Fearing a discouraging word here, but FSBO’s suck drain water.
They are often the ones who harbor the most perceived options (in their heads, if not anywhere else).
First, they think they have the marketing and negotiating skills of an agent. Well, agents themselves are notoriously terrible at marketing. Just ask the folks with expired listings littered all over the MLS. Or how about their inability to negotiate much more than a carpet replacement…much less framing a counter offer.
So, we’ve got an amateur seller (FSBO’r) who’s attempting to be his own Realtor, because he thinks he’s competent enough to put the agent out of business; too cheap to pay someone to do the leg work; or just too greedy to pay a commission. And if that’s not all, he thinks he’s got options including renting, or lease/optioning, or even seller financing the house.
Never mind he’s got zero experience with any of these alternatives. And never mind it takes the average investor three, or four, years from the start, if he ever does, to have the courage, if not the understanding, to successfully do any of these ‘exit strategies’ in the first place. But the seller thinks it’s like falling off a turnip truck, it’s so easy.
So, FSBO’s think they have options, if they can’t get their price. So much for the negotiations.
That discouraging feedback just applies to 90% of the FSBO’s, but not 100% of them. And that’s where the hope comes in. 10% of the FSBO’s are ready to deal. 3% of those FSBO’s think they’re out of options. The issue is then to filter out the "option-toting FSBO’s in the first place, so we don’t chip our teeth biting on unmotivated prospects.
As an aside, if we consider that sellers, who list their property, are often more motivated and “optionless” than FSBO’s are, then the issue is getting past an agent who has the professional obligation to get the best price possible.
Actually, that’s NOT the issue in many situations. Sometimes, the issue is just getting the house sold …the price be damned.
And of course these often become the agent’s pocket listings. These will be presented to the agent’s investor buddies. But where else might these agents advertise (so they can get the full commission)? The answer is, of course, craigslist.
Meantime, if we want to find the deals that don’t require uber negotiations through agents, or require annual purchases of entire cases of Girl Scout Cookies from an agent’s daughter, to get on the inside track for pocket listings, then we have to find these deals ourselves. This means spending the money that any producing agent would spend to find pocket listings.
In this respect, we are no different than agents. It’s about spending money marketing for deals. The difference is, we’re looking for deals, not for listings. Simple as that. Meantime, the short cut to success here is consistent marketing, regardless of what we do. Such as direct mail, flyers, bandit signs, online ads, online lead capture, business cards (yes), and whatever.
Newbies often think that marketing is done only until they find a deal, and then suspend the marketing until they need another deal. Wrong! It’s not a ‘one off’ marketing campaign. It’s an ‘ad nauseum’ marketing effort. This costs m.o.n.e.y.
Newbies otherwise give it a one-time shot, and then quit without getting a deal first. Why? Because they mistakenly thought that marketing was a temporary effort that required little work, little effort, was a “work-in-your-underpants-in-your-sister-in-law’s-basement,” enterprise of easy success. Or worse, they didn’t have enough money to market in the first place, and then spent all they had, with no results.
Of course, too, this is a major “guru” sales pitch to newbies about “wholesaling with no money.” That is an elusive, unicorn-chasing effort, but I digress.
Well, the faster we embrace the real world costs of marketing for leads and deals, the more success we’ll have at actually finding and negotiating deals from FSBO’s. And the more we embrace the fact that working with agents is a relationship-based effort, coupled with a clear idea of what we will buy (and a performance history), the more inside track we’ll have to pocket listings.
Either way, it’s pretty much finding that 3% of sellers who are ready, willing and able to give us what we want. And the better we are at finding those prospects, before anyone knows they exist, the higher our conversion rates will be.
Does a 30% conversion rate seem impossible? Not if we qualify the prospects before we pitch them.
Finally, Barney Zick is the guy that first taught us to qualify a seller before ever making an offer. He said that it takes about a 1/2 hour to overcome the seller’s lies about why he’s really selling. Now, this is less necessary, if we’re just blowing in, blowing off, and blowing out with a cash offer, in many cases.
However, if we’re depending on any creative financing solutions, we need to spend time with the seller to understand his real motivations, and then tailor and negotiate an offer that we can close on.
That’s probably too much for one post, but maybe it’s an encouragement to somebody.