Real estate farming is the process of selecting and marketing within a specific geographic area. When agents “farm” an area, they focus their lead generation efforts, advertising, and marketing in one place. The term may seem old-fashioned, but farming helps agents grow and nurture future business much like planting seeds on a farm.
How Real Estate Farming Works
Agents farm by focusing their efforts on a specific geographic area. They research the community and confirm that area sales are at a high enough level to sustain ongoing revenue. Once an agent selects their farm area, they should build their reputation as a local expert on real estate and the community as a whole.
First, choose your farm area by considering different areas that appeal to you. Research these areas carefully to find out more about your potential clients, sales volume, and competition from other agents. Once you determine the area with significant revenue potential, set area boundaries and focus your marketing and sales efforts there.
The next step is to build your brand and reputation in your real estate farm area. Set up a Facebook advertising campaign aimed at your target area. Participate in local groups, blog about the neighborhood, and sponsor a local event. Also, be sure your website is up and running to collect every potential lead from your marketing efforts.
Finally, with your farm area selected and real estate lead generation strategy in place, focus on becoming an authority in the community. You want people to consider you an area expert and remember your brand when it’s time to buy or sell real estate. Agents find that, over time, efforts toward farming in a specific area builds upon itself by increasing referrals and overall sales.
5 Steps to Choosing the Right Real Estate Farm Area
Choosing the right farm area starts with research. Study the demographics, look at the number of homes and apartments in a particular area, review historical sales data, and consider the potential for future sales.
Here are the five steps to picking a real estate farm area:
1. Consider Your Region & Demographics
Before you start farming, you need to know as much as you can about the area. Consider where you live or other places you know well. Then, consider home prices and sales data to see if you can earn the income you’ll need to meet the goals in your real estate business plan.
Consider the following criteria:
- Types of homes
- Average income
- Transportation options
- School ratings
- Average age
- Commuter area
- Nearby employers
- Local amenities
Much of this data can be found through Google searches, census data, and statistics tools found on most local multiple listings services. Consider national housing trends from sources like Harvard’s Joint Center for Housing Studies and NAR’s research and statistics pages. The more you know about an area, the more you can position yourself as an expert.
Examples of the types of data points to consider when choosing a farm area
2. Evaluate Personal Preferences & Interests
Focus on aspects of the neighborhoods you’re considering that personally interest you. For example, if you love vintage homes, selling them may come more naturally to you than a new development. Buyers respond to your enthusiasm and personal knowledge on the topic.
You can specialize within your farm by focusing on a specific type of home. For example, you may decide to farm a certain neighborhood but focus only on mid-century homes. Keep these interests in mind as you consider possible farm areas; they will ensure you are not just an authoritative agent, but an enthusiastic one.
3. Define Boundaries
As you consider different areas, it’s helpful to look for well-defined boundaries. While you can always set geographical boundaries yourself, established ones make it easier to market your listings effectively since the geographic area you work in is clear to yourself and others.
In Manhattan, for example, the Upper East Side starts at 59th Street, from Fifth Avenue to York Avenue, then extends up to 96th Street. In the past few years, gentrification may have pushed the boundaries of the neighborhood a bit, with some agents claiming listings up to 103rd Street are on the Upper East Side. Still, when you tell most clients you’re taking them to the Upper East Side, the boundaries are generally understood.
4. Research Sales Activity in Potential Farm Areas
Make sure your chosen area has enough sales activity to make real estate farming worthwhile. You want to find a combination of high sales prices, relatively high turnover, and low competition. Here is how to research the sale potential in your farm areas:
Calculate the Average Sales Price & Commission
It’s easier than you might think to get an average sales price in your anticipated farm area, and it takes just a few steps to complete. First, open your Multiple Listing Services (MLS) program or a program like Realtors Property Resource (RPR) and choose the ZIP code of the area you’re considering. RPR and many MLS systems offer the ability to draw an area on the map to help you define boundaries.
Next, pull all sold listings from the area from the past two or three years. The average sale price will be the average price of the sold homes. Once you have the average price, you can estimate the commission you might have earned per transaction and determine how many listings you will need to close in your farm area to make a profit and meet the goals you have set for yourself.
Consider the Turnover Rate
In order to figure out the turnover rate in your potential farm area, simply divide the number of homes in your farm area by the number of homes sold in the last year. Make sure the area you want to farm has a relatively high turnover rate. Tom Ferry, a noted real estate coach, recommends only considering areas with a 6% or higher turnover rate.
Research the Competition
Once you’ve determined the area has enough sales activity to sustain you, the next step is to figure out what your competition looks like. Be sure to take particular note of the top closing agents for the past few years. You can do this by examining sites like Zillow or Realtor.com and reviewing agent profiles for a specific farm area or ZIP code.
More often than not, there’s usually one agent who already dominates an area. Getting a foothold in areas like that can be a challenge since, chances are, that agent has been selling in that area for years and is very well established. On the other hand, if you find a number of agents close sales in the same area, then there is more than likely room for you as well.
Assemble Real Estate Farm Area Data
Now that you know all about the demographics of the area and the numbers around sales activity, turnover, and competition, you need to pull all that information together to choose a farm area. Try creating an easy-to-read table so you can compare areas side by side.
Example Farm Area Comparison
Farm Area One | Farm Area Two | Farm Area Three | |
|---|---|---|---|
Total Number of Homes | 150 | 200 | 250 |
Estimated Farming Cost per Year (mailings, open house costs, advertising, and so on) | $2,100 | $2,800 | $3,500 |
Average Sales Price | $300,000 | $350,000 | $400,000 |
Average Commission per Sale (calculated at your average commission %) | $9,000 | $10,500 | $12,000 |
Total Homes Sold in Farm (previous year) | 15 | 16 | 12 |
Turnover Rate (total homes sold divided by total # of homes times 100) | 10% | 8% | 5% |
Income Potential (total homes sold x average commission on sales) | $135,000 | $168,000 | $144,000 |
Average Days on the Market | 43 | 39 | 61 |
Number of Current Listings | 13 | 3 | 7 |
Farm Area Two may not have the most homes, the highest average sale price, or the highest turnover rate, but it still provides the highest income potential. Successful agents consider as many data points as possible before settling on an area to focus their farming efforts.
5. Finalize Your Farm Area
Companies like SmartZip and GNOwise can help you drill down even further by providing real estate-focused predictive analytics. Predictive analytics can help agents look at potential sales trends, market shifts, and which properties within a given farm area might be more likely to sell.
After collecting and analyzing information, you should be ready to pick a farm area that meets your criteria for the best location, the highest potential income, and the lowest amount of competition. Once your farm area is all set, the next step is to get to work on becoming the go-to agent.
9 Real Estate Farming Ideas to Build Authority
Make a name for yourself and become established as the go-to real estate professional for the community. Proven ways to build your reputation and name recognition include methods such as direct mail campaigns, advertising, networking, and online marketing.
Here are nine ways to start building your presence in your farm area while prospecting:
1. Create Direct Mail Campaigns
The key to staying top of mind is touching everyone in your farm area multiple times. You should plan for at least two or three mailings before expecting a return. Every Door Direct Mail® (EDDM®) lets you send direct mail to every house along a mailing route. Using an EDDM® service from a provider like ProspectPlus! allows you to send mailers to residents in your farm area, even if you don’t have their mailing address.
2. Distribute Door Hangers
Door hangers are another tried-and-true way to reach homeowners in your farm area. These tend to work best when you offer something like a free home valuation. The reason door hangers work so well is that unlike a postcard, which can easily get ignored, homeowners will see your door hanger and take it off the door, thereby increasing the odds that they read it. For about 35 cents each, you can use this as an effective lead generating tool that a homeowner is more likely to read.
3. Walk Around Your Neighborhood & Meet People
Walk around your neighborhood, say hi to people, strike up a conversation. In the age of so much tech, meeting people in person bridges any gaps that might exist in the digital divide. Most agents advertise online, but many sales opportunities happen organically through referrals and word of mouth. Door knocking may not be viable or totally safe in your area (or any area), but being out and about is one way to meet people and be top of mind.
4. Buy ZIP Code-specific Advertising on Zillow
Focus your online ad spending on the ZIP codes in your farm area. Zillow Premier Agent lets you advertise to buyers in specific ZIP codes. It is estimated that for every $1 you spend on Zillow, you get $2.60 or more back in commissions. More leads give you more closed deals at the end of the day, and Zillow offers you targeted leads in your farm area. Learn more about how Zillow Premier Agent works.
5. Target Buyers on Facebook & Instagram
Facebook and Instagram advertising platforms allow you to target lead capturing ads using a seemingly endless amount of criteria, including age, income, interests, recent jobs, and much more. The amount of information you can use to find your target audience on Facebook is pretty astonishing.
Facebook even has a category called “Ready to move,” which is made up of people whose online behavior is consistent with people who are ready to move. To learn specifically about using Facebook as a real estate agent, we’ve written a Facebook for real estate agents guide to help you get started.
6. Participate in Online Local Forums
Another great way to build trust in your farm area is to participate in online real estate forums dedicated to your farm area. These groups can be found on sites like Facebook, Patch, NextDoor, and LinkedIn. The best way to develop trust is to participate as an ordinary citizen who also happens to be a real estate agent. Find where your farm area gathers online and join the conversation. Contribute valuable insights—and remember that you represent your business too.
7. Attend Local Events & Meetup Groups
Above all, be social and business will follow. Once people get to know you, they’ll seek out your advice and services. Post photos of any social events to your Instagram and show the moments of connecting with the community. Look for community-oriented events you’d enjoy being a part of, including charity events, art openings, and talks.
8. Sign Up for Exclusive Leads
Lead generation companies like BoldLeads offer exclusive leads to one agent in a specific area or ZIP code. You get conversion-optimized landing pages, a comprehensive customer relationship management (CRM) system, and marketing automation tools like drip campaigns to help you nurture the leads they generate for you.
9. Set Up a Farm-focused Website
If you’re new to real estate, you will definitely need your own agent website. Not only will you create an online space for your brand and capture leads, but you include local events and neighborhood information. Sites like Placester offer affordable agent websites with IDX pages to help capture leads. Help people find your new site by learning how to rank your real estate website on Google.
Bottom Line
Real estate farming is the method by which an agent establishes a region wherein they focus their marketing and sales for maximum effect. As you evaluate your own potential farm area, consider the type of property you want to sell, who you want to sell it to, and the competition you may have to face. Once you’ve chosen your farm area, create authority and build a solid reputation by engaging regularly with the community.
If you plan to use real estate farming as a way to generate leads, having access to valuable data about the homeowners in your area will make all the difference. For example, SmartZip is a predictive real estate marketing software that gives you data-driven listing predictions in your farm area, so you know which homeowners are most likely to sell their home soon. Visit their site to learn more.
