Even with housing marketing as it is, converting for sale by owners (FSBOs or also known as “fizzbos”) into referral sources is still an effective marketing strategy. Don’t make the mistake of thinking that you would just jump at the opportunity to help this fizzbo get a home equity loan. The real goal is to develop a relationship with the homeowner such that you pre-qualify all potential leads who are interested in their home for sale. Using a phone script will make this easier.
Walk around your area and look for all the homes sold “For Sale by Owner.” And if your area is like mine, there should be plenty of them. When you find one, write down the address, phone number, and sale price if available (if they have a flyer, even better).
Once you’ve collected several addresses and phone numbers, it’s time to make the phone calls. Because FSBOs are so targeted by real estate agents, the homeowner will likely be very resistant to your phone calls. You have to break through this resistance as quickly as possible. And the best way to do this is to let them know early on that you’re not trying to get their money. Once they know that none of their money is at risk, they will be more open to talking to you. This is the text to use:
FSBO: Hello?
you are welcome Are you selling the beautiful home at 15 Oak Street?
FSBO: Yes, I am. Who am I talking to?
You: My name is Ken Johnson from ABC Mortgage and I was wondering what is the sale price on the home? Oh, and what’s your name, by the way?
At this point, fizzbo will be a little surprised. His resistance is still high because he knows you’re from a mortgage company, but you haven’t said anything yet to get him to hook you up.
FSBO: Well, my name is Bob and I want to get $200,000 for it. Now, why are you calling me?
You: Bob, I can hear the emotion in your voice, and I can probably guess why it’s there. Since you’ve put up a for sale sign in your yard, you’ll likely be bombarded with calls from real estate agents who want you to list your home with them. I can promise you I’m not calling about it.
FSBO: Really? So why are you calling?
You: I want to establish a win-win partnership with you. One is that you sell your house faster and with much less stress, and you don’t have to pay me a single penny.
FSBO: Well, I could use any help selling this house faster. But what’s the point of that?
You: Usually, during the time a house is listed for sale, it gets the attention of dozens of potential buyers. Almost all odds are you will not buy this particular home. But they still want to buy a home and may need financing to make it happen. It is these potential buyers that I would like to get business from.
FSBO: OK, I see. But how will you help me then?
You: I’m glad you asked. Did you know that when it comes to selling a “for sale by owner” home, most transactions are never completed? Did you know that?
FSBO: No, I wasn’t. why is that?
You: The number one reason these transactions don’t make it to the closing table is because the financing was not properly established by the buyers. So they’ll go look at the homes they can’t afford (because they weren’t pre-qualified by a mortgage professional) and then go bid. This results in a lot of wasted time (and a lot of stress) for the homeowner.
FSBO: So will you help me by pre-qualifying buyers who are interested in my home?
You: Exactly! By allowing me to pre-qualify them (at absolutely no cost to you), you will only have to deal with those potential clients who are financially able to buy your home. Besides weeding out all those buyers who can’t afford to buy your house anyway, the pre-qualification process eliminates those potential customers who are just “bystanders.” You know, the people who are always walking around looking for homes for sale, but never intend to buy them.
FSBO: Awesome. So you’re going to do that pre-qualification for me, and I don’t have to pay you anything?
You: Nope. Not a single cent. I will make my commission from buyers side. Does this win-win situation sound like a good idea to you?
FSBO: Yes it is. What’s next?
Once the FSBO is on board, everything else will be cake. Every FSBO relationship you create should be able to provide you with many potential buyers. Having a few FSBO partnerships will generate a steady stream of mortgage purchase leads. And because the time required to maintain them is minimal (it’s basically just a matter of pre-qualifying prospects once you’ve established your partnership), you can have a number of continuing partnerships going on simultaneously. Just remember that if you happen to not want any of their money, they will be more than willing to work with you.