Buoyed by the myriad sell-your-own-home Internet sites that offer sellers the chance to list their properties on the MLS for a nominal fee and save on Realtor commissions, the For Sale by Owner (FSBO) phenomenon is growing in the real estate industry. More and more home sellers think they can go it alone, following the real estate boom of recent years, when many homes sold in record time. All they have to do is list their properties on the Internet, hang their signs and fill out some paperwork when it sells, right? Wrong.
Our experts agree that most individual home sellers do not know enough about CMAs, proper pricing, the closing process and reaching people who would be interested and qualified to buy their homes. According to the National Association of Realtors, more than 70 percent of For Sale By Owner (FSBO) listings fail to sell.
In addition, our sources agree that properties in South Florida are currently staying on the market longer, and this time is usually prolonged when sellers do not hire Realtors. Perhaps this is because, as Kayce Driscoll, a Realtor associate at Jeanne Baker Realty, says, individual home sellers may not offer potential buyers the availability that a Realtor can. Denise Rubin, an agent in the Coldwell Banker Legends Society, emphasizes that the longer a property sits on the market vacant, the more money the owner loses on maintenance, taxes and mortgage.
Even though they might not know it yet, these sellers need you. The challenge is how to convince them of this fact, illustrate your value to them and, ultimately, win their listings. Driscoll suggests using some basic sales techniques, such as “match and mirror.”
“You check out the mannerisms of your prospect and then act the same way,” she advises. “For example, if they talk fast and use their hands to express themselves, then you match the pace of the conversation and also use your hands. Unconsciously, the client will like and trust you.”
Below, Driscoll, Rubin, David Nguah of Majestic Properties and Kristine Flook of Global Investments Realty share some of the most common objections they hear from FSBO sellers and explain how they counter these arguments effectively.
OBJECTION # 1
“I don’t want to pay a commission.”
Kayce Driscoll, Jeanne Baker Realty: Usually, the answers fall into some version of “I don’t want to pay the money.” Then we talk about how much that would be at 6 percent, and I ask how they would expect to sell it themselves. They say that they would place ads (which cost money), place a sign in the yard and possibly use a “For Sale By Owner” MLS service. I ask if they have investigated the cost of this process and, usually, the answer is, “No.” I tell them about those costs and that broker-to-broker sales run over 85 percent in the state of Florida. If they use one of the many do-it-yourself packages, it could run them well into the thousands for fees, etc. And if someone works, it can limit showings. In this market, often times people are in town only a short window and you may have only that one opportunity to show it to them.
Kristine Flook, Global Investments Realty: If you knew you could net the most amount of money possible by selling it with a Realtor, would you consider paying a commission? Also, based on a recent study, people who use Realtors net 16 percent more than FSBOs who sell themselves.
David Nguah, Majestic Properties: What you pay is irrelevant. What is important is what you get and how quickly. Hiring the best Realtor assures you the highest dollar in the shortest amount of time.
Denise Rubin, Coldwell Banker: Selling a home is one of the most important sales in your lifetime. Why wouldn’t you want to pay a commission? Would you have an operation if the doctor didn’t charge you? What matters is the amount of money you leave the closing table with. Recently a home in my community was listed with a FSBO company that charges a nominal fee to put the property in the MLS. Another Realtor sold the property, so they had to pay an additional three percent. This was a community in Aventura, where all the homes are similar. The subject property was four bedrooms, on the water, and it sold for $869,000. At the same time, I listed a neighboring home for 6 percent commission. It was off the water and only three bedrooms, but I sold it for $1,000,000. In this case, there was no expert advice to the homeowner, and they received too little for their choice waterfront home, although they did save on the commission.
“My friend’s house sold in three days.
The agent made thousands of dollars
for three days’ work!”
Kayce Driscoll: The process and the paperwork to sell or buy a house is extensive. Getting a contract is great, but this is just the beginning of a process which requires lots of time and effort, including things such as inspections, appraisals, mortgage work, title issues, encroachment issues, surveys, timing of both parties on moving, closing and a laundry list of details in which the Realtor can offer extremely valuable experience and mediation to get the deal done.
Kristine Flook: All this shows me is that the client has had success using real estate agents in the past. I would ask them if they’ve heard the phrase if it’s not broke, then why fix it? How long did they want to take for the home to sell? Wouldn’t they agree that by selling it in three days the Realtor did a great job? Does that mean because your friend’s house sold in three days that it should have been sold for a lot less? If the three-day sale did not affect the price, why should it affect the commission?
David Nguah: That means that he or she did a great job and was rewarded accordingly.
Denise Rubin: The Realtor should be congratulated or even paid a bonus. In this market, it is an exception to sell a home in three days, and the owner obviously chose the right Realtor. The fact that it sold in three days does not mean that the Realtor did not work hard; perhaps the agent notified his past clients, sphere of influences or network, or the it was the Realtor’s quick expertise in marketing that produced such fast results. I say “Congratulations” to the Realtor.
“I’ve sold homes through agents before,
and I think I can do it myself.”
Kayce Driscoll: There are two reasons to use a Realtor. One is that people are uncomfortable to have the owner guide them though their own house. Secondly, the MLS is used cooperatively by all agents. Over 85 percent of the units sold in the Miami metropolitan area are sold by an agent other than the listing agent. Next, I would get into the statistics: I would tell the client selling a three-bedroom house with a pool in Miami Beach that there are 350 houses in Miami Beach currently for sale, and of that number, 97 have three bedrooms for sale and 39 of those have pools, etc. The process of going through the facts and looking at all the comparable properties usually blows them away and gives them a reality check.
Kristine Flook: Statistics shows that only 2 percent of homes get sold by FSBO and 98 percent get sold by Realtors. Do you want a 98 percent chance of selling your home or 2 percent chance?
David Nguah: If that were the case, agents would be performing surgery. A good agent pre-qualifies buyers before ever letting them into your property, spends the dollars to market your property, is available seven days a week and handles all follow-up on inspections, financing, etc. Selling your property without a top-notch Realtor is penny wise and dollar foolish.
Denise Rubin: Especially in today’s market, it takes a lot of expertise to get a property sold, as listings have piled up more than in the last few years. An owner can try it by themselves, but will most likely end up turning to a Realtor for help, after wasting valuable time. If a property is already vacant, then every month that it sits on the market costs the owner monthly upkeep, taxes, maintenance and mortgage.
OBJECTION # 4
“Will you lower your commission, or
rebate some back to me?”
Kayce Driscoll: No. I am a full-service Realtor working for a full-service company. It is not based on a flat fee; it is a sliding scale which is based on 6 percent of the total price. Typically, the commission is split between more than one agent, as Realtors often work with a partner or an assistant, or there is another selling agent involved. This commission is then broken down further and split with my company. Therefore, as your Realtor, it is not unusual that I make about 1 percent of the price after my expenses.
Kristine Flook: Commission is non-negotiable with agents that sell homes everyday. The commission is only negotiable with desperate agents that are not too sure of the service they are providing to the customer. Now let me ask you, do you want a desperate agent to represent you and negotiate for you or someone aggressive?
David Nguah: You get what you pay for. We spend the dollars and time to market your property. Again, it is not about what you pay, it’s about what you net. The question to ask is not who will charge less, but who can best sell your property.
OBJECTION # 5
“I can get it in the MLS for such a small fee;
why is it so expensive to use an agent?”
Kayce Driscoll: The agent has experience and we offer a fair value for our services. I say things such as “Let me ask you, do you know many homes are for sale in your neighborhood? How many sold over this last year, and what was the average price per square foot? Is there a difference in price for those that were renovated? Also, is there a price difference for older historical houses built in the 1930s or 1940s than ones building the 1950s or 1960s? I know the answer to these questions and then price your house accordingly.” All of my resources are at a cost to me, and my expertise is what you are paying for, just like a lawyer or doctor. I work very hard for my clients and bring them the best possible offers through hard facts and good negotiation learned through more than 20 years of sales.
Kristine Flook: When a Realtor brings a buyer, they are both sizing you up based on price and motivation. And while the third party’s interest is being protected, who is protecting you?
David Nguah: Who is going to pre-qualify buyers, advertise your property, arrange showings seven days a week, prepare the contract and follow up on inspections and financing? The MLS is one small piece of the puzzle. Selling a house for top dollar is an intricate process that is not as easy as it looks. Hire the best Realtor to sell your property, and everyone wins.
Denise Rubin: Once again, you get what you pay for and to get the right exposure, you need the right Realtor. The right Realtor for your property will do everything necessary to get the job done and sell your property for the highest price. They will put it on the MLS with pictures and offer a virtual tour; advertise locally and nationally; provide Internet exposure; create a property brochure; and mail just listed cards to neighbors, his or her network and other Realtors. The right Realtor will leave no stone unturned to give their property maximum exposure.
Whatever objections you face while attempting to enlist a reluctant client, winning his business will require your knowledge, perseverance and confidence. Aside from effectively addressing his objections, ask questions of your own to get to the core of the seller’s feelings. Once you can address his hidden concerns, you’ll be on your way to turning an FSBO to a FSB-U. M.A.