Many markets across the nation are sizzling to scorching hot when it comes to home sales prices, but they are suffering from a reduced number of sales and lower inventory levels. The situation has left many agents scratching their heads and wondering what is going on with their business or if they are becoming irrelevant.
The marketing engine is working in full force — the postcards are being sent out and the email drip campaign is going, but the business is not materializing.
Most agents get to a point after a few months and go to their broker throwing their hands up saying their marketing isn’t working. Then, out of pure frustration, they plan on changing everything up because they don’t know what else to do.
What many of these agents do not realize is that they haven’t really been marketing at all — they have been advertising. It’s the advertising that has not been generating the results they desire.
[Tweet “Most agents haven’t really been marketing at all — they have been advertising.”]
That’s likely because the tactics used have not been directed at the right audience, they haven’t included the right message, or they have just gotten lost in the sheer volume of real estate ads in the marketplace.
One common issue is some real estate agents neglect to perform the necessary steps to understand their market and skip straight to advertising.
[Tweet “Some agents neglect the steps to understand their market and skip straight to advertising.”]
Once agents get past their existing client base, they need to be wise about how they invest their valuable resources in attracting new clients. The first step should be to evaluate the local market carefully before any advertising is completed.
Where to start?
Many agents can get a large chunk of information such as the total available market and market share of agents directly from their multiple listing service (MLS).
County-level public record information can also be used to identify market turn rates by specific locations.
[Tweet “County-level public record information can be used to identify market turn rates by location.”]
Another place to mine local demographic data is the U.S. Census Bureau. It’s freely available to agents who know where to look.
Evaluating the market is the first thing that all businesses should do before spending a dime on advertising. However, most agents have never been taught how to do this.
After all, if you don’t understand your market, how can you advertise with any dependable results?
[Tweet “If you don’t understand your market, how can you advertise with any dependable results?”]
In looking at the agents with challenges in today’s hot market, putting on a strategic marketing cap might help identify a variety of reasons. Could it be that their lack of success in recent years is based on their farm area or the sphere not turning over like it usually does?
If so, could this be based on the demographics of the area, or is it based on some other factor? Is another agent taking market share away, and why? Is it based on brand messaging, price, offering or something entirely different?
Wollertz / Shutterstock.com
If agents can better define some of the portions above and ask the right questions, they will be able to understand the fundamental drivers of their business better.
Without putting on a marketing cap, some real estate agents are blindly exhausting resources on promotion and will never truly know what worked for them to generate business that comes in.
Understanding the total available market at a macro and micro level can also help agents comprehend why they have had good years and bad years in the past. We have found that many established agents’ businesses rise and fall with the tide of the local market.
[Tweet “Understanding the total available market can help agents comprehend their past years’ trends.”]
Many agents have their percentage of market share, and that remains steady with consistent advertising into the markets in which they already have traction.
Their best years are those where the overall market, and particularly their farm areas, have the highest volume. Their worst years are the years when the volume or number of transactions dips in their farm.
These agents chalk up the good years to their advertising efforts and the bad years to bad luck. Good marketing will help real estate agents understand the truth and prepare for those potential down years.
Instead of making rash decisions about advertising and spending based on good and bad years, agents should educate themselves to understand the fundamentals of marketing.
[Tweet “Agents should educate themselves to understand the fundamentals of marketing.”]
Advertising is just one tactic once their market is defined, and skipping the marketing step can lead to a business that rises and falls unpredictably for no apparent reason.
We have all been through the peaks and valleys of real estate. If agents dig, do research and have patience, they will find the right answers in the readily available data to help them make informed decisions and determine the best marketing actions for developing, sustaining and growing their real estate business.
Chris Trapani co-founded Sereno Group with his father, Marko Trapani Sr., and his lifetime best friend, Ryan Iwanaga. Follow the Sereno Group on Facebook.