Dean Jackson, the ultimate real estate marketer, states, “In real estate, pairing a capital investment mindset with some capital is a winning combination,” Dean Jackson is the founder of GoGoAgent and Listing Agent Lifestyle. The following is his breakdown of how to get more listings by becoming a real estate asset builder.
Most real estate agents don’t come into the real estate business with a capital investment mindset because they’re so focused on earning commissions and controlling expenses.
I think a capital investment mindset and some capital is the ideal way to become a prolific asset builder. And the best way to build strong long-term assets is with a geographic farm.
A four-year case study
I did a four-year case study with real estate agent Tony Kelsey. He started out in a farm area of 2,000 homes and, over four years, generated an almost 11 times ROI by consistently marketing there.
Over four years, Tony spent $50,000 marketing to the people in this neighborhood every month, and with that investment, he generated $550,000 in commissions.
He mailed postcards monthly for five months before he made his first transaction of $15,000 in commission. At that point, he had spent $5,000 on marketing.
From that moment on, he was profitable, and his ongoing investment continued to realize transactions. He was building the asset of identifying future sellers and cultivating relationships with those sellers over time.
Related: How to Turn One Listing into Five
The path to dominating
Now, let’s look at a 1000-home farm in a neighborhood that has a turnover rate of 8%. That means 80 homes will sell this year in that neighborhood whether you do anything or not.
What if you decide you want to dominate this neighborhood? What will that look like for you in four years?
Well, it costs approximately $750 a month to mail to those 1000 homes ($9,000 over 12 months). And let’s say the average home price in this neighborhood is $600,000; you’ll get around $18,000 on the listing side of each sale.
This means after the first transaction in this neighborhood, you will be profitable, just like Tony.
If, in addition to going after new listings, you cultivate a list of potential buyers in the same farm area and begin communicating with them, you’re taking asset building to a new level. Specifically, since NAR states home buyers purchase homes within 15 miles of their last home.
This strategy is especially powerful if you are farming in a competitive market.
In this case, the most valuable thing that you can bring to a listing presentation is a list of potential buyers that you’ve been communicating with over time. You’re actually demonstrating to the seller that you already may have their potential buyer in hand.
So if you’re looking at a farm of 1000 homes or maybe 800 or 500 homes to get started (whatever you’re comfortable with), all you need is the seed money to get to the first transaction.
And once you hit that first transaction, the only thing that more money allows you to do is to speed up the process of identifying who more future sellers are.
Becoming visible to future sellers
Getting in front of your market consistently through direct mail is a proven marketing strategy, and clearly, one that worked well for Tony.
It gives you the advantage of identifying those future sellers and building a relationship with them before they even know they want to sell.
Over time they will begin to view you as a helpful advocate who’s continuously serving their community without expectation.
The more you get them to think about you, the more the odds increase that they’ll think about you when it matters most, when they’re ready to sell.
That’s when the fun of being an asset builder begins.
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