Does Farming Actually Work In Real Estate?

In my pre-licensing classes at Demetree School of Real Estate, farm area is probably the first vocabulary word I teach.  On day one, within the first hour of class, they learn that a farm area has nothing to do with agricultural.  Rather, it is a residential prospecting technique where the real estate agent specializes in a particular neighborhood.  I give an example, and the students usually chuckle in disbelief.  Someone always asks, “Does that actually work?”

It works like a charm.  It’s not exactly the fast path to success, but there is no such thing as a fast path to success. 

I have several Realtors who farm my neighborhood.  I probably get half a dozen postcards a week from different real estate agents.  I get Just Listed postcards, Just Sold cards, football schedules, soccer schedule, you name it.  I usually give it a quick glance, then because I’m a real estate instructor, I put it in a folder to use in class.  If I weren’t an instructor, I’m sure I would toss them.

The front and back of a farming postcard I received. It includes the name, phone, email or the real estate agent plus a customized link for me to get more information.

So the other day, our local Realtors Association sent out the ballots for the board of directors.  I recognized one name, not because he was student, not because I’ve done a deal with him, not even because I’ve ever met him in person.  I recognized him because I’ve been getting postcards from him. 

I haven’t voted yet, but in elections, whether it is for the local Realtor Association or United States Congress, the biggest hurdle is getting people to recognize your name. This guy that has been sending me postcards for a year has overcome that hurdle.

So yes, farming absolutely works. But just like farming the land, it’s not a quick fix. It takes a while.

How To Use Purchase Money Mortgage To Help Your Client

When you were sitting in the pre-licensing class, you likely thought, “I’m never going use this stuff after I pass the state exam.”  For the most part, you won’t use it.  But here is one thing that, if you remember it from pre-licensing, could save the sale.

Do you remember what a purchase money mortgage is?  It’s when the seller holds the mortgage, or when the vendor is the lender.  Usually when I teach this in class, people think this is crazy.  Why would the seller want to hold the mortgage?  For the same reason the bank wants to hold the mortgage – they make money from the interest.

Ask the seller to hold a purchase money mortgage. It might save the sale.

Back in the good old days, this is happened every day.  It’s not as common today, but it still happens.  In fact, I have a purchase money mortgage on the house I live in.

If the buyer didn’t need any cash, the seller could finance the entire $200,000 purchase.  Then, every month the buyer would send a check to the seller. The seller is acting as the bank.

The buyer gets the deed – this is not rent-to-own.  The seller is lending money that is secured by the house.  He puts a lien on the house just like the bank does.  He can foreclose on the house, the same way the bank would.  Every month, the seller will get a check in the mail.  The real estate agent gets a commission.  Win-win-win.

A more common example would be were the seller lends a smaller amount of money. Let’s say the seller wants $200,000 for the house.  The buyer has $50,000 to put down and is approved for a $125,000 loan.  In other words, the buyer is $25,000 short.  You could ask the seller to hold a $25,000 mortgage.  Every month, the buyer would send one mortgage payment to the bank and a different smaller payment to the seller.

If the seller doesn’t need the cash from the house, ask her if she would be willing to hold a mortgage.  If you represent the buyer, and the negotiations are a small amount apart, ask the buyer to hold a purchase money mortgage.  This might be the thing that saves the sale.

Good luck out there.

To Get Good At Real Estate Sales, Get Good At Scripts

I love scripts.  You might be thinking, “Scripts just sound canned.  I want to sound natural.”  But hear me out.  Does your favorite actor sound canned when they are acting in a movie?  No, they sound natural.  The reason they sound natural is they have practiced the script, and embraced it so it sounds natural.  So if the script sounds canned, it’s probably not the script.  It’s the actor.

I’m not suggesting for one minute that a sales person should be an actor playing a role. You can be yourself. Fortunately, in real estate sales, we are not given a script and told we have to say it word-for-word.  We get to write out own scripts.  You don’t have to play a part in a movie.  I’m suggesting you should prepare what you are going to say and practice it until you can deliver it naturally.

You might be saying, “But it’s a live presentation.  I don’t know what the prospect is going to say.”  Let me ask you this… when a stranger says, “How are you?”  Do you pause, think about it, and then answer?  Or do you say, “I’m fine.  How are you?”  I’m betting you follow the script.  Now you might not say those exact words.  You might have a different script that you follow.  You might say, “I’m great.  Thanks for asking.”  My point is that you took a script that you were probably taught at a very early age, modified it to fit your personality, and have been using it so long that it sounds natural and just rolls off your tongue.  When someone says, “How are you?” you don’t even need to think about how you are going to respond.

I’ve done several types of sales.  Usually after about 5-10 presentations, you have heard all of the objections.  Every once in a while, you hear a new one.  But most fields have a handful of objections that you hear all the time. 

Let’s say the customer says, “Mr. Agent, your commission is too high.”  When is the best time to come up with an answer to that?  Right now when you are sitting in her living room?  Or last week, when you had a few minutes to think about it, write it down, and practice it so it would just roll off your tongue. 

If you work in timeshare, they might say, “We are planning to buy a house soon.”  Is today the first time you’ve ever heard that objection?

If you don’t have a script for an objection, a good place to start is the training your company offers*.  If your company doesn’t offer training, ask the other people in your office how they answer it.  I take that back, don’t ask everyone in your office – ask the best agents.  You don’t need to mimic mediocrity.

Write down what people say.  Try using their script, modify it until it works for you, then stick with it.  Practice it enough with other people until you can say it as smoothly as you can say, “How are you doing?”

“I’m fine.  How about you?”

*If your company doesn’t offer training, you might be at the wrong company. Call me.