The world of real estate is constantly evolving.
Trends in the market, the state of the economy, speculative demand, supply, and affordability are all determining factors for how real estate business will perform and there is always a sense of needing to “strike while the iron is hot” to avoid any missed opportunities. Two of these often-overlooked opportunities are Expired Listings and For Sale By Owner (FSBO) homes. For the savvy real estate agent, understanding how to approach these listings can mean tapping into a gold mine of potential business through referrals and repeat clients.
Understanding the Mindset of Sellers with Expired Listings or For Sale By Owner (FSBO) Homes
Before delving into the strategies for how to approach homeowners, it’s crucial to understand the psyche of sellers in these categories:
Expired Listings:
Selling a home is a significant milestone in a homeowner’s life because in most cases, they are selling due to a life-changing event.
Whether a family is expanding square footage to accommodate a new addition, or a homeowner is experiencing a hardship that necessitates the sale of their home, sellers are full of anticipation and anxiety.
When a homeowner’s home doesn’t sell in the planned timeframe and the listing expires, the homeowner has likely taken several price cuts to motivate the sale. Sellers with expired listings are likely frustrated and disillusioned. Their property didn’t sell, and they might be blaming their former real estate agent or the market. They may have urgent reasons for selling, like relocating for a job or financial concerns that are adding pressure and stress to an already stressful situation.
The uncertainty of how to proceed after a home listing has expired can bring feelings of embarrassment and bewilderment but can also set up a renewed sense of hope and determination when in the right hands.
For Sale By Owner FSBO:
Homeowners who decide to sell their property without an agent often do so to save on the cost of commission. By saving on commission, however, homeowners who choose to take the FSBO route often miss a lot of the value an agent brings to the process like strategic marketing, promotion, and an extensive network of real estate agents. They might be confident about their ability to handle the listing, marketing, and sale, believing that the property will sell itself and for the price they want, or are simply distrustful of agents based on a previous experience.
However, homeowners are often unaware of the nuances of the real estate market and how market trends can affect the landscape at the drop of a hat, which can result in a longer sale process or a less favorable deal.
Crafting Your Initial Approach and Value Proposition
The key to winning over both Expired Listings and FSBO sellers is to first understand how they view real estate agents in regards to these two categories and then offer a value proposition they can’t refuse. Here’s how:
Know the History and Be Prepared: It seems obvious, but the first place to start is by knowing what you’re potentially walking into. Start by researching the property’s past, how the market has fluctuated and how the value has changed over time. Dig deep into the last couple of years’ sales in that neighborhood. Look at buyer feedback. Collect basic details on the property like time on the market. Then, present yourself as the expert for not only that neighborhood, but also for that property. Share recent sales data, current market conditions, and projections. Give the seller insights they might not have had access to the first go around.
It Starts with Empathy: Approach the seller with empathy and understanding in order to help rebuild trust in real estate agents. Ask questions that will help you gain an understanding of their goals and what their motivation is for selling. If it’s a FSBO property, dig deeper into why they didn’t go with a real estate agent the first time. The key is to listen to their concerns and frustrations before offering solutions so you understand the bigger picture. Ultimately, make the relationship about them and not you.
Showcase Your Past Successes: Prepare to share stories or case studies of clients you’ve helped in similar situations (bonus points if you can share success stories in that same neighborhood!). Demonstrating your ability to get challenging homes sold will be reassuring to the homeowner and establish both trust and credibility. Quotes from previous satisfied customers (when mentioned tactfully) are also a great asset for establishing your expertise and authority.
Show What Kind of Marketing Mix Will Sell Their Property: Demonstrate your marketing plan by highlighting your strategic marketing approach: professional photography, professional staging, online listings, physical marketing items like, mailers, and open houses demonstrate the marketing mix at your disposal and demonstrates your authority. Show them how you can market their property better than they or their previous agent did.
The Power of Negotiation: Remind homeowners of the power of negotiation and the extensive experience you have with negotiating for favorable outcomes. Negotiating price and terms is often the last thing a motivated seller is going to prepare for when selling their home. Discuss with the homeowner the minimal selling price, contingencies, and potential successions. Walk them through how you plan to negotiate on their behalf. By having you as their agent, they’ll have a professional to navigate home inspections, buyer requests, and the final deal.
Personalized Strategy: Prepare a tailored strategy for the homeowner that outlines the approach from start to finish, taking unique consideration for key selling points, hindrances, and a plan of action to adjust the strategy within a certain timeframe. Part of a dynamic sales strategy includes having a plan to adapt to the everchanging market conditions. With a roadmap to follow, the homeowner has confidence that they have chosen the right agent and can trust the process.
Flex Your Network: Success in most industries hinges on leveraging the power of networking, and real estate is no exception. Potential clients want to see that as their agent, you have an extensive network of professionals at your disposal. A good relationship with fellow agents is often the key to finding the right buyer, especially for a tough-to-sell property like an Expired Listing or an FSBO.
Tips and Techniques for Approaching FSBO and Expired Listing Homeowners
Now that you have a plan for backing up your credibility as the right agent to work with, it’s time to think about how to approach an FSBO or Expired Listing homeowner. Approaching an FSBO or expired listing requires a unique strategy, tailored to the individual homeowner’s situation. Here are proven techniques to help you win them over:
Initial Contact:
- When approaching homeowners with Expired Listings, initial contact should be warm, helpful, and genuine. Reach out with a simple phone call or a personalized handwritten note to introduce yourself.
- The approach with an FSBO homeowner should be adapted to the individual homeowner’s needs based on the research you’ve done before making the initial contact. If history shows that the home was listed with an agent previously, and didn’t sell, the homeowner could have a pre-existing opinion about working with an agent and your approach she be adjusted accordingly.
Offer Free Value: Offering something valuable for free can show your potential clients that you’re not only trustworthy and dedicated, but knowledgable about what will help them sell their home. Provide a complimentary home valuation report, market analysis of recently sold homes in the area, or suggestions for improvements to the home that could help them. By offering something of value upfront, you position yourself as a helpful expert and stay top of mind with the homeowner.
Highlight the Challenges:
- Expired Listings: After making contact, you can now further discuss the potential reasons their home didn’t sell — whether it was pricing, marketing, or something else. The key is to get all the information first by listening intently to what the homeowner is saying about their experience trying to sell their home. Hold back from jumping in and offering solutions right away. Keep in mind that they may have had a bad experience with a previous listing agent, or been given bad guidance that didn’t meet their expectations or goals for the transaction. Whichever the case, start by listening and treating each homeowner as a unique case, rather than offering a one-size fits all solution.
- FSBO: Similarly to the approach of an Expired Listing, there could be multitude of reasons why a homeowner chose the FSBO route rather than listing with an agent. Typically, homeowners have chosen to sell on their own to avoid the commission that they would otherwise pay out of the profit from the home sale. However, don’t just assume… ask! If it is just to avoid commission, remind (or educate!) them on the potential pitfalls of selling on their own: legal complexities, negotiation challenges, and the time it takes to manage viewings and paperwork. Show them the value you as an agent bring to the transaction.
Stay Consistent with Communication: Don’t be discouraged if a prospective seller doesn’t sign with you right away. Consistency is key. Set a cadence for how often you plan to follow up, and offer new insight into the market and anything else that could affect their home-selling goals. Remain available and top of mind by continuing to offer value, even without a formal engagement.
Leverage Testimonials: Positive reviews and testimonials are a great tool for homeowners to see themselves in a satisfied client you’ve already worked with. Real stories can alleviate fears and reservations, especially when selecting reviews with similar circumstances like, FSBO and Expired Listings.
Conduct Workshops: Workshops are a great way to meet potential clients and offer something of value that builds authority and trust. Consider a series of workshops dedicated to navigating the complexities of the real estate process specifically for FSBO sellers or a series of workshops for Expired Listing homeowners with useful tips for homeowners starting the journey again. Not only are workshops an incredible way to capture leads but a workshop puts on display just how tricky the real estate business is to navigate, the intricacies and complexities that can make or break a sale. As the expert, you can knock out two birds with one stone: demonstrate your value and authority, and stay top of mind.
For more tips on how to approach homeowners about selling their home, check out our blog post Always Prospecting on how to craft your approach
Considerations to Further Strengthen Your Approach with FSBO Sellers
One of the primary considerations when homeowners decide to sell their home themselves is the cost of commission involved when choosing to work with a real estate agent. This alone can be a challenge when reaching out to connect with FSBO sellers. On the surface, FSBO may appear to save money upfront by avoiding real estate agent commission, however, the legal implications and possibility of incurring unforeseen costs, or an unfavorable deal are a risk for inexperienced FSBO sellers. As part of an agent’s strategic approach, exposing the possible legal and financial pitfalls can help demonstrate your credibility, garner trust, and prove your value in a helpful way.
Exposing the Legal Implications and Risks for FSBO Sellers
When done strategically and after plenty of research, exposing the potential risks to FSBO sellers can help strengthen your approach.
Property Disclosure Laws: In many jurisdictions, sellers are legally required to disclose known defects or issues with the property. Failing to disclose significant problems can result in legal consequences. To strengthen your approach with an FSBO seller, come prepared with important information regarding disclosure laws in your state.
Title and Ownership: A clear and marketable title to the property, meaning there are no liens, judgments, or other encumbrances that could affect the sale is crucial when a homeowner is preparing to sell.
Zoning and easement concerns: Many sellers don’t know or don’t understand the specifics around property lines and easements and how those can affect property value and marketability. You can find this information before having a conversation with the homeowner at the local county assessor’s office.
Marketing Expenses: FSBO sellers often underestimate the skill and expense of marketing their property effectively to sell. This includes professional photography, online listings, signage, and promotional materials done by experts.
Pricing Mistakes and Negotiation Errors: Without in depth market knowledge and negotiation skills, homeowners chance mis-pricing their property or accepting a low-ball offer. Homeowners risk being persuaded into unfavorable terms by a buyer’s agent or buyer who is more experienced with negotiating. This alone can make it worth going with a knowledgeable agent.
Fees: FSBO transactions may still require legal assistance, incurring additional costs. Breaking down the cost involved and the potential unforeseen costs can help sellers understand the hard work agents do on their behalf.
Exposing potential risks and highlighting potential rewards can help FSBO seller see the benefit of working with an agent. Be personable and be the expert. Set the seller up to make the most informed decision.
Demonstrate Your Value as the Right Agent: Flex the benefit of your powerful network
Another risk FSBO sellers take when choosing to sell on their own is missing out on the benefit of a massive network of skilled professionals with market insight and referral potential. Highlight how working with you grants access to a wider pool of potential buyers through your network. Share case studies and testimonials that highlight the benefit of an agent’s network in these categories:
Connections with Niche Markets: Connections are especially important in a niche market. Whether it’s luxury properties or historic homes, demonstrate your expertise with these niche real estate markets. It’s all about “knowing someone.”
Collaborating with Other Agents for a Better Sale
In real estate, teamwork can be a game-changer. Collaborating with other agents, even those from competing firms, can help expedite the sales process and provide added value to your clients. Keep case studies and reviews up-to-date on your website with strong testimonials speaking to your strong partnerships.
Multiple Offers: Use examples of how networking with other agents can lead to multiple offers, driving up demand and potentially resulting in quicker sales at better prices.
Demonstrating your value as the right agent is not merely about showcasing your experience. It’s about revealing the countless opportunities that come with your vast network of professionals and industry connections. FSBO sellers may embark on the journey of selling their own home and be unaware of the vast network they are missing. Emphasize how working with you grants them access to a broader pool of potential buyers and the potential for a better outcome. Your ability to collaborate with other agents, sometimes even from competing firms, is a game-changer, expediting the sales process and adding significant value to your clients.
In Conclusion
Expired listings and FSBO properties are untapped reservoirs of potential business for real estate agents. By understanding the unique mindset of these sellers and offering a compelling value proposition, you can convert these missed opportunities into successful listings. It’s all about positioning yourself as the knowledgeable, empathetic expert they need on their side. And remember, persistence and consistency are your best allies in this endeavor.
Educate the seller, and demonstrate the value you bring.
