People are always telling me, “I want to have a GeoFarm, but how do I choose an area?”
Having a geographic farm is one of the most efficient ways to generate business over the long term. But, if you’re just getting started, it can be hard to know which location to choose.
To get started, you should consider an area where the average price point fits well into your business plan.
For example, if the average transaction required by your business plan should generate an average commission of $6,000 and your average commission rate is 3%, then you would want a geographic farm with an average sale price of at least $200,000.
The second consideration when choosing a GeoFarm is to make sure the area has enough homes to meet the number of transactions required by your business plan per year.
You can determine whether an area will produce a sufficient number of transactions by looking first at the number of homes there are in general and then by looking at the local MLS to see how many of those homes sold in the previous 12 months.
For example, if there are 200 homes and 20 sold in the last year, you’ve got a 10% turnover rate. In my experience with GeoFarms, you can achieve a 30% personal market share if you commit to that GeoFarm over the long term. That means of the 20 transactions, you should expect to get seven of those.
If your business plan requires you to make seven transactions a year, a GeoFarm of 200 homes will be just about right. However, if your business plan calls for 14 to 15 transactions per year, you’ll need a GeoFarm with at least 400 homes.
The final consideration when choosing a location for your GeoFarm is probably the easiest. If at all possible, farm your own neighborhood. You will spend a tremendous amount of money trying to gain traction in an area where you have no natural traction. But, if you live in a neighborhood, you have the strongest connection possible.
If you farm your own neighborhood, you’ll be able to make use of an effective phrase I recommend all of my agents put in their marketing materials, which is, “I live here, I work here, I play here. I am your neighborhood specialist.”
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.