WHAT IS REAL ESTATE FARMING? 5 THINGS EVERY AGENT NEEDS TO KNOW, PLUS A FEW DOS AND DON’TS.

Intro

Whether you’re a newbie or a seasoned professional, real estate farming plays a critical role in the growth and continued success of an agent, and it’s wise to hit the pause button every once in a while to evaluate your efforts and make adjustments to ensure that you’re utilizing this tried-and-true marketing strategy to its fullest. So, consider this a checklist to help you do just that.

Let’s start with a short primer—an introduction for newcomers to the business and a refresher for veteran agents.

1. WHAT IS REAL ESTATE FARMING?

It’s a marketing method that, when practiced to its fullest, guides agents through a process of identifying a target or niche market and a geographic area—two parts of the whole—to set their sights on. Then agents can—in fact, should—employ a variety of tools aimed at establishing themselves as the real estate market expert in that farm and engaging the community in ways that propel lead generation and sales.

And before we go any further, it’s important to note a common misconception that real estate farming and geographic farming are one in the same. (Note the earlier reference to “two parts of the whole.”) Cultivation of a verdant farm will take both approaches into consideration—together, they create a strong foundation for success. Here’s what you need to know about each, why they’re important, plus other valuable info.

2. GEOGRAPHIC FARMING

Just as the name suggests, this is all about area—preferably the one you live in or one that you’re already familiar with. That gives you a leg up on the knowledge required to build your reputation as the expert. And if you live there, you likely already have some degree of name recognition—even if it’s just among your neighbors. They could end up being clients or great referral sources.

Most often, a ZIP code serves as the footprint for the farm. But agents who are based in a competitive community with a saturation of real estate professionals sometimes decide to pare down the area to a subdivision. Others choose to farm a whole city. The general rule, however, is to start small, claiming a neighborhood as your farm, and then branching out as your reputation takes hold and your business grows. (Keep reading for a rule of thumb on the number of homes that comprise a manageable farm for agents just stepping into the field.)

3. NICHE FARMING

Adherence to the Fair Housing Act, which protects individuals against discrimination based on race or color, religion, sex, disability and other factors, is critical in this approach because it takes a look at various demographic information. For niche farming purposes, however, it’s good to know the region’s median age, income, interests (like golf, tennis, hiking, horseback riding), size of household, and the type of owners (first-time buyers, empty-nesters, real estate investors).

4. RESEARCH

Whether or not you live in the area you’re considering claiming a stake in, there’s still some research you should do before making a final decision. Your findings will serve as the base line for setting your sales expectations and goals. Here are a few of the most important factors to consider in your research and decision-making process:

Appeal: Naturally, the places where people aspire to live make the best farming areas because they’re in demand, which makes selling homes in that location a little less laborious. On the downside, inventory may be hard to come by if people don’t want to move. So it’s important to choose a farm area that offers homeowners and home-buyers a range of offerings—homes for folks looking to relocate to that area, and places for locals who want to move up or down, but don’t want to leave the farm.
Average home prices: There’s a wealth of online resources where you can find out the average home prices in areas you’re interested in farming—MLS, Zillow, Redfin, Realtor.com and Homes.com are just a handful. Knowing this information will shed some light on what you can expect to make from your sales commissions. (NOTE: Beware of areas where you see short sales or foreclosures because they’ll have an impact on comparables in the neighborhood and could carry a negative connotation among prospective buyers.)
Community assets: Proximity to schools, parks, recreational facilities like golf courses and tennis courts, and other community assets are all considered favorable amenities.
Competition: You’ll want take into consideration the reputation—and activity—of other agents farming the area. Obviously, if no one has claimed the territory, or the agent farming it isn’t engaged in marketing efforts or doing a very good job at it, all the better. It’s prime for the taking! But if there’s a seasoned pro who’s really working it, gets plenty of praise from clients (you can glean that from the agent’s website and social media channels) and heeds a steady stream of marketing strategies, you should probably think twice about throwing your hat into that ring—unless you have some innovative ideas and are ready to go toe-to-toe with the current title-holder.
Farm size: Pay attention to the number of homes in the area you’re looking to farm. Somewhere between 200 and 500 homes is considered a good starting point for professionals who are just starting out. As you gain a firm footing and your brand takes root, you can—and should—begin to expand that footprint. Seasoned agents often farm areas with homes numbering in the thousands.
Turnover, absorption and sales rates: Knowing each of these is critical for forecasting and determining reasonable sales goals—in other words, estimated income. Here’s the difference between each of them and how to arrive at the figures:
- Turnover rate: This gives you an idea of the number of homes you can expect to sell in a year. To determine the turnover rate…
  - Take the number of homes in the territory you’re looking at farming
  - Divide that by the number of homes that were sold in the last 12 months. If it falls between 6 to 8 percent, that’s a good sign. So, for example, if a territory comprises 250 homes, and 20 of them were sold in the last year, the turnover rate is 7.2 percent (18 ÷ 250 = .072).
- Absorption rate: This indicates the availability of homes on the market and the length of time it could take to sell a property. So here’s how to figure it all out.
  - First, determine a timeframe (let’s stay with the figures used for turnover, so 365 days)
  - Find out how many homes were sold during that period (18) as well as the number of homes that remained on the market at the end of that timeframe (let’s say it’s 80).
  - Divide the homes sold by the homes that remain, and you’ll have your absorption rate, in this case 22.5 percent (18 ÷ 80 = .225). Anything above 20 percent is considered a seller’s market and indicates that homes are moving fairly quickly.
- Rate of sales: This is all about inventory.
  - Take the number of active listings during a timeframe (keeping with the same figures, let’s say 98—18 sold + 80 that remained).
  - Divide that by the number of homes that closed (18), and you’ll end up with your rate of sales. Following this example, the figure comes to 5.44, indicating it would take 5.44 months to deplete the current inventory of homes if no new listings hit the market. If the figure is between 4 and 6, you’re in a balanced market. The higher the number, the more favorable it is for buyers (meaning it’s a buyer’s market). The lower the number, the better it is for sellers.

5. THE TOOLS

Direct mail and door hangers: We may be in the digital age, but farming letters, post cards and door hangers continue to play a valuable role in real estate farming. But it’s important to use that printed space wisely. Here’s a general guideline for the kind of information to include in each:
- Farm letters: Try to send these out every quarter and use them to (re-)introduce yourself to the homeowners in your farm and (re-)establish yourself as the real estate expert in the region. Share a few anecdotes about yourself—both on a personal and professional level. Ideally, the personal information you share will create common ground and relatability with people living within your farming area. Note a few market updates and statistics—like recent sales, inventory, pricing, average time on the market—but don’t overload the letter with figures.
- Postcards: These should go out monthly, if possible. Include a photo or two of homes, plus a thumbnail picture of you. Keep the information brief but powerful. Tout recently sold properties, new listings, upcoming open houses. They include timely information that inspires readers to react.
- Door hangers: As old-fashioned as these may seem, they’re still an effective medium because they simply can’t be ignored. Consider alternating your postcard distribution with door hangers, so that one or the other will be going out each month. You can use the same type of information and photos on both.

On all of these materials, include a call to action (a free home value estimate, for example, or an invitation to an upcoming open house or event that you’re sponsoring), an invitation to join your mailing list and follow your social media channels, and your photo. And always—always—include your website and contact information (that means email and phone number).

Events: Open houses, team sponsorships, neighborhood yard sales—the value of these events cannot be overlooked. The intention of open houses is, of course, obvious—it’s one of the best ways to showcase a listing. But anyone who’s ever held or visited an open house knows they attract lookie-loos, and those nosey neighbors could end up being clients. Team sponsorships are excellent branding opportunities, as are sponsored neighborhood yard sales (provided the signage you place throughout the neighborhoods includes your photo and contact information). All of them provide you with a chance to network and meet the people in your farm. In the case of yard sales (which you can organize on a quarterly basis), make the rounds and introduce yourself, strike up a friendly chat and leave the homeowners with a business card. Team sponsorships: Attend the games and get to know the players (or parents of the players). In all of these examples, you’ll maximize your interactions with prospective clients.
Real estate websites: You’ve likely already discovered that you can glean all kinds of real estate market information online from Google searches, and sources like MLS (http://www.mls.com), PropertyRadar (https://www.propertyradar.com) and Realtor.com (https://www.realtor.com). But there are a wealth of other sites that offer everything from website creation to ongoing education to lead generation. The Close (https://theclose.com), Easy Agent PRO (https://www.easyagentpro.com) and Become a Local Leader (https://www.becomealocalleader.com) are among
Social media and video: If you don’t already have separate Facebook and other social media pages for your real estate efforts, you need to establish them now—like immediately. Some words to wise:
- Follow your competition. It’s good to keep tabs on how (and what) other agents in your farm or surrounding farm areas are doing.
- Post on your site at least once a week, if not more.
- If you’ve secured a new listing, post it!
- If you have a new property video, post it!
- If you come across an interesting article or new stats on the real estate market, post it!
- Post videos of neighborhood strolls, and quick video posts from a community event, an open house or, perhaps the coup de grâce, a visit with new homeowners who are more than happy to show off their abodes and share their excitement about moving into the neighborhood. (Just plan those visits in advance, of course.)
- Just as important as posting: engaging. And not just on the comments landing on your post. Comment on your followers’ posts—whether it’s a vacation photo, a cool story upload or a daily inspiration. Everyone scrolls to see who’s liking and commenting on whatever is being shared. And whether it’s a conscious action or not, we all make a mental note of the people who like and, especially, comment.

DO THIS, NOT THAT

Prospecting: While cultivating your farm, you’ll want to continue to prospect in order to generate income. But don’t confuse the two. Farming takes time because you’re cultivating relationships, building your brand and establishing authority and trust in your region. With prospecting, you’re looking for buyers and sellers who are ready to make a move now.
More research: Stay up to date on real estate trends and fluctuations in the market; recalculate turnover, absorption and sales rates; and e-evaluate your goals on a regular basis. Don’t become complacent.
Calls to action: Yes, we’ve covered this already, but it’s worth repeating. Include calls to action on everything. It’s the best way to engage the folks in your farm and generate leads. Find compelling ways to get them to sign up for your and mailing lists and email newsletters to get the latest market updates, home evaluations find out about special events.
Networking: Foster relationships with local lenders and other resources that a new homeowner might need—a handyman you trust, for example. If they’re excited to connect with others in the area, tell them about a few of the community’s clubs and civic groups. Help them make the connections that will ensure their efforts to establish roots in the area are fruitful. And at least once a year, take some time to walk your farm and interact with locals. In other words, knock on doors.
Think outside the box: Employ innovative marketing tools, like launching your own branded magazine. It’s the ultimate branding opportunity. From million-dollar sales to your most alluring listings to the professionals who make up your team, it’s your platform for sharing the information you want your target audience to know. And it’s easier than you might think. Our team at Private Label Media can do it for you. Each quarter, we create a beautiful, glossy luxury lifestyle magazine filled with articles aimed at capturing the interest of an affluent audience, with our clients’ branding gracing the cover, and page after page of their best property profiles, with no competition from other agents. Want to find out more?

Visit privatelabel.media and let’s get started!