Approaching a FSBO on behalf of a buyer-client requires a new set of sales skills and, in most states, a written buyer agreement with compensation detailed. Some things to consider are:
1—Prepare your
buyer-client
At your buyer counseling session, remind the client(s) that “I represent your interests in every transaction. When a property is available as a ‘For Sale by Owner,’ that is when you need me most. After all, there is a lot of work that must be done after you view the property.” Then discuss FSBO scenarios in detail.
Since it’s not a current issue and only a future possibility, you can have an objective conversation regarding the need for representation when an offered property is not represented by a professional.
Discuss the role you will play as their buyer’s agent if and when they become interested in a FSBO property.
2—Contact the owner
Remember that the FSBO-owner is probably getting many other calls from agents trying to get the listing. Stress that you are not calling to get the listing. Inform them that you are a buyer’s representative and that you have an interested buyer-client. Ask for more information on the property and request an opportunity to view it, with your client, at a mutually convenient time.
3—Don’t make your compensation an issue
When you have a written exclusive buyer agreement with compensation fully outlined, it is not necessary to ask the owner for any compensation at all. Sometimes the owner is willing to compensate you. In their minds, they have saved “half” of the commission. But if they aren’t willing to pay anything, you don’t need to make an issue of your fee.
4—What if you are excluded from the viewing?
If “the money” has been taken out of the equation, the owner is usually more than willing to let you accompany your client(s).
Then again, sometimes the owner won’t permit it. If you discussed this potential scenario at your initial counseling session, it will now be much easier to manage the situation and make it feel less like an “issue.” Also, when you have a written exclusive agreement already in place, this scenario feels much less threatening to you. Your value in the transaction begins when your clients find a property that they’re interested in purchasing, including a FSBO. Advice and guidance with regard to the process is paramount in attaining their objective.
5—Review disclosure laws.
If your state law requires some type of signed disclosure notice, mention this to the owner in advance of the actual showing.
Explain that you must receive written validation that you do not represent their interests and only represent those of your buyerclient. Many states require written confirmation of these
“Miranda Rights” at first contact. Your state law also offers direction to you if the party refuses to sign the disclosure statement.
6—Do your homework.
Before actually viewing the home, be sure to:
• Secure all public information on the property.
Accept all information provided by the owner, including any state-required Property Condition Disclosures—but don’t believe a word of it. Partner with your buyer-client to obtain all pertinent and available information directly from the public records. Rely only on that information and whatever is derived from the inspection process.
• Prepare a comparable market analysis for your client. Generate a basic CMA using the public information you obtained, prior to visiting the property. The CMA should identify the high-medium-low range of value based on historical information. Layer in current supply/demand market conditions so that your buyer-client has a full perspective. Once the property is viewed, adjust the analysis for actual condition.
7—Do not provide advice and guidance to the owner.
Sometimes an owner is totally overwhelmed by the selling process and solicits your opinions, advice and guidance. This can be a real “catch-22,” since advising the seller can be construed as working to the disadvantage of your buyer-client. In many states, license laws and statutes prohibit providing “client-level” services to someone other than the client. Tread lightly by reminding the owner that they should direct their concerns to others who can advise them.
8—Discuss strategies
The ramifications of all options and alternatives need to be fully discussed so that your buyer-client is prepared to make some decisions. Negotiations with owners are a unique experience—and entirely unpredictable. You’ll need a full spectrum of skills and extreme flexibility in dealing with a wide range of personalities. In some situations, you’ll be negotiating with the owner’s attorney.
9—Keep the negotiations simple
If the owner is not involved in paying your fee, it might be easier to start by telling them that your buyer-client is offering them a certain price for their property. But also explain that you will be structuring the written offer in such a way that your client can finance your professional service fee.
10—Facilitate the inspection process.
Once the contract is fully executed, inspections must be scheduled. Be prepared to facilitate the request for repairs on behalf of your buyer-client, if any are needed. Often times, this takes the shape of another mini-negotiation.
Your client needs to understand the available options and alternatives in order to make educated decisions.
If things work out, follow up and follow through as you would with any other transaction. The success of a FSBO transaction hinges on the “quality” of the owner(s) and their ability to represent themselves throughout the process.