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   ARTICLE   |   From Scotsman Guide Residential Edition   |   November 2008

FSBOs Can Add Fizz to Your Biz

Tapping the for-sale-by-owner market could lead to more referrals

r_2008-11_Greene_spotIn a tight market, even top producers and old pros are searching for new ways to find consumers who need financing. That’s why working with for-sale-by-owner (FSBO) sellers can be a smart addition to a mortgage broker's marketing plan.

These sellers are selling their property without a real estate agent’s representation. Why would homeowners assume the burden of selling real estate without a professional’s help? In many cases, it's because they do the math: In a scenario where homeowners owe more on their loan than the price they could realize in a sale, they may take the FSBO route to save money that would normally go to a real estate agent.

Although the concept of connecting with FSBO sellers isn’t new, many real estate agents view this market only as potential listings. Their typical approach is to advise sellers to sign a listing contract. For mortgage brokers who understand the bigger picture, however, solid FSBO relationships are worth building and can be a lucrative business resource. A single FSBO relationship can translate into a great deal of business from multiple sources and can provide long-term returns via continued relationships.

Offering your services

As you seek FSBOs, you first should offer your services as a neutral third party who can help contact and prequalify buyers. As obvious and valuable as this service may be, it might require a patient, sophisticated approach to convince a seller of the significant benefits that come with working with a mortgage broker during the process.

These sellers likely are getting many calls from real estate agents, and distrustful FSBOs may decline your preliminary offers of help. Use your best people skills to finesse a meeting, and explain face to face exactly what you can do and why your services are beneficial.

Here are some examples of what you can do for FSBO sellers:

  • Prequalification services: You can contact potential buyers and establish that they can qualify for adequate financing to purchase the home and that they have the funds for a downpayment and closing costs.
  • Financial assistance: You place the advertisements, field the responses, filter out the real estate agents and brokers, and have access to all the leads.
  • Physical presence at open-house events: A third-party presence will add security and deflect the potential discomfort sellers may have about dealing with buyers alone.
  • Third-party referrals: You can provide literature or referrals to home-stagers if sellers must improve the home’s presentation. You also can offer names of experienced real estate agents if the sellers decide to list their home and direct them to ancillary services if they locate a qualified buyer and sell the house.
  • Share lists of necessary forms: Advise sellers where these can be purchased. Explain to the sellers that you can’t provide forms or help complete them because you may be held liable if there is a problem.
  • Secure financing for their next house: You can provide sellers with an estimate of proceeds based on the projected sale price of their current home and collect documentation to prequalify them for their next loan.

It’s clear that mortgage brokers can provide valuable services to a FSBO seller. Once a seller understands the possibilities, forming these relationships is not actually difficult. It makes too much sense. If you persevere with a friendly, interested demeanor, your persistence may convince them to rely on your knowledge and assistance.

As you gain their trust, your FSBO clients likely will ask about current real estate market conditions and the sales process. They may rely on you to:

  • Share ideas that will enhance the property’s presentation;
  • Advertise the home (if you offer) and attend open houses; 
  • Provide names of industry affiliates who will smooth and speed the transaction once a purchase agreement has been signed; 
  • Help them find lists of required forms and booklets; and 
  • Help them get a loan on their next property.

Your generosity likely will translate into gratitude on their part, and they in turn will refer friends and family who need financing.

Enhancing agent relationships

As you maintain contact with each seller, you can counsel your agent-partners about the homeowner’s attitude and the status of the sale. You also can share the contact information of prequalified buyers who decide not to purchase the FSBO seller's home but who are still in the market.

When the time is right, you can offer your clients information about the benefits of working with a competent real estate agent and provide names and phone numbers.

Another method is to seek a real estate agent who wants to partner directly in your campaign and use a tag-team approach with FSBO sellers. The agent can answer questions about the sales process, provide a comparative market analysis, market information and staging tips, and you can provide financing information and prequalifications.

Working with FSBO sellers is an excellent way to generate loans without relying totally on your agent relationships. It also lets you supply your agent-partners with business. There is no better way to cement real estate agent relationships than to provide solid buyer and seller leads.

Finding sellers

You can find FSBO sellers by scanning classified ads and local real estate magazines, looking for yard signs, and visiting online sale sites. In addition, real estate franchises that provide minimum seller services are excellent resources. If you want to locate companies that deliver leads to you, search “FSBO leads” on the Internet.

Lower property values, high inventory levels in the current market and typically slower sales in winter will probably create a scenario where more sellers are forced to walk the FSBO path. If you’re not already working this niche, it’s time to consider the opportunities FSBO relationships provide.


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