Running a real estate business involves a lot of community building and marketing to a specific neighborhood.
Realtors call this “farming,” and I recently got a great question on this very subject. Mary in Houston asks, “How should agents choose a neighborhood to farm?”
There are two main questions agents should consider when picking a neighborhood to farm:
1. Does the neighborhood have a good turnover rate? An ideal neighborhood for farming would be one where people actually move semi-frequently. Therefore, aim for neighborhoods with a turnover rate of at least 6%. The bigger the turnover rate a neighborhood has, the better. To determine an area’s turnover rate, compare the number of recent sales versus the total number of homes.
“The bigger the turnover rate a neighborhood has, the better.”
2. Is there already a dominant real estate agent in the neighborhood? When considering this point, remember that any agent who has 15% of the market share for a given neighborhood is considered dominant. Also, if two agents combined have 20% of a neighborhood’s market share, they would be considered dominant, as well. Though it is possible to farm a neighborhood that already has a dominant agent, I personally wouldn’t recommend it.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.
