Even with the housing marketing as crappy 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 are only going for the opportunity to help that fizzbo get a purchase loan for his new home. The real goal is to develop a relationship with the homeowner so that you prequalify all of the potential buyer prospects interested in their home that’s for sale. Using a phone script will make this even easier.
Drive around your area and search for all the homes being 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 sales price if it’s available (if they have a flyer, even better).
Once you have collected several addresses and phone numbers, it’s time to make the phone calls. Because FSBOs are heavily targeted by real estate agents, the homeowner will probably be very resistant to your phone call. You have to break through that resistance as soon as possible. And the best way to do this is to tell them early that you are not trying to get their money. Once they know that none of their money is at risk, they’ll be much more open to talking to you. Here’s the script to use:
You: Hi. Are you selling the beautiful home on 15 Oak Street?
FSBO: Yes I am. Who am I speaking to?
You: My name is Ken Johnson from ABC Mortgage and I was wondering what your sales price is on the home? Oh, and what’s your name by the way?
At this point, the fizzbo will be a little taken aback. His resistance is still high because he knows you are from a mortgage company, but you haven’t said anything yet to make him hang up on you.
FSBO: Well, my name is Bob and I’m wanting 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 its there. Since you placed that for sale sign in your yard, you are most likely getting bombarded with calls from real estate agents wanting you to list your home with them. I can promise you that I’m not calling about that.
FSBO: Really? Then why are you calling?
You: I want to create a win-win partnership with you. One in that you sell your home quicker 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 in it for you?
You: Typically, during the time a house is listed for sale, it gets interest from dozens of potential buyers. Almost all of the prospects will not buy that particular home. But they still want to buy a home and probably need financing to make it happen. It is those buyer prospects that I want to get business from.
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 “fore sale by owner”, most of the transactions never get completed? Were you aware of that?
FSBO: No, I wasn’t. Why is that?
You: The number one reason that those transactions never get to the closing table is because the financing was not properly established by the buyers. So they will go look at homes that they just can’t afford (because they haven’t been prequalified by a mortgage professional) and then go making offers. This results in a lot of wasted time (and plenty of stress) for the homeowner.
FSBO: So you’ll help me by prequalifying the buyers interested in my home?
You: Exactly! By allowing me to prequalify them (at absolutely no cost to you), you will only have to deal with those prospects who are financially able to purchase your home. Besides weeding out all of those buyers who can’t buy your home anyway, the process of prequalifying eliminates those prospects who are just “lookers.” You know, the ones who are always driving around looking at houses for sale, but never intend to buy them.
FSBO: Wow. So you’ll do that prequalifying for me, and I don’t have to pay you anything?
You: Nope. Not a single cent. I will make my commission from the buyers side. Does this win-win situation sound like a good idea to you?
FSBO: Yes it does. What’s the next step?
Once you have the FSBO onboard, everything else will be cake. Each FSBO relationship that you establish should be able to provide you with several buyer prospects. Having a few FSBO partnerships will generate a steady stream of purchase mortgage leads. And because the time to maintain them is minimal (its basically just prequalifying prospects once you have your partnership created), you can have a number of ongoing partnerships going on simultaneously. Just remember to come across as not wanting to get any of their money, and they will be much more willing to work with you.