As Thoughtful Real Estate Entrepreneurs, we buy properties that nobody else even knows are for sale….often including the Seller themselves! When you tell someone you buy off-market properties, they usually think you mean you buy properties from FSBO’s—For Sale By Owners. But there’s a huge, critical difference in the mentality of a FSBO and a true off-market Seller. In this episode, Jeff compares FSBO’s to off-market seller leads, and explains why off-market leads are so much better.
Hey, thanks for joining me for another episode of Racking Up Rentals. First of all, I want you to know that you can get notes for today’s show at www.thoughtfulre.com/e38. Please do us a big favor and hit your subscribe button in your podcast app. If you haven’t done that already. It really, really does help other fellow Thoughtful Real Estate Entrepreneurs who are out there searching for their people to find us. Alright. onward. So not long ago, I was talking to somebody who was an aspiring real estate investor, he had some experience as I recall, but not a ton. And he was kind of asking me what I do and how I do it. And I was explaining the thoughtful way and well how we buy properties that are off market. And we use a lot of seller financing. And it’s very relational and all that kind of stuff. And so he said, Oh, so you do you buy fizzbuzz for sale by owners? And I said, Yeah, that’s right. And then I stopped. And I thought about it. I said, No, actually, not exactly. And therein lies a fine distinction. It might be a slight distinction to a lot of people. But it’s not really a slight distinction in the reality of the situation. And that’s what we’re going to talk about in today’s episode. Probably the most foundational and fundamental principle that we have as Thoughtful Real Estate Entrepreneurs is the idea that you need to know your audience, you need to understand the person who you’re talking to, as well as you can and get to that point of understanding them, as well as you can as fast as you can. And a big part of that is understanding their mentality. And I want to focus on mentality today because there’s really a big difference in mentality between people who are for sale by owners fizbo. Like maybe they’ve got a sign sitting out front of their house with the for sale by owner thing hanging from it or they put it on Zillow or something along those lines, they put it on Craigslist, maybe there’s a big difference in mentality between those people and off market sellers true off market sellers. And I would say this distinction is especially strong and clear and important in a strong seller’s market like we tend generally to have right now, you know, things vary a little bit from Market to Market. But I think categorically we’ve got pretty much a seller’s market. We’ve got low inventory, we’ve got low financing costs. And so there’s a lot of buyers seeking a very small number of properties. And we’re going to talk about this important distinction today. You know, first you might say, well, isn’t a fizbo, an off market seller? What do you mean, what’s the difference between these? And what I mean is that a fizbo is off market in the sense that they’re not maybe on putting their property on the multiple listing service. It’s not being distributed broadly to real estate agents, but it’s still on the market in the sense that they have said, our houses for sale. We are placing it into the market and we are choosing to represent ourselves. So let’s just take a moment and break down the mentality of fizz Bo’s first for sale by owner sellers. First and foremost, they have decided that they are selling their property or that they want to sell their property. Okay, there. They know that that’s the objective and the outcome that they’re looking for. As such, they see themselves in the role of the seller, their their self identity in this case is I am a seller and that puts them in Like seller mode, you know, I’ve got a product and I am trying to sell it kind of a mode.
At the same time, they’ve also decided very deliberately not to get representation, or help from anybody else, like a real estate agent. And so we have to ask ourselves the question why now, the following couple points are, of course, generalizations, there’s going to be a little bit different for each person. But in my experience, these generalizations are pretty universally true. Why have they decided not to get help from a real estate agent? Number one, they think, Hey, this is not that hard. This is not that complicated. Maybe they’ve actually done it before as well. Or maybe they’re just the kind of person who just feels like it can’t be rocket science. So it’s not that hard. It’s not that complicated. And that leads into point number two, which is, it’s not worth the money. Have you seen how much realtors get paid, they get paid so much to do so little? It’s ridiculous. That’s their mentality. Okay. And point number three, especially in today’s low inventory seller’s market, they’re thinking to themselves, I have a product that people want. It’s like shooting fish in a barrel to find a buyer for my property. I don’t need the help of a realtor because you could handcuff me blindfold me and you know, put some duct tape over my mouth. And this would still be like a walk in the park to sell.
So what these people have who are for sale by owners is they have a high level of confidence in themselves, confidence that they can handle it, confidence that they can do it, that they can market it that they can handle the details of the transaction. But what you’ll often find is that this confidence actually begins to border on arrogance. They’re thinking to themselves, I’ve got this thing everybody wants, this is easy. Look at all those other suckers who are out there paying realtors, I can do this myself and I can get a better outcome. And it starts to border on arrogance. And when when you have a seller whose mentality is like that, they feel like they’re in total control of the conversation. But they’re in total control of the negotiation. And that, in fact, it’s not a negotiation in their mind, because they have all the power, that’s how they’re thinking about it. They’ve got a very firm vision in their mind of here’s how this is going to go people if you want to buy my property, let me tell you exactly how this is going to work. So that’s the mentality of for sale by owner, people who have elected to sell their property, they’ve told the world I’m selling my property by putting a sign out front of their property or putting it on the internet or Zillow, or whatever. That’s their mentality. But now let’s compare and contrast with the off market seller. Now, this would be the kind of person who you meet by usually using our thoughtful approach, direct mail, it might be a personal referral or something along those lines, kind of a networking sort of thing. But this is somebody who has not necessarily decided that they are selling their property, right. And so right off the bat, if you’re not a Thoughtful Real Estate Entrepreneur, those people they look at this and go, why in the heck would you want to be trying to buy a property from somebody who hasn’t decided they want to sell it yet. But put that aside, if that’s what you’re thinking, we’ll we’ll kind of come back to that. So you’re off market seller has not decided that they want to sell necessarily, they are considering that topic and evaluating the possibility of that while they are talking to you. Okay, so that’s, again, very different than the fizbo, who has already decided, here’s what I want to do, here’s how it’s gonna work. But these people, these off market sellers are considering it and evaluating it through via while during the conversation they’re having with you. Now, if they were to say yes, and decided to sell the property, they don’t yet really have a firm vision for how it’s going to work. Because again, they didn’t come into this conversation saying, Yes, I’m going to sell this Yes, I’m going to represent myself. There. They’re formulating their plan and their vision in real time alongside you. They may or may not honestly feel that selling their house is hard and complicated. They may or may not feel that it’s expensive and that realtors are overpaid, and that there’s no reason to spend that money it does. That’s actually not a theme that is necessarily consistent. Some of them might see the value in a realtor. Some of them might feel like it is maybe a little complicated. Others think it’s easy and don’t think realtors are needed. But what matters is that they are open to looking at it from either perspective. Now these people do tend to be confident in themselves they are self confident, however that confidence doesn’t as often border on arrogance. Like it does with the for sale by owner, people who have planted the sign out front and said, I’m selling this house, here’s how it’s gonna go. These people are confident in having this conversation or else they wouldn’t have, you know, they wouldn’t have accepted the opportunity to meet with you and have the conversation. But it doesn’t as often border on arrogance. And so the bottom line with the off market seller is that they perceive that this is this, this dialogue with you is truly a conversation, that it’s not one person in control, that it is a level playing field. And it’s just two people discussing and evaluating something, to see if it would be mutually beneficial. So if you’ve ever heard us talk within the Thoughtful Real Estate Entrepreneur community about marketing in general, you would know that our goal with marketing is not just to create a lead. Our goal with marketing is to create a dynamic, it’s to go and establish a certain type of dynamic in our conversation with the seller. And the dynamic that is created with fizz Bo’s is very different than the dynamic that is created with off market sellers. And the dynamic that is created with off market sellers, is a much better dynamic for us to be able to work with. So let’s just take a moment and talk about why
the dynamic is better, because the off market seller is more malleable, you know, they are a lump of clay. And they’re much more open to you molding that clay through the conversation, they’re open to you being a leader in this conversation, and you making suggestions and you shaping how the process will work because they don’t have a firm setting concrete template in their mind about how it has to go necessarily. So they’re more open to hearing your thoughts. They’re more malleable. They the dynamic is better, like I mentioned, because there is a level playing field in this conversation. In the fizbo conversation, it’s not so much a level playing field in their mind, in their mind, they’ve got a product, everybody wants it, it’s going to be so easy that they don’t even need help doing it. And so they feel they have all the control. But with the true off market sellers, you have a conversation between two people who were the power dynamic is balanced. And both are evaluating whether it would work out both are free to say no thank you and politely walk away. Both are free to say yes, I would like to proceed with this. It’s a level playing field. So in conclusion, the big picture of this is that when you’re out generating leads when you’re out looking for opportunities and sellers to talk to you. It’s easy at first to get excited when you see the for sale by owner sign sitting in front of somebody’s property or you you get a I’ve got Craigslist alerts set up where I get automated emails that come to me when somebody uses a certain term in a in a listing. And fizbo FSBO is one of those terms. And so it’s easy to kind of get excited when you see ooh, fizbo you know, but I would say the truth is the best leads you can possibly get are not the ones who have self declared as fizz bows they are the best leads are the ones who are willing to chat with you but have not yet declared to the world. I am selling my property in the following way. The best leads for you are not the obvious ones that anybody can see with internet access or eyeballs. They’re the invisible leads that you create, through usually your seller, direct mail, Thoughtful Real Estate Entrepreneur approach to reaching out to off market sellers. If you’d be interested in seeing how we do that, you could go to seller direct mail.com. And there we’ve got tools that will help you figure out what list you should be marketing to how to get that list without even paying for it. What you might say in those letters, what those letters should look like, etc. makes it very easy. You don’t have to recreate the wheel. reinvent the wheel, because we’ve already done that part for you. That’s it for today’s episode of Racking Up Rentals. And again, show notes for today’s episode are at www.thoughtfulre.com/e38. Please do us a huge favor. Hit the subscribe button in your podcast app. Also rate and review the show that tells iTunes that people are paying attention and encourages iTunes to share this show with other people who will benefit from it like you are. Did you also know that we have a Facebook group for Thoughtful Real Estate Entrepreneurs to it’s called the Rental Portfolio Wealth Builders and we would love to have you join us there. If you liked this episode, and I hope you did. Please do Take a screenshot of it, post that screenshot to Instagram and tag us. We are at thoughtful real estate on Instagram. I will see you in the next episode and until then this is Jeff from the Thoughtful Real Estate Entrepreneur signing off.