I read a good post from Paul Campbell in Lexington Kentucky earlier today wherein he inquired about ways to approach FSBO's -- especially those who really don't have a feel for how to price their homes. After I finished sending him a comment, I got to thinking that there's more to say on the subject so, voila -- here's another post.
First here's the comment I sent in response to Paul's post:
"I think we all face the same dilemma w/ FSBO's, and indeed, all sellers in this market. But FSBO's may be among the more under-informed sellers out there. So, like BethAnn said, they need someone to not only TELL them the truth, but also DOCUMENT the truth.
Show them what people have been willing to pay for similar homes in the same or similar neighborhoods.
Then show them what their competition is -- the active listings.
And finally show them the expireds -- those are what DOES NOT WORK.
Don't be afraid to give them information and educate them about what is required to sell their home, e.g. clean-up, fix-up, staging, how essential it is to price correctly and competitively, etc. Not all at once, mind you, just a bit at a time over a few weeks. Stay in touch with them. Bring them something new and helpful each time.
Serve them a little for free to build the relationship, and they will come to you when they finally realize that they truly do need a professional.
Statistically almost all FSBO's either eventually list with a REALTOR, or take their homes off the market. The key is that they typically list with the agent who has contacted them 3 times or more. Persistent customer service is dang near omnipotent w/ FSBO's. Good Luck in Lexington!"
So now, here are a few more thoughts on the matter:
(1) With regard to pricing, the fact is that most FSBO's don't understand the basic fact that their home is not worth --
a. What they paid for it in 2005,
b, What their neighbor up the street got for his last year,
c. What their neighbor down the street is currently asking for his --
-- It is only and exactly worth what a ready, willing and able buyer will give for it in the current market. And, that is indicated clearly by recent sales data that is typically found either in the multiple listing service or in the county record.
And, the difficulty faced by most folks trying to sell their homes without a professional, apart from inexperience, is that although the sales data is a matter of public record, most of them don't know where or how to look for it. Even if they did, they then don't know the finer points of how to use that information to assemble a Comparative Market Analysis, and come up with a projected selling price. (value)
(2) Once a Current Market Value has been determined, a look at the competition is vital. Most FSBO's in my experience, don't really see other homes for sale as competition, and consequently don't think about competitive pricing. Our ability, as REALTORS to do this objectively is another of the many reasons why they "pay us the big bucks." We don't have the emotional attachment that the typical seller has to his or her home. And, most of us have a high level of training and experience that the average FSBO just doesn't.
In my town of Prescott, Arizona, the real estate market has been a tad volatile over the last year or two and one of the important lessons we've learned is that a seller has to get ahead of the downward pricing curve from the get-go. If you price anything over the anticipated selling price with the thought in mind that you can always drop the price later, you end up behind the curve in a buyer's market where, if you're not priced in the lower 20% of what's currently for sale, you don't even get shown, let alone receive an offer.
(3) Then, of course, there's the really important lesson that even REALTORS sometimes forget, and that is: ANYTHING that distracts a potential buyer from being able to envision a house as their home, with their stuff in it, diminishes the likelihood of them buying it, in exact proportion to the level of distraction. And that's not just limited to things like pet hair on the furniture or the smell of cigarettes. It includes things like forty years of family pictures on the walls, and yes, even your beloved collection of Elvis memorabilia stuck in every nook and cranny through out the house.
Keep in mind that the rule of thumb is that "Less is More." But that's not all. The "Less" must be well-positioned or properly combined and arranged. Even if you think you can't afford a stager to come in and do a complete number on the place, most home stagers will, for a much-reduced price, meet with you in the home for a consultation wherein they will give you guidance and instruction on how to stage it yourself.
Now, back to Paul's questions. All these things and a jillion more, are things that a FSBO really NEEDS to know, in order to be successful at selling his/her home -- and most of them don't. And even if they are successful, they'll still remember you in a positive light and odds are they will refer you if they ever get the chance. So, I recommend going out of our way to help them and teach them.
I like to take them sample copies of the SPDS, and the Real Estate Purchase Contract. And our association puts out a brochure entitled "10 Things Every Seller Needs to Know About the Arizona Real Estate Purchase Contract." I also give them that.
A great benefit of this approach is that, by the time they do list with me, I have a well-informed Seller who trusts me implicitly because I've proven myself to them in advance. That just makes for a smoother transaction all the way around.
It's been my experience that the more help, service and info we give them, the more thankful and appreciative they become toward us. And, they start to gain a real understanding of how much we really do and how valuable our knowledge and experience really are to them.
The vast majority of private home sellers still end up listing with a REALTOR. The difference is that it's usually the one who has stayed in touch and been so willing help, even before having an autograph on a listing contract.
Guys and Gals, this is still only scratching the surface, but I hope it'll help some of you out there who, like Paul, may be scratching your heads and wondering what else you might do to persuade a FSBO that he/she really does need a professional real estate expert, and that that expert is YOU!
