the frame.
“My job as your listing agent is to look outside the frame and to coach you so you can make the best, educated decision. I believe you are a smart, and capable person, but I’m licensed by the state of New Jersey. I didn’t get this out of a crackerjack box, I had to take the training and pass an exam and continue to go to training.
“I know real estate in and out, and there are things that you don’t know, because this isn’t what you do for a living. I wouldn’t know how to do what you do for a living. I could try, but I’m sure I would make a lot of mistakes.”
Why never to be a pushy salesperson
As real estate professionals, we know why FSBOs shouldn’t sell on their own, and I think many hesitate to have these conversations because they don’t want to come across as “pushy.” The thing to keep in mind here is that this is part of coaching the sellers for their own good.
They need a real estate professional to get them the most money for their home. They need a real estate professional to steer them around the legal trouble they could land in because they don’t know the laws.
They need a real estate professional there to look out for their best interests, so it isn’t a matter of you being pushy, it’s you trying to keep them from making a big mistake.
Get out there and serve — FSBOs need you! We are here to help.
Darryl Davis is a speaker, coach and the bestselling author of of How to Become a Power Agent in Real Estate, as well as the CEO of Darryl Davis Seminars. He currently hosts weekly free webinars to help agents navigate the new real estate reality. Learn more at www.DarrylSpeaks.com/Online-Training. Connect with him on Facebook or YouTube.