Even with homeowner marketing as bad as it is, converting for sale by landlords (FSBO or also known as “fizzbos”) into referral sources is still an effective marketing strategy. Don’t make the mistake of thinking that you’re just looking for an opportunity to help that fizzbo get a loan for his new home. The real goal is to develop a relationship with the homeowner so that you pre-qualify all potential buyers interested in your home for sale. Using a phone script will make this even easier.
Drive through your area and find all the homes that are selling “For Sale by Owner.” And if your area is like mine, there should be a lot. When you find one, write down the address, phone number, and sale price if available (if they have a steering wheel, even better).
Once you have collected several addresses and phone numbers, it is time to make the phone calls. Because real estate agents largely target FSBOs, the landlord is likely to be very resistant to your phone call. You have to break that resistance as soon as possible. And the best way to do that is to tell them ahead of time that you are not trying to get their money. Once they know that none of their money is at risk, they will be much more open to talking to you. Here is the script to use:
You hello Are you selling the beautiful house 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 the sale price of the house is. Oh, and what is your name by the way?
At this point, the fizzbo will be a bit taken aback. His stamina is still high because he knows you’re from a mortgage company, but you haven’t said anything yet to get him to hang up on you.
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 agitation in your voice, and I probably guess why it’s there. Since you posted that for sale sign in your yard, you will most likely be bombarded with calls from real estate agents wanting you to list your home. I can promise you that I won’t call you for that.
FSBO: Really? So why are you calling?
You: I want to create a win-win partnership with you. One where you sell your house faster and with a lot less stress, and you don’t have to pay me a penny.
FSBO: Well, I could use any help to sell this house faster. But what’s in it for you?
You: Typically, during the time a home is listed, it receives interest from dozens of potential buyers. Almost all prospects will not buy that particular home. But they still want to buy a home and probably need financing to make it happen. It’s those buyer prospects that I want to do business with.
FSBO: Ok, I see. But how will you help me then?
You: I’m glad you asked that. Did you know that when it comes to selling a home “advance sale by owner”, most transactions are never completed? Were you aware of that?
FSBO: No, it wasn’t. Why is that?
You: The number one reason those transactions never make it to the closing table is because buyers didn’t properly set up financing. They will then go looking for houses that they just can’t afford (because they haven’t been prequalified by a mortgage professional) and then they’ll go to bid. This results in a huge waste of time (and a lot of stress) for the owner.
FSBO: So will you help me by prequalifying interested buyers in my home?
You: Exactly! By allowing me to pre-qualify them (at no cost to you), you will only have to deal with those prospects who are financially able to buy your home. In addition to eliminating all buyers who cannot buy your home anyway, the prequalification process eliminates prospects who are simply “bystanders.” You know, the ones who are always looking for houses for sale, but never intend to buy them.
FSBO: Wow. So will you do that prequalification for me and I don’t have to pay you anything?
You: Nope. Not a single penny. I’ll make my commission on the buyers side. Does this win-win situation sound like a good idea to you?
FSBO: Yes, it does. What is the next step?
Once you have the FSBO on board, everything else will be a piece of cake. Each FSBO relationship you establish should be able to offer you multiple buyer prospects. Having a few partnerships with FSBO will generate a steady stream of mortgage buying opportunities. And because the time to maintain them is minimal (it’s basically about pre-qualifying the prospects once you’ve created your association), you can have multiple partnerships ongoing simultaneously. Just remember to give the impression that you don’t want any of their money, and they will be much more willing to work with you.