Farming is not just growing crops in a field. In real estate, farming means growing your business by marketing yourself to a specific area, or farm. A farm can be any geographic or demographic area in which you want to focus your business. Examples of farming include direct mail, postcards, door knocking and any other form of advertising. Consistent farming in the right area has been the basis of success for so many agents. However, this doesn’t come easy if they pick the wrong farm to begin with.
You might be wondering, How is it possible to pick the wrong farm?
It sounds so simple, but selecting where to market yourself is much easier said than done. Some agents have selected a farm but are not seeing the results they hoped for. Others are overwhelmed and haven’t selected a specific farm at all.
No matter where you are in the farming process, selecting the right farm is the first and most important step toward success. Here are a few tips to make your selection easier and more efficient.
1) Do Your Research
Looking at farms from a numbers perspective is an important first step in the selection process. Farming your own neighborhood may seem like an easy solution, but what if it is already heavily farmed by other agents? What if there is a low turnover rate? There are a couple of steps you can take to ensure that these are not concerns in the farm you choose:
Run the Numbers: The Multiple Listing Service is filled with valuable information that can determine the activity of a farm. However, this can be overwhelming if you don’t know how to use the information. There are many calculations you can make to determine your chances of success in an area. These can range from finding the number of homes sold to computing the turnover rate. Here are a few major ways to run the numbers for a farm.
- Start by searching the MLS to find how many total homes there are in the farm and how many of those have sold in the last few years. To find the total number of homes, you can filter your MLS search by subdivision. The MLS will total the number of homes in that area for you. To determine the number of those homes that have sold, simply add the category “sold” along with a date range to your search. The MLS will then generate the number of houses sold during that time.
- After this, calculate the turnover rate. Mathematically, this is the number of homes sold in a farm divided by the farm’s total number of homes. These are the same numbers you just found in the MLS. The turnover rate will tell you how active a farm is. A range of 6 to 8-percent typically shows it’s a healthy market.
- Finally, check out the average price point in the farm to further understand the farm’s activity. Go back to the MLS search where you found how many homes had sold in the date range you provided. You can look at the prices at which these homes sold, and calculate the average price point. Some MLS systems will do this for you, but you may have to calculate this on your own. Once determining the average sold price, decide if you feel comfortable selling in that price range.
2) Look Inward
While it is important to do outside research when choosing a farm, it is crucial to look inward as well. Considering who you are will help determine what farm you will succeed in most.
Who Do You Relate To? This might sound like an odd question, but think about it. Do you prefer having short chats at coffee shops with young millennials? Do you enjoy spending a few hours at a family’s home with children running around? Or is having a long and meaningful talk with retirees more your style? Who do you tend to get along with best? Answering these questions will help you determine what demographic you should focus on. This will not only help your business grow, but will make your farming more enjoyable.
Get Input From Others: If you need guidance or validation when doing this self-reflection, ask for help! Those who know you best see you in ways that you can’t see yourself. While they may not have your real estate knowledge, they know your communication style. However, this comes with a couple of caveats. Never rely on one person, but instead, get a few trusted opinions. Also, remember that at the end of the day, you know yourself best! Therefore, this strategy is best used as a complement to those mentioned above.
A final note about choosing your farm...
While the tips listed above can help you pick the perfect farm, it’s important to remember that there is a line between farming and discrimination that can sometimes be blurred. The Fair Housing Act prohibits discrimination in housing-related transactions, including advertising. Including or excluding certain audiences or neighborhoods in your advertisements could be seen as discriminatory. Therefore, be thoughtful when you craft your marketing materials so they don’t go against these guidelines. Click here to learn more about the Fair Housing Act’s effects on your farming.
If you are interested in farming, remember that your success largely relies on what farm you choose. By selecting the right farm for you, your business will improve and so will your state of mind. These steps will get you started toward your future as a successful farmer.