October 9th - 2004

How to turn a FSBO into a listing

For sale by owner? Can you turn a competitor into a client? The fact is that many homeowners believe they can save thousands of dollars in fees for the services REALTORS provide by selling their property on their own.

For sale by owner? Can you turn a competitor into a client? The fact is that many homeowners believe they can save thousands of dollars in fees for the services REALTORS provide by selling their property on their own. There are even websites to help them to do it.

But obviously there are advantages to using a REALTOR. Only REALTORS have access to the Multiple Listing Service, or MLS, and therefore can offer sellers maximum exposure to a vast number of other REALTORS and potential home buyers. Ontario REALTORS also have the distinction of being highly educated having passed some of the most stringent requirements in the profession. REALTORS are also members of organized real estate and must adhere to a strict code of ethics.

So what should you do when a homeowner asks: “Why don’t I just sell this house myself and save the commission?” The best approach you can take is to offer your best wishes for a successful sale and back off. Don't get defensive. At the same time, however, you might simply ask for their permission to outline what they could have got if they listed with you.

If they agree, be prepared to proudly state the value of the services you provide. Next, ask them the following questions and be prepared with solid, practical answers.

Do you know how to price your home properly in today's market?
You, as the REALTOR, have the expertise required to do a proper market analysis. Remind the sellers that if they price it too high they will scare potential buyers away and if they price it too low, they could cheat themselves out of thousands of dollars.

Can you show other homes in your neighbourhood as comparables?
Most potential buyers want to see comparable homes in the neighbourhood. But who will show them other homes? If the buyers have a REALTOR working for them, how will the sellers know how their house stacks up against the others?

Can you be emotionally detached from your house?
Buyers will have many objections and criticisms about the house that many homeowners will find offensive if not downright upsetting. Do they have a thick enough skin to remain calm and pleasant while potential buyers point out every little flaw? Tell them it’s your job to act as a buffer between them and the buyers and to negotiate the best price possible.

How are you at negotiating?
Do they know what to say and what not to say and what questions to ask? Do they know how to “qualify” a buyer and how to negotiate the deal?

Do you have access to financing resources?
Most buyers require some kind of financing. Do they know where to send them for financing – a mortgage broker or a bank? Do they know if buyers have good credit or can even afford to buy your home? Point out how financing hassles can result in delays or even the cancellation of a deal. It could also mean they lose the interest of other qualified buyers while they are tied to a contract with unqualified buyers.

Do you really have the time it takes to sell your home?
Explain how you will advertise and market their home, remain available day and night for calls from prospects, host open houses on the weekends, show their property on short notice, screen potential buyers, fill-out all the paperwork, handle the negotiations and do dozens of other things required to sell a home. When they consider the amount of time invested, are they really saving any money by going it alone?

Are you experts in real estate contracts and concepts?
Highlight the education, knowledge and experience that qualifies you to successfully negotiate even the most complicated real estate transaction. Describe some of the challenges you have faced in past deals and how you’ve handled them.

As REALTORS you know that selling a house involves much more than sticking a sign on the lawn and waiting for the buyers to line up. If you haven’t evaluated your “brand” lately, it's a good idea to take the time to list all the value you bring to the table. That way, the next time you are faced with a potential FSBO you are very likely to confidently turn them into a listing.

FSBO fears fade
While the assumption of many REALTORS is that the number of FSBO (for sale by owner) real estate transactions increases in a hot sellers market, a 2003 NAR (National Real Estate Association) survey shows that assumption may be false.

According to the survey results, there’s been a trend in recent years showing a decline in FSBOs. While the numbers have stabilized, with 14 percent of sellers conducting transactions without the assistance of a real estate professional in 2003, they are down compared with a high of 18 percent in 1997.

The survey indicates more buyers than ever are accessing the Internet to search for homes. Just less than 90 percent of Internet searchers used a real estate professional, compared to 79 percent of non-Internet users.

Ellen Roche, vice president of research for NAR is quoted in Realty Times as saying, "I think we continue to be surprised that the FSBO number isn't higher, with all the buzz about the Internet. This demonstrates that our members provide a valuable service. People need help in a transaction as complex as real estate."

Because sellers are faced with a number of challenges, only half of recent FSBOs said they would sell their current home without the assistance of an agent, while many were unsure of what they'd do. The biggest problem areas for FSBOs were understanding and completing paperwork, preparing a home for sale, getting the right price and having enough time for all aspects of the sales process.

Share this item

OREA supports revision to Mortgage Brokers Act Construction activity remains strong

For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Senior Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
Facebook LinkedIn YouTube Instagram

The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

OREA AI Assistant