Find Your Next Listing With These Geographic Farming Tactics
RPR gives you access to data, tools and reports that can help you “wow” your clients and close more deals. However, from time to time, we like to “wow” our users and show them features and capabilities within RPR that can really help them build their business.
By digging a little deeper into the platform, you can go beyond basic property information and valuations. You can use RPR to conduct research that will help you identify specific targets and create areas to farm for leads.
Real estate farming is possibly the most proactive position an agent can take to build inventory. The method includes a series of steps that analyze a given neighborhood, ZIP code or market area to determine how many homes are most likely to sell, at what price range, and how long they will be on the market.
Using RPR to conduct market research and applying the formulas below will help you in your farming efforts. A good farming strategy involves working through a set of five exercises to determine the area’s viability:
- Average price Predicting your average commission per transaction will determine how many properties you will need to close to make a profit in your farm area. From your area, pull all of the sold listings over the past two years to calculate the average price range of homes sold and then calculate what your commission would have been. Then jot down the number of closings you need to succeed.
- Amount of homes Your number of needed closings (from above), needs to be proportional to the number of homes in the farm area and the area’s turnover rate (which we’ll address next). Real estate experts recommend those just starting out choose a neighborhood that has up to 500 homes to make the effort worth the investment. That number is negotiable though as you don’t want to choose an area so large that your marketing effort is spread too thin to make a difference.
- Turnover One of the most important aspects of identifying a farm area, turnover rate, is a simple calculation that helps to identify whether the area has enough sales activity to sustain your prospecting campaign. Most agents look for areas with a 7% or higher turnover rate. For example, an area with 500 residences but only 25 sales in the past year only yields a mere 5 percent turnover rate –– not high enough to earn a decent profit even though there are so many homes in the area. To figure out the turnover rate in your potential farm area, divide the number of homes in your farm area by the number of homes sold in the last 12 months.
- Months of Inventory Another important measure of potential success is “months of inventory,” a calculation used to indicate how long it would take for the homes currently available to sell at the market’s present pace. The figure is primarily used to help REALTORS® predict how many listings are needed to keep their pipelines active over a given time period. A healthy market usually has between five and six months supply of inventory. To calculate months of inventory, from your farm area, divide the number of active listings on the market by the number of homes sold per month on average during the previous 12 months.
- Competition Lastly, knowing who is currently marketing to your potential farm area can lead to a make-or-break campaign. If one agent dominates the area, you may want to look elsewhere. An area with a variety of agents will more than likely be more open to a new face.
Here’s an article, with details and step-by-step directions, on how REALTOR® Trang Dunlap uses RPR to farm for leads.
Ready to launch your next farming campaign?
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TUTORIALS & GUIDES
This is awesome. Thank you for sharing.
I’m striving to use RPR more proficiently. Thanks for this info.
Thank you for this thoughtful article!
Excellente’ and much appreciated, very useful info.
Thank u. I look forward to using this strategy.
Great & motivating information ,
This information is very helpful , thank you.
This is very helpful information. Out of all my years in RE, I have never been given these formulas. They are so welcome. Thanks so much
This is great information. I have always used RPR for market value & neighborhood demographics. I love the detail reports. Very professional. Thank you.
Thank you so much.
[…] To calculate months of stock, divide the variety of lively listings in the marketplace by the variety of properties offered monthly on common in the course of the earlier 12 months. A wholesome market often has between 5 and 6 months’ provide of stock. For extra particulars on each, click on here. […]
[…] To calculate months of inventory, divide the number of active listings on the market by the number of homes sold per month on average during the previous 12 months. A healthy market usually has between five and six months’ supply of inventory. For more details on both, click here. […]
Thank you for sharing such a wonderful article. I believe, the average price and the turnover are the two major components of determining an area’s viability.
Another useful tool would be to add in the equity % or “time in residence” of the homes in the area, that way we would be able to pinpoint more accurately potential sellers who have built up enough equity or lived in the property 5 yrs or more. It’s been my experience that those home owners are usually more open to selling.
Great point! :)
Yes. Note to admins, this is an excellent inclusion idea.
This is wonderful information!! I love RPR! Thank you for sharing these tips!
I love RPR and this is terrific advice.Thanks
how do you find out how many homes are in an area?
Hi Xeryus, In this video we review the steps around the 3 minute mark: https://www.youtube.com/watch?v=Ed9Ug1C5Tvs