FARMing: cultivating new leads and harvesting past clients
The goal of FARMing for real estate clients is to build a database of contacts and be recognizable in your chosen neighborhood of influence.
To make a living over the long-term, many contacts — some old, most new — are required. Thus, FARMing is a business undertaking, not a social project. It builds quickly by converting a set of neighborhoods into a vibrant collective of owners, branded to turn to the dedicated agent. This can be fully accomplished within two years through dedicated, consistent FARMing.
Step 1: Find a mentor
Before you begin FARMing on your own, gain some first-hand experience.
Tag along (or team up) with an experienced agent who is a long-time FARMer. Observe the agent’s strategies and scripts. Ask questions. Likely, they will be happy to show you the ropes. Since your chosen FARM will not overlap with their area, you will not present direct competition.
Step 2: Choose your FARM
Choose the neighborhood or community you will FARM. The first choice is one you know very well already. Acquire a map of the area, and choose your boundaries and route.
How do you decide on appropriate FARMing boundaries? Write up a FARMing goal, based on:
- how many doors you can realistically knock on per day; and
- how many deals you need to make in a year to meet your financial goals.
To determine how many deals you need to close to make a living each year, compile a detailed list of financial needs, called an income data sheet. This list includes expenses for:
- your brokerage;
- your office;
- multiple listing service (MLS) and other organizational memberships;
- your vehicle (loan/lease payment, registration, insurance);
- technology (phone, internet);
- continuing education; and
- marketing (FARMing) materials. [See RPI Form 504]
The fee you receive per transaction will vary based on the area you FARM. If you live in a neighborhood with little turnover or low-tier home prices, consider commuting to a more profitable center. Just because you have experience with low-tier properties does not mean you are locked in at that tier. Whether you sell in Beverly Hills or Barstow, the principles are the same.
Start by knocking on 50 doors a day. Usually only 20 homeowners out of 50 actually answer the door. This means you will likely be at it for two hours at most and make 20 contacts. If you need to close more than 20 transactions each year then up the door knocking. This works out to 20,000 homes in your FARM if you keep this up for five days a week, and follow up every two months.
Once you are familiar with your chosen FARM, keep track of individual properties. Know and catalog the status of individual properties on a spreadsheet (distressed appearance, negative equity, positive equity, free and clear, length of ownership, price paid, etc.). This knowledge enables you to adjust your marketing strategy for each class of home. This property information can often be found on your local MLS or provided by a title company.
Step 3: Prepare a script
As a new FARMer, you will want to prepare a script. An effective script includes:
- a proper greeting;
- a brief introduction of yourself and your business;
- opening questions for the potential client;
- answers to their common questions; and
- a closing.
If the homeowner is interested in selling, be prepared to set up a meeting. Most importantly, listen to the homeowner. Don’t get caught up in the script to the point of reciting.
Devote time to practicing your script every day. This will help you internalize the script and make it your own, keeping your content from becoming stale and irrelevant.
Step 4: Craft your FARM materials
Make up a flyer appropriate to your area so homeowners will have something by which to remember you. The best flyer will brag about your recent sales. If you haven’t yet closed your first sale, or if it was more than a few months ago, consider these alternatives:
- sales made within your office;
- local market activity; or
- various tips for homeowners.
A creative personal style will help you stand out from the competition. Alternatively, notepads or schedules that can go up on a refrigerator (anything with a magnet on the back) will ensure your name stays fresh in their minds.
Each time you make a contact, harvest their email address. Also, ask for three names and emails of people they know who are interested in buying or selling. Once you have garnered a few contacts, set up an email database. Then, email a drip letter once a month. This email newsletter can contain your recent sales, local market activity or an adapted FARM letter.
Editor’s note — Some agents choose to do mailings in addition to door knocking. These produce limited results, and postage does add up. Email is often better than snail mail (no postage required).
Depending on the types of handouts and mailings you send out, expect to spend $3,000-$6,000 a year. Don’t let this amount daunt you — one deal will make up for the investment.
first tuesday has a wide collection of personalized FARM letters tailored specifically for California residents. Consider forwarding online articles you have read to selected individuals, to show that you keep yourself technically informed.
FARMing past clients
FARMing is not only about making new contacts. It’s about maintaining relationships with those contacts over the years.
Keep in touch with your past clients. They are your best source of business. Therefore, make it your business to let past clients know you remain successful, and extremely willing to help them in their next move or acquisition.
Make a database of past clients with their particular holidays, such as birthdays and anniversaries. Send cards on these special days. Consider sending a bulk email to past clients each time you close a listing.
The key to FARMing success is…
Consistency: It will take 3-5 years before FARMing will begin to pay off with a steady stream of clients. Consider each door knock an investment in your future career. In the meantime, you are always prospecting.
Persistence: Explore all possible leads. After each conversation, ask if the homeowner knows of any neighbors or friends who are considering buying or selling, and get their name. If a good lead does not answer the door during the week, go back on the weekend.
Commitment: If you give a 50% effort, you will get a 50% return on your time spent.
Make a schedule for your FARMing activities and stick to it. Many agents go into the real estate industry expecting a relaxed schedule and easy money. Agents who do not quickly revise their expectations will soon find themselves making a career change.
This article was previously posted in 2013, and has been updated.