If you are a new agent or thinking about becoming a real estate agent, you might not understand what farming means in real estate. Much like actual farmers, the concept refers to planting seeds in a neighborhood and growing those seeds to become the neighborhood expert where you eventually get the crop in terms of sellers (listings) and buyers. It is one of the easiest ways to start as a new agent, and one of the most effective if you do it right. So let’s discuss how to choose your farm. You can use one, all, or a combination of these criteria to determine the best area for you.
A neighborhood with enough homes is paramount. Too small and there won’t be enough business to make it worthwhile, too large and it will be difficult and expensive to really farm the community well. A beginner farming area should be 500-800 homes. In some areas that will be a small neighborhood, in others it could be just a couple of buildings on one street, or even one building. This number is easy to consistently visit each of the home owners each quarter or more regularly.
We all know that location, location, location is important in real estate, but when choosing a farm it is less so. You should be close enough to the location that you can visit often, and work with sellers and buyers without burning yourself out. Once you are established you can venture further out and work with someone closer to the location on a referral basis for higher price points or other reasons that might make a more attractive farm.
Your farm should have at least 8-10% turnover each year. So if you have a farm of 500 homes, you want to see 45-50 sales happening each year. That is enough for several agents to get business from throughout the year. You can have less turnover if you can take a larger market share. Also take a look at how long listings take to sell, higher price points are great but they often take a lot longer to sell, so they might not make a great first farming area.
When you are looking at potential farming areas, take a look at who is listing the homes for sale. If there is one agent that has a very large market share it can be more difficult to break into the farm. It’s not impossible though. When I chose my first farm one agent had a very large market share, and had for almost 20 years. She was very behind the times though, so I was able to get market share by using Internet marketing, an area she never ventured into at all.
How easy will it be to market in the area?
Is the community easy to walk between houses, is it on one or two Every Door Direct Mail line to cut down on postage, do people search online for that specific community for one reason or another? These are all things that can impact your ability to reach homeowners regularly. If you plan to deliver a newsletter each month but the homes are all down 100 yd driveways that could be a problem.
Finding Your Farm
The easiest way to make a list of potential farming areas is to do a search of the homes sold in your MLS area in the last 3-4 months. You want a list of at least 500 homes to look at, and then sort by subdivision name. Write down the ones that had the most sales and start exploring the neighborhoods.