Neighborhood Farming

There’s no one-size-fits-all answer to what constitutes your farm area as a Realtor. But following a predetermined set of criteria will help you save time and energy while advancing your goal of becoming the most preferred realtor in your area. Here are some questions to help you get started:

1.  Is the neighborhood close by and accessible?

If you’re planning to expand your farming operation to a new area further away, keeping up with regular touchpoints can be challenging. Ideally, you want to be able to visit the new area at least every three to four weeks to maintain consistency and visibility.

2. Is the turnover rate of the area acceptable?

The turnover rate is crucial when looking for a new farm area. This calculation reveals how active the real estate market is in a given region by dividing the number of residences in your farm area by the number of dwellings sold in the previous 12 months. Knowing this information will help determine whether there is enough sales activity to support your prospecting efforts. For example, out of the 200 houses located nearby, only 25 homes were sold last year. This totals an average home turnover rate of 12.5% (25 /200)x 100. A turnover rate of 5% or more is generally what you want to see.

3. What is the Neighborhood’s Absorption Rate?

The absorption rate is another metric that can be used to estimate how successful a neighborhood farming program will be. It measures how many months’ worth of inventory is in a specific area and can help you determine if there is a high demand for homes in that area. For example, if you’re looking to start a farm in a specific area, you would first need to determine the sales rate. You can then use that data to compute the absorption rate. To do this, you would look at the past 12 months and see how many residences had sold. Then, you would compare that number to the number of active listings. If there are more active listings than residences that have sold, the absorption rate is low, and it may not be the best area to start your farm. Taking a similar example, let’s consider that in the past 12 months, 15 residences have sold, and currently, there are three active listings. Calculations For Home Sales Rate and Adsorption Rate Home Sales Rate  The home sales rate is calculated as the number of homes sold over a year divided by 365. This means that one house sells every 24.3 days on average in our example. Adsorption Rate  The absorption rate can be determined by multiplying the home sales rate by the number of active homes. In this case, it would be three times 24.3 or 72.9 days. This means it would take 2.43 months for the current inventory to sell at the current market rate, assuming that no new listings are added to the market, and that market conditions stay the same.

4. Is the number of houses manageable for regular marketing outreach?

You want to get your brand in front of as many people as possible, but you don’t want to sacrifice the quality or depth of your area farming campaign. The key is to market to only as many homes as your budget will allow each month. This way, you can sustain your campaign consistently and with a long-term vision.

5. Is one agent now dominating the neighborhood’s sales activity, or are houses been sold by different agents?

Many agents in the real estate industry don’t talk about it, but they all have specific areas that they try to dominate. If you’re looking to break into the real estate market, knowing where to focus your efforts is essential. Also, talk to any real estate agent, and they’ll tell you that specialization is the key to success in the industry. To succeed, you should focus on one area and become an expert on that particular neighborhood or area. That’s why it’s an excellent opportunity to become the local expert in an area that any one agent is not heavily marketing. So, get out there and establish yourself as your area’s go-to source for information! Combining neighborhood prospecting with a broader area (town or city) local marketing, like with our HERE sites, can produce powerful results!