The four types of smart specialization are location, property type, client, and technology. Pick one or more of these areas. Carve out your own niche and dominate it.
Location refers to hyper-targeting very specific communities. Aim for a narrow area, not a whole city. Become the boss of one or two neighborhoods or complexes. Your weapons are content and targeted marketing.
Imagine that you’ve chosen the Heather Farms neighborhood of Walnut Creek, California (in the San Francisco Bay Area). You know that people move to the area either because they’re young families with kids looking for schools or retirees looking for quiet and proximity to nature while still in an urban area.
Now, you position yourself online as the local expert with content and targeted advertising. Write Facebook posts about the remodeled neighborhood pool. Blog about some of the new restaurants. Share Instagram pics of recent festivals in the park. And create videos about homes for sale and exciting neighborhood developments. Finally, produce some inexpensive Facebook and Google ads targeting folks looking at that community.
Before you know it, your posts, blogs, videos, and ads will pop up anytime someone searches Heather Farms. You’ll become familiar to the prospects and soon you’ll be a trusted resource. They will turn to you for advice when they’re ready to take the plunge and move! And, best of all, they’ll be so comfortable with you that they won’t even care about your lack of Yelp reviews or successful sales!
Differentiation based on property type segments the market into the usual suspects: single-family homes (SFH), condos, townhouses, land, etc. Unfortunately, this type of segmentation only works if you either pick a very specific segment (i.e. land or manufactured homes) or if you couple property differentiation with neighborhood specialization.
For example, you can easily make a name for yourself if you are the go-to person for undeveloped land sales in your city. Spend some time researching land sales so you know your stuff. Then, share that knowledge with valuable content! Write about permits, utilities, and acceptable use. Use Facebook Live and show off that beautiful plot with the stream and city views. You’ll be the only one doing this and the buyers and sellers will be banging down your door!
Alternatively, you can position yourself as the condo expert in, say, Boulder, Colo. There aren’t that many condos there. Learn them all and you can own the market. When a buyer seeks the condo lifestyle and wants to live by the mountains, take their business!
Client type. Smart segments include retirees, young Millennials, same-sex couples, families with kids looking for top schools, urbanites, investors, and international clients. Learn about the needs and search habits of these buyers, and you will become their go-to resource.
Retirees/elderly
Retirees are unfairly stereotyped as internet-ignorant. According to Pew Research in 2017, two-thirds of seniors use the internet and the proportion of seniors using smartphones has doubled in the last 4 years![12] While social media use by seniors still lags (only one-third use it), there are plenty of ways to recruit senior clients. Currently, your easiest opportunities might be partnerships with events and locations with senior patrons and non-social media internet channels like search engine marketing (sponsored search results on Google or Bing). While slightly more challenging to reach, seniors are great potential clients because many can afford to move. And it’s a great feeling to help these folks find the perfect place to live.
Never lose sight of why you went into real estate in the first place. If you’re like many agents, you entered the field because of a genuine desire to help people during one of the most important transitions of their lives. What could be better than helping senior citizens move closer to their beloved grandchildren? Or finding a place the elderly could live independently despite physical handicaps?
If you’re interested in working with seniors, it’s worth familiarizing yourself with different housing types so you help them find the right home for their needs.[13] The most common are retirement communities, co-living spaces, aging in place, assisted living, and accessory dwelling units (ADUs). My company, Dignified Housing, Inc., is dedicated to helping seniors find the right affordable home. I’d love it if you’d check out the site and join our team. We want to celebrate and promote real estate agents who share the same passion for advising seniors that we do. We are expanding rapidly across the country and we’re always in need of new partners!
Millennials
On the opposite end of the spectrum are young Millennials. Now the single largest demographic block of homebuyers, Millennials were raised with the internet, and social media is an integral part of their lives. If it’s not posted on Facebook or Instagram, it didn’t happen.
And that is good news for you because you know how to reach them! Engage with them on social media, create voice content, post cool pics on Instagram, and vlog about activities in the neighborhood that will appeal to this demographic. And, by all means, promote your listing’s high-tech features and powerful broadband. Your competition may be overlooking this demographic. But you know better.
Other client segments
Same-sex couples, families with kids, urbanites, and investors all have particular needs and interests. If you have an interest in any of these demographic segments, learn about what would be useful to them and share it online! They're all great communities and they tend to have friends with similar interests. If you can win them over, they’ll be a fountain of referrals!
Do you have a connection to another country? If so, use it to your advantage! Whether you speak a foreign language or have a close cultural tie, you should parlay those strengths into sales. NAR reported that foreign buyers spent $153 billion on U.S. residential real estate in one year between April 2016 and March 2017.[14] One out of every 20 existing home sales were to foreign buyers. It’s time for you to claim a piece of that action!
If you’re fluent, create web and social media content in foreign languages. Promote local restaurants and markets that would appeal to international clients. Advertise your listings on websites popular with foreign buyers. And make yourself available for international consultations via Skype. Create online tours with Matterport and virtual reality. With your special access to these markets, you have an advantage over your competitors! Use it, and win business.
Win business with technology
Picture the usual initial sales call you might make to a potential client. You go over to their home and take a quick tour. Then, after some small talk, you sit down at the kitchen table and open up your binder. You unload boring glossy brochures and pamphlets all over the table. You show several ads you made for prior sales, a few graphs about the benefits of using an agent, and perhaps some positive quotes by clients you’ve helped in the past. Yawn!
While the binder certainly has some value, you don’t need to limit yourself to it anymore. Relying on a binder full of glossy flyers is a relic and it’s what your dated competitors are still doing. They don’t know any better, but you do!
Now, imagine a different scenario. You meet your new prospect Ming at her home. While she shows you around, you snap a few pictures using a virtual tour app. After the walk-through, you sit her down and flip on your tablet. You dazzle her with your sophisticated social media campaigns. She loves your video blogs of the neighborhood. Finally, you close the deal with interactive tours from Virtual Tour Cafe or RoOomy that turn her home into a virtual showcase.
You’ll knock her socks off and win her business.
Technology does more than locate and nurture prospects. Use technological tools to differentiate yourself and prove that you’re worthy of your client’s business. In fact, once you’ve established yourself as a technological innovator, clients will beat down your door to see how you can use your tech savvy to help them!
Remember, Millennials live on the internet and are used to seeing ads on Snapchat and virtual reality movie promos. When, they see agents with binders and pamphlets they are not impressed. They don’t want a
dinosaur selling their home. Embrace technology and win over this demographic. They are waiting for someone who understands them. You can be that someone!
The value of hard work
Technology alone won’t make you successful, you still need a strong work ethic. Fortunately, hard work can be the great equalizer, allowing new agents to compete against the top dogs.
When discussing the value of work, Tom Ferry said, “The National Association of Realtors puts out these wonderful statistics. They say that 78 percent of consumers go with the first agent they meet. So, for a brand-new agent, it's very simple: You need to do more meeting and greeting and connecting and prospecting and marketing than Gregory, the experienced rock star in your town who has done it for decades and still does it. But everybody's marketing. The Borrell report tells us that somewhere in the range of $15-16 billion a year is spent on advertising. If an agent just gets out in the marketplace and meets and greets, does more open houses, knocks on front doors, makes phones calls, goes after all the myriad of available lead sources, a new agent's going to win.
Unfortunately, the math tells us that the vast majority of them won't do those things and, therefore, will fail. Some say it's as high as 87 percent, but that doesn't shock me because 90 percent of all small companies fail. So, why would 90 percent of startups fail, and real estate agents succeed at a higher level? It's a dog-eat-dog world. But a new agent who has the discipline to talk to as many people as possible, who knows what to say, has the ability to communicate, connect, engage, ask questions and bring value to the customer will win.” Click here to read the full Tom Ferry interview.
Success through a cause
Save the neighborhood parks. Build houses with Habitat for Humanity. Hold fundraisers to support the local animal shelter. Organize volunteers to help feed, train, or provide food for the homeless. Read to disadvantaged kids at the local library or school. Donate compassion at the senior center. Support your community!
The goal is specialization. What better way to make a name for yourself, help the neighborhood, and boost your business than by committing to a good cause? Find one that motivates you. We’re each driven by different passions. If reading to kids doesn’t appeal to you, volunteer at the art museum. The opportunities are endless! Find something that resonates with you.
You’ll be known as the person who saved the local playground. People will admire your dedication. Then, when they’re looking for a real estate salesperson, they’ll think of you.
The beauty of specialization through good deeds is that you don’t need any real estate experience. You don’t need a portfolio of sold homes or lots of Yelp reviews. You can go out and do it today, even before you put up your website.
Just remember: support your charitable cause because you want to, not solely for self-promotion. People will see through that and it will remove all the good will from your good works. Just do the right thing, and business will follow. We have a whole chapter dedicated to social responsibility later in this book.
Join a local real estate organization
While going out and meeting clients (either online or in person) is the best way to generate new business, you shouldn’t neglect your real estate colleagues. They can be a rich source of advice, mentorship, and leads. Dave Phillips, VP of industry relations at Realtor.com and former CEO of the Pennsylvania Association of Realtors® offered this advice:
“I've seen plenty of really super talented Millennials who come into the business thinking they're not worthy yet. I’ve heard many Realtors® who have been there for a while say, "We need to get this new person involved," and they push them forward. They help them go forward early in their career. But sometimes the new Realtors® are reluctant to take the step. They think, "I'm not quite ready," or "I need more experience," or whatever. I don't believe that's the case anymore. I think what you need is innovative thought, and when you get someone new to the business or, someone very young who hasn’t lived through the last eight real estate cycles, you get some fresh thought—some fresh juice in the organization.”
“What we've always found is that the people who are engaged in that sort of leadership and participation—at whatever level of the realtor organization—are the ones who’ll still be in the industry years from now. Anybody who's involved in that sort of volunteerism gets more out of it than they put into it. They become more knowledgeable and have new doors open up that they wouldn't have known about without being involved.” Here’s a link to the full interview with Phillips.
Is part-time still possible?
We all want flexible hours and control of our schedule. In fact, that’s the most commonly cited reason folks went into real estate.[15] Two-thirds of agents surveyed by NAR in 2017 cited flexible hours as their primary motivation to become a real estate salesperson.
As an associate, you can arrange your schedule to take the kids to school, root for them at soccer games, or even treat yourself to a mid-day manicure or workout. You enjoy the luxury of time that many of your 9 to 5 peers can only envy.
Beyond simply wanting control of hours, many folks are drawn to real estate with the dream of working part-time. Perhaps you plan to work only 20 hours per week by limiting your new clients. Alternatively, you might try to job-share and split a full-time real estate job with a friend. In that scenario, you would both work together for all of your clients. You’re still working part-time, but (theoretically) your clients are still enjoying full-service.
Unfortunately, the new world of real estate will make it more difficult to work part-time. The primary reason is that prospects will see who’s making the sales. They can hop on Zillow, Redfin, or Realtor.com and find all the top agents in their neighborhood. And, most likely, those top sellers work full-time.
Now that the MLS is transparent and easily accessible to everyone, I suspect that most prospects will gravitate towards the busiest agents. Social media provides social proof for the biggest sellers.
Here’s an example: I follow Jordan Mott, a real estate agent in the Silicon Valley area, on Facebook. You should too. The guy is amazing! It seems almost every day he has a new listing. It isn’t uncommon for him to have simultaneous homes he’s preparing for market. Even when he’s on vacation, he’s landing new deals. And, most remarkably, his properties perform. Jordan is always working, and he crushes the market.
Now, I’ve never met Jordan. But, if I had a home to sell in Silicon Valley, there’s a pretty good chance I’d be calling him up. I see how well he does on Facebook. He’s a winner with a great track record, and that’s who I want on my team.
As a part-time agent, it would be tough to keep up with top producers like Jordan. A part-time person would never have the sales volume or social media successes to compete against a powerhouse like him. That’s not to say it’s impossible, but you’ll find it increasingly difficult to remain competitive against successful agents - especially when their success is visible for the world to see.
If you do decide to give part-time a go, here’s what you’ll need to focus on to succeed. Much of this advice also works for new or underperforming agents.
● Lead Generation: While lead generation is important for everyone, folks working part-time will especially struggle here. You’ll have fewer reviews on Yelp and won’t have as many successes on Zillow. You’ll lack the social proof of an impressive track record. As a result, you’ll need to work hard to acquire leads. Consider creating valuable content, purchasing leads from sites like AgentZip, or paying for advertising.
● Maximize the QUALITY of your reviews: Since you work fewer hours, you’ll have fewer deals. As a result, you’re likely to have fewer online reviews. Therefore, you must make sure that each deal results in a great review. Once you sell a home, ask your client to post a glowing review on key sites like Homelight, Zillow, and Yelp. Don’t be bashful! It’s possible that your sterling reviews might carry you over the finish line.
● Differentiation: A track record of success is probably t
he best differentiator. As a part-time agent, you’ll have fewer closed homes. Instead, look for alternate ways to differentiate yourself. Find a niche such as a limited geographic area, housing type, or buyer profile. Alternatively, differentiate yourself with your commitment to social causes! We expand on this strategy later in the book.
● Outsource: You have fewer hours per day to work. Therefore, you must make each hour count! Use virtual assistants (MyOutDesk, Kim Hughes), Chatbots (Kaydoh, HelloAlex), and natural language systems like Google Duplex when available. Have the computers do the work for you. Let your assistants screen prospects, make appointments, and handle routine tasks so you have time to focus on the core responsibilities that only you can do.
New rivals and the future of commissions
You’ve always had to prove your worth, but now you have new rivals: the machines. There are so many new ways to sell a home, you will need to prove that not only are you better than the agent down the block, but that your human touch is superior to an inexpensive computer algorithm. Companies like Home Bay and Opendoor will transact a house with little human involvement and much lower cost. Auctions are soaring in popularity and require little agent participation. New models are surely on the way. All of these may cost less than half the price of a traditional real estate agent. You need to show the client that you’re worth it.
With all the new competition, the typical 5-6 percent commission is sure to drop. You have new electronic rivals that cost about 1 percent, and they will impact your pay. On the other hand, real estate firms have less power over you than they used to. You have new options like eXp and Purplebricks. While your overall commission will drop, you’ll pocket more of it and your brokerage will take less.
Angel investor, proptech enthusiast, and real estate expert Nav Athwal had this to say about agent commissions: “I think charging 6 percent commission, regardless of what type of market you're in, is going to erode away slowly. In markets like San Francisco, where you're very supply constrained, and the transaction sizes tend to be larger, 6 percent is very expensive. Those homes typically start at $1M and are going for $1,000+ a square foot. I think taking 6 percent of that transaction doesn't really make sense, and the value the agent brings doesn't justify it. Whereas, that same type of transaction in a market like Phoenix or Dallas does make sense, because the size of the deal is smaller, and the supply/demand balance works much differently than in primary markets like SF or New York.” Here’s a link to the full Nav Athwal interview.
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