Bob: Hey, Dan. I saved $15,000 on a lawyer by representing myself!
Dan: Good for you! Let’s go out and celebrate!
Bob: Okay, but can you wait two years? I’m in jail right now.
You’ve heard the ads.
“Johnny hired ‘FSBO Inc.’ and saved over $15,000!”
Really? How does Johnny know he saved $15,000? How does he know he didn’t actually lose money by choosing not to hire an experienced, highly skilled agent?
Answer: Johnny doesn’t know, and he’ll never know because he’s already sold his home to some lucky buyer who cashed in on his massive naivety.
You’re a professional Realtor, so you know exactly what I’m talking about, right? But how do we explain this to the public?
How about simply telling them the straight-up truth?
(Note: You might need to tone down my snarkiness a smidge.)
Here’s the straight-up truth about FSBO Inc.:
1. They claim you’re going to get “professional representation” to help with all the paperwork, marketing and negotiating.
Ask yourself one simple question: If these people were actually good at what they do, why are they working for peanuts for FSBO Inc.?
2. When it comes to negotiating, you’re on your own (see #1 above).
So, how do you think you’re going to fare negotiating your first real estate transaction against a shark who does this for a living?
3. Despite the “rules,” most agents will avoid showing your property and will discourage buyers from writing an offer on it.
Why? First, there’s a high probability that it’s overpriced, based on the combination of the terrible advice you’ve received from the FSBO “agent” and your own “feelings” about what your home is worth.
Second, every professional Realtor knows that working directly with a FSBO seller is likely to be a painful experience compared to dealing with a professional. It’s usually twice as much work and three times as much stress.
Third, there are additional legal liability concerns because a FSBO is simply not held to the same reporting and disclosure standards compared to a professional real estate brokerage.
4. You really have no choice but to pay the buyer’s side of the commission anyway (you already know how to explain this.)
On top of that, there are listing costs from FSBO, Inc. that need to be paid up-front, whether you sell or not. So tell me again, how much are you going to “save”?
5. Quality of buyers.
There are three types of buyers. (1) Potential buyers – anyone who wants to buy a home. (2) Qualified buyers – those who have the ability to buy a home. (3) Serious buyers – those who are actively looking to buy a home.
But the only buyers who matter are both (2) qualified and (3) serious. You can have a serious buyer who isn’t qualified, or a qualified buyer who isn’t serious, right? So, guess what?
Almost all serious, qualified buyers are working with a professional real estate agent – the ones who want to avoid showing your FSBO!
The people who call you directly? Those are potential buyers, but are they qualified? Are they serious? How will you know? Have fun showing your home to a bunch of looky-loos who have no intention of ever buying.
Let’s expand on this and look at serious, qualified buyers from a different perspective. All of the following buyers are both serious and qualified:
‘A’ buyers are every Realtor’s dream client. They’re getting transferred from a city where prices are significantly higher than in your market. For me (Calgary), this could mean they’re coming from Toronto or Vancouver. If you’re in one of those cities, maybe your buyer is international – Hong Kong or New York, for example.
These buyers are moving to your market area because they’re probably getting a promotion/raise, and they’ve got a pocket full of cash, having just sold their home in (expensive city). They’re working with a highly qualified agent referred by their trusted local agent, and they’re flying in on the weekend to look at 10 homes and choose the best one.
They can’t believe the “bargains” in your city! But guess what? The Realtor wants to make the most of the short time they have together, so they’re not going to waste valuable time looking at FSBOs.
No ‘A’ buyers for you!
These buyers are local, but they’ve just sold their existing home. They’ve got a short window of opportunity to find their new home, and they’ve already developed trust and rapport with their agent, so guess what? This agent isn’t going to waste time with their valuable repeat-business clients looking at FSBOs.
No ‘B’ buyers for you!
These are first-time buyers. They’re scared and they don’t know the process. They were referred to their agent by their parents or someone else they trust. The agent takes this responsibility seriously and will not risk getting into a messy deal with a FSBO.
No ‘C’ buyers for you!
These are bargain hunters and investors. They know the market and they’re looking for people selling undervalue. They love working with FSBOs!
Congratulations! You get all the ‘D’ buyers!
You still think you “saved” $15,000, Johnny?
Thanks to my friend Pete for this simple A/B/C/D presentation. He does it on a whiteboard, overflowing with confidence, and he’s never once in his entire career NOT successfully converted a FSBO back to their senses.
Honestly, despite my snarkiness oozing in this article, the truth is:
I feel sorry for FSBOs.
I mean, how are they supposed to know, if you don’t explain it to them?
I completely understand how people can conclude that FSBO is the way to go, if they’ve had one or more bad experiences with an unskilled, unprofessional, apathetic agent, which – let’s be honest – is not a rarity.
These agents are the seagulls of the bird world – obnoxiously loud, squawking scavengers who serve no useful purpose, at least to the untrained ornithological eye. I’m sure seagulls are good for something.
No wonder people turn to FSBO companies. They think we’re ALL seagulls.
Are you a seagull? Or are you an eagle?
Be an eagle. If we were all eagles, FSBO Inc. would not even exist.
I always knew how to demonstrate my value. As a result, I attracted high-quality clients who trusted me as a professional and would never even consider selling their own home, or represent themselves in court, for that matter.
If you really want to convince people not to go FSBO, demonstrate your value with actions, not words. It’s not as difficult as it sounds.
Be an eagle.