Create a Geographical Farm that You’ll Love to Farm
Selecting the right geographical farm it is crucial. You need to pick a farm that will work for you. A farm of homes that you will sow, grow and be able to harvest as home sales time and time again.
You want to avoid a farm that is stagnant and does not yield sales. A neighborhood where no one ever moves because they love the place they live may be the ideal place to live, but as a Realtor, it is the worst place to farm.
The 1st thing to do is decide how big you want the farm. A good rule of thumb is to have about 350 homes in your geographical farm. Consider time and money as you will spend time farming, (door knocking, putting together mailers, setting up systems, face to face contact, events). All this will cost money so you also want to create a budget for how much it’s going to cost to market yourself to your geographical farm.
Next, you’ll need to choose the location. Login to your MLS and search by map. Draw the area/s that you think will be a good geographical farm. Do a history check of sold homes in that area for the past year, last 2 and 3 years and even the last 5 plus years if possible. Determine a history of sold properties. If only a few homes have sold per year, this is not a good farm. You want a geographical farm that has a minimum of 7 % to 10% of home sales per year. If the number is even higher great! That’s a gold mine.
In a farm of 350 homes, 7% – 10% is 25 to 35 homes that sell per year. That means you can be listing up to 35 homes per year. Realistically, it will take a couple of years to start getting serious numbers, not to say you cannot do it sooner. Say in a couple of years you dominate the market share of listings at 20%. That’s 5 – 7 listings per year out of that farm. And if your market share is 50%, that’s 12 – 18 homes you will list and sell.
At an average sales price of $400,000 and a 2.5% commission, at a 20% market share, your commissions will be $50,000 – $70,000 and at a 50% market share, your commissions will be $120,000 – $180,000. If your commissions are 3% in your area or if you close both sides, your commissions will obviously be higher.
For more accuracy and better results, you can research a farm area by other demographics like age of homeowners, types of loan, when homes were purchased, marital status and family. Determining whether there is a more or less likelihood that homes will sell will save you lots of time and money in the future.
If you want to know more about creating a geographical farm contact me and I will be more than happy to help you out.
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