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When change happens, the key to success is to find the most effective strategy possible that will generate results and execute on it. The time-tested strategy of geographical farming worked in the past, is working now, and will continue to work in the future.
In this article, I’ll share the step-by-step blueprint for success that will develop a consistent flow of listing opportunities for your business.
Step 1: Identifying the right area
Success or failure through geographical farming is determined early on by choosing the best area to farm. The first question you should ask is whether there is a dominant agent in the neighborhood. I determine this by totaling the number of listings closed in the past 12 months and the current active listings.
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I prefer to start a new farm in a neighborhood where there isn’t any one agent who has active listings or sold listings from the previous 12 months that exceed 10 percent of the total listing opportunities for the neighborhood. If you find a neighborhood like this, you have identified one that is ripe for your marketing to make you the dominant agent for that area over the next 12 months.
If there is someone who has between 10 percent and 20 percent of the sold and currently active listings, then the neighborhood still has potential for you to farm, but make sure you know where your breakeven number is for the investment you will be making.
Step 2: Financial evaluation
Finding the perfect farm area involves not just finding a neighborhood you love, but also identifying one that provides an opportunity for you to add money to your bottom line. Consistency is key to becoming the dominant agent for your area, so we want to start with a 12-month commitment to marketing to the neighborhood.
I like to use a budgeted amount of $2 per month per home or $24 per home for the year. I will go into what these expenses will be shortly, but for now, let’s see where our breakeven point will be.
For this example, let’s assume we have 400 homes in the neighborhood. The $24 per home, per year budget multiplied by 400 homes means we will have an estimated expenditure for the year of $9,600.
If the average sales price in the neighborhood is $400,000 and your listing side commission is 3 percent, then you could anticipate an average listing side gross commission rate of $12,000. If you have an 80 percent split with your brokerage, then your net proceeds after the split would be $9,600. Meaning, for this example, you would need to list and sell one home in the neighborhood during the year to break even.
I also like to evaluate the opportunity in the neighborhood. If the average homeowner stays in a home for 11 years, then that means the neighborhood should have roughly 9 percent of the homes in the neighborhood selling each year. Based on 400 homes in the neighborhood, this means we can anticipate roughly 36 homes in an average year being listed and sold.
If you execute on the marketing in the following section, you should be able to list over 10 percent of the available listings in a neighborhood over the next 12 months. That means the estimated minimum results you should expect for this farm would be to list 4 homes in the coming year.
If we are being conservative and say you only sell three of the four homes you list, then based on our average net commission from above, this means your $9,600 budgeted expense for the year would generate $28,800 ($9,600 average net commission times three homes sold) or a net income amount of $19,200.
With the breakeven point of one sale, no dominant agent in the neighborhood, and a conservative expectation of listing 10 percent of the available listings, generating a return of $19,200, this appears to be a farm area with a lot of upside potential.
Step 3: Consistent direct mail
The marketing plan for the neighborhood will determine whether the farming efforts are successful or not. Remember that we budgeted for $2 per home per month. The consistency of monthly, at a minimum, mailers to the neighborhood is foundational to your success.
The monthly mailers I suggest are a mix of postcards or direct mail letters. I like a quarterly sales report or card that goes out four times a year. The January one will be a year in review; the April, July and October ones will be reports for the quarterly sales activity.
These cards should be clean and easy to understand with a section for homes currently for sale, under contract or that sold during the time this card is reporting on. It should include the address, number of bedrooms and bathrooms, square footage of the home, list/sales price, and date sold if closed.
These cards should also include a summary of the activity levels and any market details that encourage potential sellers to call you for additional details. Every mailer we send should have a strong call to action for additional details or a free, no-obligation home valuation analysis of their home.
The additional eight months of monthly mailers will be a mix of different marketing pieces. The following are examples of the types of mailers you can choose from, or you can supplement with some of your own ideas.
I recommend a review/recommendation piece twice a year. These should share a quote from your client about how you helped them sell their home and the service they received. The effectiveness of these pieces is increased if you can include a picture of your clients and even more effective if the home you sold for them is in the neighborhood you are farming.
Other mail alternatives for the additional months should be a mix of local service provider cards, community calendars, just listed cards, just sold cards and even an “About Me” card so the owners get to know you.
Step 4: Next-level ideas for the farm area
Mail is the foundation, but additional touch points are what turn good farms into great farms. The $2 per month per house I mentioned during the budgeting portion will not be completely absorbed each month via mail costs. These additional funds will be spent on quarterly activities or large events every six months to increase your recognition in the neighborhood.
The first of these additional activities should be an evergreen video about the community. This video should include the history of the community, the number of homes, the size range of homes, amenities and a call to action to reach out to you for additional details. Not only is this a great lead attracter, but it also shows your commitment to and expertise on the neighborhood to the owners in the farm area.
Other options for special events can include a food truck night you sponsor, a family photography or pet photography day in the neighborhood or even a fall festival in the community park. The key is to serve the neighbors and show your commitment as the neighborhood agent of choice.
In addition to the special events, your presence in the neighborhood is also a key to success. Glennda Baker, out of Atlanta, Georgia, said she began her career farming a luxury neighborhood while living in an apartment. Not only did she know the neighborhood inside and out, but she would drive over to the neighborhood she was farming in the afternoons to walk around it, pushing her baby in a stroller so that she could be visible and meet the owners.
Why not walk your dog or take an afternoon walk in your targeted area? Your presence will make a difference.
Step 5: Leverage your listings
If you follow these steps, you will generate listings. Once you get that first listing, leverage it to audition for your next listing. Spend extra on professional photography and videography of the home that you can share with the neighbors.
Send just-listed and just-sold cards, but with a twist. Instead of typical postcards, tell the story of listing the home and the marketing you did, and provide bullet points showing numbers and results.
Door-knock or call neighbors to let them know you are hosting an open house. Put up clean, professional signs with take-one boxes and QR codes for easy access to the marketing videos you produced of the home.
Always look for ways to stand out. Mary Maloney, out of San Diego, California, utilizes the take-one box in a unique way once a listing she has goes into escrow. She asks the sellers for a review of their experience and has professional photos taken of the family providing her with the review.
Once the home is in escrow, she creates a two-sided flyer that states the home is in escrow with the owner’s photo and review. The second side of the flyer provides other properties they have listed and a strong call to action to call Maloney if they are considering buying or selling.
By marketing the listings you take at the highest level possible, you will be rewarded with additional listings.
With the changes coming, now is the time to build a consistent listing lead flow for your business. Nothing accomplishes that goal better than geographical farming.
