Updated: Jan 29
You may have heard people talking a lot about farming if you are in the real estate business. Right now, because of new technologies, you are not limited to representing sellers or buyers of real estate in your own neighborhood. You can work in all parts of your metropolitan area or even in surrounding areas if you want. GPS and Google Maps can direct you to your selected property right away. Even though you can work in many geographic areas, as a residential real estate associate, focusing your marketing efforts in one area and targeting prospects in that area is more efficient and effective. Targeting one specific geographic area, also known as farming, can make you more productive in developing your real estate business. How can you farm a geographic area as a new real estate associate? Here are some tips to help.
First, choose your farm area.
Generally, real estate agents choose to farm an area where they live or near where they live and focus on consistent marketing in this area as a long-term plan. However, Realtors Property Resource (RPR), the most powerful data platform available to members of the National Association of Realtors, has a detailed scientific method for choosing the best geographic area to farm. RPR suggests that realtors consider these five points in choosing a farming area:
1. Choose an area close by with convenient access.
2. Consider areas with an annual turnover rate above 5%.
The turnover rate is the number of homes that have been sold in the previous 12 months divided by the total number of homes in the farming area. For example, if the number of houses sold in past 12 month is 213 and the total number of houses in this area is 3866:
The turnover rate is (213/3866) x 100 = 5.5%
3. Calculate the inventory absorption rate and how many days it takes to sell homes in the neighborhood.
For example, in previous 12 months, 213 homes were sold and there are 26 homes currently listed for sale. How many days did it take to sell the previous 213 homes?
365 days (12months)/213 = 1.71 days
This means that every 2 days a home was sold in this farming area.
The absorption rate = Current active listing number multiplied times the average number of days for previous home sales, calculated as 26 x 1.71 = 45 days (1.5 months). This means that the current 26 listing will be sold at the current pace of market about one and a half months.
4. Determine the size of the farming area that matches with your marketing budget.
5. Look for an area that has multitude of agents currently active.
Second, flyers, brochure, letters marketing.
After you define your faming area, the next step is to choose what types of marketing methods you will use to reach the area. The traditional marketing methods that many realtors use are flyers, brochures, and letters. They choose a farm area, then consistently send out flyers, brochures, and letters to the homeowners in the area. Flyers are a very efficient and traditional marketing tool. By some realtor’s experience, after three or four months of consistent marketing in one area with flyers, you will receive the rewards of the marketing. Similarly, brochures and letters are an inexpensive and effective way of marketing your farm area. The purpose is to let people to know that you are an expert in this area and are available to help them buy or sell homes in the area. RPR has a systematic platform that you can use to send out the flyers, brochures, and letters. You can check out the RPR website to learn the platform and become an expert at marketing with flyers, brochures, and letters. If you want to save the cost of hiring an outside company, right now new technologies allow you create your own pictures, flyers, brochures, and letters to market with your logo and brand. You can print your own marketing materials and mail them out in the farming area.
Third, internet expertise and marketing.
The traditional flyers, brochures, and letters are effective marketing methods, but they are much slower. Right now, new technologies can connect you with anyone anywhere within seconds. Social media platforms, such as Facebook, Twitter, LinkedIn, Google+, Instagram, Pinterest, etc. can spread your marketing information anywhere in seconds. However, if you are marketing on these platforms, it may cover too wide an area and may not get effective results in your target area. These social media companies have specific marketing departments to help you target your prospective customers, but targeted marketing can come at an increased cost. Besides these social media platforms, there are some real estate internet companies which will market specifically for you. These companies are Zillow, Trulia, Realtor.com, LoopNet.com, MLS.com, Costars, etc. These companies are specific to real estate and they know how to market to real estate customers; however, the cost may be much higher than marketing through flyers, brochures, and letters. Some realtors have great experience working with these companies to market their customers effectively and efficiently. In addition, smartphone platforms, such as Facetime, Google chat, Zoom meeting, Skype etc. are a great way to connect with your customers and keep in touch with your friends and family based connections, also knowns as your sphere. Sphere marketing may a good way to start, but it is extremely limited. A systematic program of sending emails or text messages with helpful market information has been used by many realtors.
Fourth, Become the celebrity of that area.
In addition to traditional marketing and internet expertise marketing, there are other ways to increase your profile and to become well known in your farming area. Right now, people use Neighbors.com to connect with neighbors and it is a great way to know your neighbors and connect in your farming area. Dentists, family doctors, grocery stores, banks, insurance companies, etc. are great referral sources. Some realtors choose to engage in joint marketing efforts with other companies. They become well known in these companies and refer business to the companies and receive referral business from the companies. In addition, you can connect with some small or big companies and help them to locate homes for their employees or expand their business, which is a great way to establish your business as well. Another way to raise your profile is to become involved in local community service organizations or sponsor community events or charitable fundraising.
As a new real estate agent, you may be very excited to be starting your career. However, to establish your real estate career and business you need to work hard and work smart. By learning from the experience of others and thinking outside of the box, you can help meet the needs and demands in your community as you grow your business. These farming and marketing tips may help you start your career and establish you in the real estate business. Always remember that your mission is to use your expertise, skills, and knowledge to help others and improve their quality of life.