Even with home marketing as bad as it is, turning homeowners (FSBOs or also known as “fizzbos”) into referral sources is still an effective marketing strategy. Don’t make the mistake of thinking you’re just looking for a chance to help that fizzbo get a purchase loan on his new home. The real goal is to develop a relationship with the homeowner so that you pre-qualify all potential buyers interested in the home that is for sale. Using a phone script will make this even easier.
Drive around your area and look for all the houses that are being sold “For Sale By Owner”. And if your area is anything like mine, there should be a lot 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 the primary target for real estate agents, the homeowner will likely 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 up front that you’re not trying to get their money. Once they know that none of your money is at risk, they will be much more open to talking to you. Here is the script to use:
FBO: Hello?
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 selling price of the house is. Oh, and by the way, what’s your name?
At this point, the fizzbo will pull back a bit. His stamina is still high because he knows you’re from a mortgage company, but you haven’t said anything yet for 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 can probably guess why it’s there. Since he put that for-sale sign on his front yard, chances are you’ll be bombarded with calls from realtors wanting you to list his house. I can promise you I won’t call about it.
FBO: 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 much less stress, and you don’t have to pay me a dime.
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 for sale, it receives interest from dozens of potential buyers. Almost all prospects will not buy that particular house. But they still want to buy a house and will probably need financing to make it happen. They are those potential buyers that I want to get business from.
FSBO: Okay, 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 “pre-sale by owner” home, most transactions are never completed? Were you aware of that?
FSBO: No, I wasn’t. Why is that?
You: The number one reason those deals never make it to the closing table is because the buyers didn’t set up the financing correctly. So they’ll look for houses they just can’t afford (because they haven’t been pre-qualified by a mortgage professional) and then they’ll make offers. This results in a great deal of wasted time (and a lot of stress) for the owner.
FSBO: So you help me by pre-qualifying interested buyers for my house?
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 purchase your home. In addition to weeding out all buyers who can’t buy your home anyway, the prequalification process weeds out prospects who are simply “seeing.” You know, the ones who are always driving around looking for houses for sale, but never intend to buy them.
FSBO: Wow. So you’ll do that prequalification for me, and I don’t have to pay you anything?
You: No. Not a single hundred. 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 provide you with several potential buyers. Having a few FSBO associations will generate a steady stream of mortgage buying opportunities. And because the time to maintain them is minimal (it’s basically just pre-qualifying prospects once you’ve created your partnership), you can have multiple partnerships going on simultaneously. Just remember to give the impression that you don’t want any of their money, and they’ll be much more willing to work with you.