Own Your Geo Farm

Too often today, agents are traveling farther and farther away to pursue prospects (both buyers and sellers). You may be licensed to work anywhere in your state or province, but that doesn’t mean you are qualified. The question I need to ask you is, “how can you in good conscience take a listing in an area you are not an expert in, or write an offer for a buyer in a neighborhood you’re unfamiliar with?” If you think you can get all the information you need to help clients make wise decisions from your computer screen you are sadly mistaken. I would argue, if you do business in an area you are NOT an expert in, you are putting your commission check above your clients’ wellbeing. A real estate transaction, done well, can set your clients up for life. A real estate transaction, done haphazardly, can set them back for years. Think about this the next time you jump in the car to travel an hour out of town to take a listing. Are you doing it for YOUR benefit, or your clients?

Let’s discuss the value of farming. I have never liked the term “farming”. As a sales guy it never sounded very sexy to me, but when you truly understand the value of a recognized reputation, and how over time farming is the best business model, you’ll see the true value in it.

When you work close to home, there is a time savings. Rather than spending hours in the car every day to service your clients, you can spend that time marketing and prospecting for tomorrow’s clients. With consistent, quality marketing in your local area, over time you will start getting inquiries coming in rather than having to hunt so hard for business every day. The other benefit to working your local area exclusively is that you can’t help but become an expert. The more research you do on a specific area, the more you know about it. You can easily communicate market stats, recent sales, average days on the market, medium sales price, available inventory, and the local demographic. All this information culminates to help your clients make wise decisions and elevate you above the competition.

You may be thinking, “That sounds great, but how do I do it, how long will it take, and how much does it cost?” All great questions, so let’s explore each one.

HOW DO I DO IT?

• Choose a neighborhood close to your home. You live there, you know it like the back of your hand, and you can talk about it intelligently. You already have connections in the local area. You see the same people at the grocery store, the mall, restaurants, and local events. Familiarity builds trust, so when people regularly interact with you around town, there is already a sense of trust.
• Don’t be a secret agent. Real estate is a social business, and part of having a recognized brand is being seen. Attend everything you can around town: shop local to support local businesses, attend local charity events, volunteer for good causes, be part of your Chamber of Commerce and the local Builders’ Association, join the country club, join the local gym, essentially do everything you can to be seen in public every day supporting the local community.
• Know your stuff. Being social will have you engaging in conversations with local residents every day. How do you turn these casual conversations into business opportunities? It is important to know your stuff. What is the stuff? Well, if someone asked you why living here is a good choice, how will you answer them? You should know the average age of residents, average income of property owners, employers in the area, available transportation, nearby amenities like schools, parks, clubs and restaurants, the types of homes in the area, and the health of the real estate market.

HOW LONG WILL IT TAKE AND MUCH DOES IT COST?

• Consider the size of your farm. Start with about 250 properties and depending on the number of years you’ve been in the business and your budget, it could go into the thousands. Be careful not to bite off more than you can chew. Make sure you have the resources available to continue your campaign over the long haul. Starting and stopping your marketing will only serve to burn your savings and you won’t see results.
• You must be in it for the long-haul. If you think you can send one or two postcards into an area and your phone will magically ring, think again. If this happens, you can consider it a gift from God. Marketing typically takes anywhere from 6-18 months to start seeing a return (depending on the area and price point you are marketing to, and how many other agents are marketing in the same area). Don’t be afraid of a little competition. Homeowners like options. Agents often have the misconception that a leading rival already owns a neighborhood, but in reality, few agents market consistently over time to dominate an area.
• Consider the frequency of your marketing. Your marketing should include 1-2 touchpoints per month to stay top of mind. It should be a mixture of postcards, market reports, letters, event invites, door knocks, phone calls, social media ads, etc. If you send the same thing every month, people will ignore it. Send a different message every month (one that connects with your target audience) and people will be interested in receiving it.
• Consider what you are sending. Garbage in, garbage out. Sending print/digital marketing is not enough. Unless you send the RIGHT marketing, no one will pay attention. This is where most agents fall down. They try to market on the cheap by producing the marketing themselves rather than hiring experts. Don’t be a FSBO. Hire a good graphic designer and copywriter to develop a campaign that is both eye catching and resonates with your local community. Are you dealing with empty nesters, investors, first time homebuyers, commuters… they all respond to different messages.
• Consider your potential return. Measure twice, cut one. There are a few things that will affect the return you can get on your marketing investment. What is the average turnover? How many properties have sold in the past two years? I recommend farming an area with at least an 8% turn rate which means if there are 500 homes, there needs to be at least 40 sales per year. With a great marketing campaign, combined with some shoe leather on the ground, you should aim to capture 50% of the market share over time. What is the average sale price and average commission rate in your area? This will determine the possible income potential per sale. Multiply the average commission per sale by the number of potential sales from the area and you will know your potential return.

Let’s break this down into a real-world example.

Let’s pretend you have a geo farm with 500 homes and in the past two years there have been approximately 40 sales per year. Your goal is to capture 20 sales per year within the first two years. If the average sale price is $800,000 and your commission is 2.5% then you can expect to earn $20,000 per sale. If you sold 20 properties this would be an income of $400,000 from your geo farm.

• The question is, how much are you willing to invest to capture $400,000 in revenue?
• What would it be worth if you didn’t have to travel more than 15 minutes from home every day to go to work?

I recommend to agents that they spend 10% of their income on general brand marketing in their geo farm. The first step is to figure out the area you want to prospect based on price point, location, and turnover rate. Next, you need to decide what you want to send every month and how much it will cost for graphic designers, copywriters and monthly postage. Once your budget is set, assess your savings. Do you have enough of a nest egg to pay for your marketing campaign for the first 6-18 months when you are still building your brand and sales haven’t started yet. If you don’t have enough money to support the campaign yet, then put money aside from every deal until you have enough to be in it for the long haul. Lastly, consider the costs other than your print/digital marketing. What will it cost you to join local clubs, attend local events, and network in your community? Print marketing works best when it is supported by real, human contact.

At the end the day, marketing to a local geo farm is a fantastic way to build your brand, have homeowners start to call you, save time on commuting, and build a better business. There is no reward without risk, but the more you are invested, the more you are committed.

If you want more information how to dominate your geo farm, please visit https://leadersedgetraining.com/agent-virtual-training/.

Chris Leader
President
Leader’s Edge Training