15: [TOOLBOX] Is Working With Renters Worth A Real Estate Agent’s Time?

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If you sell homes, should you also work with renters?  And, by the same token, should you work with sellers and buyers that are in a price range well below your normal home sale price?

renters worth your time?

These are tough questions because, as a real estate agent, you have to spend your time wisely.  It’s easy to get sucked into doing lots of different things that make you little to no money.  So, if your normal home sale commission is, for example, $5000, is it a wise move to work with renters where your commission is maybe 10% of that?

There are two schools of thought regarding how to approach this:

  1. Work with everyone: you never know who might end up being a long-time client with bigger deals you can be a part of down the road
  2. Work only with your perfect client and no one else

Personally, I’ve put together a fair amount of rental deals and I’m calling it quits.  I’ve worked on enough of these to get a pretty solid understanding of the average outcome and I’ve decided to now only work with those in my target market.

Here’s why.

In my local market, the average home sale price is roughly $400,000.  That’s somewhere in the $10,000 to $12,000 commission range per deal.  The average rental deal nets me about $700.

Hmmmmm….do I want $10,000 or $700?

Now, if rentals actually took me only 7% of the time that purchases did, then maybe this would be a fair deal.  But, they don’t.  Renters still want to see 3 or 4 or 5 or 6 or more places, just like buyers.  So, although they don’t typically take as long as a buyer may take in transacting a deal, there’s still a significant amount of time wrapped up in all the things that are required to get a rental to actually come together.

For those of you that do take on renters, I’m guessing that you’re now thinking…

  • but renters could be deals down the road
  • renters could turn into buyers right now if (fill in the variable here)
  • you should help anyone and everyone all the time
  • why turn down a potential client who could refer other people to you

All these are valid points, but…

…the bottom line is that if you don’t run your real estate business, your real estate business will run you.

renter textAt this point in my business, I’m not drowning in more awesome leads than I know what to do with.  However, I am busy every day and I definitely don’t make all the “follow up” and “stay in touch” calls that I should because I am working on active deals.

So, my point is that, if I don’t have time to make the “perfect” day every day by making all the calls I should to people who can result in relationships that are worth $10,000 within the next few months, why do I have the time to work with renters who might possibly be worth a fraction of that within the same time frame.

In the same 8 hours I might spend on a rental deal, I could have had great conversations with large number of prospects and past clients that are worth more both now as well as in the long run.

Sure, it’s possible that I might lose out on a rental deal that turns in to a buyer next year when their lease is up.

But, it’s also definitely possible that the 4 leads I got from an open house last weekend at a $700,000 home are going to buy something really soon.

I’ll take my chances with the buyers.

What’s your take?  Do you work with renters?  Do you work with buyers/sellers below a certain price point that doesn’t make financial sense to  you?  Leave a comment and let us know.

13: [Toolbox] How To Create A Target Market Persona For Your Real Estate Business

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Every business has customers.  Those customers should ideally come from your target market.  The target market is important because that is the group of people that is most likely to use your services.

Does your real estate business have a target market in mind?  And, more specifically, a target persona?

Let’s talk about what these things are and why they’re important to getting more real estate leads.

What Is A Target Market?

Traditionally, a target market is defined as the group of customers that a business focuses its marketing efforts on.  Identifying a target market is the first step in understanding how, where, why, and when you’re going to market your product or service.

In real estate terms, the broadest target markets you might go after could be identified as:

  • Home buyers
  • Home sellers

real estate target market and persona

Why You Need A Target Market

Knowing who you’re going after as a client helps you stand out to that particular person.  They will notice you because you “speak to them” in your marketing.  For example, if you were a home shopper looking to buy a condo in the west side of town that cost about 900K, wouldn’t you want to work with an agent that happens to be a specialist in the luxury west side market?  If you’re like most people, you definitely would.

On the flipside, if you don’t know who you’re speaking to, then you’re actually speaking to no one.  You won’t have any parameters to work within because you’re willing to work with whomever.  And if you work with whomever shows up, you’ll take on clients who don’t get you to your goals.

For example, when was the last time you had a difficult client?  Or took on a rental when you really didn’t want to?  Or took a listing at a price that really wasn’t worth your time?  Or drove to showings that were way too far away?  If you’ve done these things, then you’re not addressing a target market that’s getting you to your goals.

Having a target market in mind will help you avoid these common real estate pitfalls.  That’s because having a target group of customers you focus on gives you boundaries to stay within.  If you know exactly who you’re going after and why they’re important to you, then you’ll know when you’ve reached the threshold of what you’re willing to do.

How To Define Your Target Market

Here are some simple ways to define who your ideal clients are:

  • buyers and/or sellers
  • location (county, city, area, neighborhood/subdivision)
  • timeframe to buy/sell (how long are you willing to nurture leads?)
  • home price range
  • age (do you identify better with a certain age range?)
  • …and there are others, which leads us into thinking about client personas

What Is A Persona?

A client persona is essentially a target market that’s taken another step further.  With a persona, we’re considering not just broad segments of people in a certain area or price range, but now we’re also taking into account very personal items such as the exact goals and behavior patterns that your “perfect” client will have.

These are important because they help us relate to customers as real human beings (not just “leads”) and allow us to best pursue each of these people in all regards to client acquisition and retention.

How To Create An Effective Persona

You can craft your target market on your own because those are your own preferences.  But, with a persona, you want to enlist the help of some of your best clients because they are the ones that will tell you what is important to them.  And sometimes the results will surprise you.

For example, I asked one of my seller clients why they used me after we had closed on a home.  He said it was my use of technology.  Now, all I’d done that he had really seen was use my iPad during my initial consultation with him.  And, from that alone, he thought I was Mr. Technology.  I didn’t think it was much of a big deal but it turned out that this was pretty important to him.  Feedback like this has helped me craft a client persona that values the use of intermediate to advanced tech skills during the buying and selling process.

To better understand what your clients value and where you can stand out in the crowded real estate agent market, do brief interviews with 5-10 of your favorite clients.  During your next “keeping in contact” call with each of them, ask them if they can do you a favor and answer these questions:

  • Why did you choose me over other agents?
  • What did you end up liking best about how I was able to help you?
  • What fears did you have before the buying/selling process and how did I help alleviate them?
  • Did you have any pre-conceived notions about working with a real estate agent?
  • What did you feel was going to be your biggest challenge in buying/selling a home?
  • (remember to keep asking “why” to really drill down to the base of their emotions and logic)

This Is Your Ideal Real Estate Client

Want to know what your perfect real estate lead looks like?  Here are the items you’re looking for:

Client Objective

  • Do you work only with buyers?
  • Do you work only with sellers?
  • Or, what is the ratio of buyers to sellers that you’d like?

Demographics

  • Education, hobbies
  • Gender
  • Age
  • Income, home price range
  • Location

Goals

  • What are your perfect client’s goals?
  • And their biggest challenges?
  • How do you help them overcome problems to get to their goals?

Identification

  • Turn your perfect client into a “real person”
  • What is their name?
  • What are their most common objections?
  • How will you appeal to them so they identify with you?
  • What do you want them to say about you after the closing?

Once you’ve gone through the process of figuring out your target market and client persona, you’ll have your perfect real estate client.  You’ll have an exact understanding of who you want to target, what they need emotionally, how they rationalize their decisions, and how you can describe your services in a way that appeals to them and makes them want to work with you and you alone.

Your Target Market & Persona

What’s your target market?  Who is an example of your persona.  Leave a comment below and let us know.