Help-U-Sell Core Marketing

Wow.  We have come a long way!  I remember a dozen years ago working with brokers to create a marketing plan that would be effective in their local markets.  It was a complex process that involved trying and evaluating a multitude of advertising vehicles available to create a short list of tools that would work together to make a marketing system.  Each local market was a little different and so the system was a little different from office to office.

Today, we have finally reached the point where marketing is almost a prescription.  The system is easy and consistent, and it works in almost every market.

Core Marketing – those things every broker needs to have working all of the time – is really five things:

1.  EDDMs to the carefully defined target market.  At Summit last year, we refined the target market down to a collection of very active carrier routes.  Instead of shotgunning 10,000 households with an EDDM, we targeted a smaller more active group, maybe 1500 – 4,000 households.  Whether you go out with EDDMs once a month or every six weeks is driven mostly by budget.

2.  Arounds within that carefully defined target market.  Every time a competitor gets a new listing in the target, we postcard or door hang every home up and down the street around the listing.  The reason is obvious:  usually when one listing appears another follows within a week or two.  We want these possible sellers to have our information at this time.

3.  For Sale By Owners.  This is a broader target.  Of course you want to be all over FSBOs that occur in your target market (Expired Listings, too – I tend to lump them together).  But you also want to expand beyond your target as well.  You have the best and most appealing program for FSBOs.

4.  C.I.s.  Anyone who knows your name and associates it with real estate needs to hear from you regularly.  Of course we have the built in automatic CI program in OMS which reaches out to these important people 8 times a year, but occasional phone contact is important as well.

5.  Just Listed/Just Sold cards.  These go around all of your own listings, whether in your target market or not.

That’s it.  That’s the core of Help-U-Sell Marketing.  It’s what every broker needs to have in place and running every day.  Then it’s just a matter of adding in appropriate items as they become available.  Perhaps a newspaper campaign makes sense or radio or Little League sponsorship. These are added to the core marketing, not substituted for it.   Always the goal is to be more visible.

Now, let me take a minor detour to make a case for something many of us have abandoned:  seller participation.  Let’s assume you have the five key pieces of core marketing cranked up and producing.  You are making a real impact on your target market as they are seeing your information multiple times throughout the year.  You know it’s working because you’re getting listings in your target.

What if you start talking with your sellers about the benefits and potential savings of participating in the marketing by holding their own open houses?  Assume you have 3 listings in your 3,000 household target market.  Let’s assume that all 3 are holding an open house on Sunday. Each puts out 7 directional signs. Can you imagine the powerful impression those 21 signs will make?

It would be just a matter of time before you became the Big Gorilla in the neighborhood!

Measuring Success

We measure the success of our businesses in lots of ways and each tells us something different about how we are doing.  Some, though important are not quantifiable;  personal satisfaction and sense of accomplishment come to mind.  You can’t measure them numerically but you know when they are present and when they are not.  From a pure business standpoint, however, there are really only three metrics that establish the success of a business:  Profitability, Market Share, and Market Value.

Profitability:  Tells us how efficiently we are operating the business and whether we are building a business worth having.

(Let me digress with an example!  Suppose you are an ordinary real estate broker.  You have 20 agents and gross on average $90,000 per month.  That’s 20 agents doing half a side a month in a $300,000 neighborhood with you charging, say, 6%.  However, month after month you look at your bottom line, and you see $500 or $1,500 or $2,000.  It seems very little return for closing ten sides a month!  Obviously you are not running very efficiently!  So you do a little analysis. You look at your expenses, and right there you see it:  75% on average going for agent commissions.  It is the single biggest item in your operating statement.  You’re not really operating on $90,000 Gross, you’re giving away $67,500 before you even begin to pay expenses.  Fughetaboudit!  This is definitely a business not worth owning!  Shut it down!)

Market Value:  What is your business worth?  What could you sell it for?  Truth is, most residential real estate businesses are not worth much.  That’s because the business is being built by independent contractor agents who can leave at any time for any reason.  Therefore the value is really the office location, signage and fixtures plus the listing inventory at the time of purchase.  Your Help-U-Sell business is different.  It is a business built on marketing and replicatable systems.  It is not personality driven (like most ordinary real estate businesses).  If you’ve done it right, a new owner should be able to step in, take  control of your marketing and office systems and continue to produce just as you have.  That’s a business worth having and one that has value.

Market Share:  This is where I want to focus because it is a much bigger topic than you might think.  Technically, when we talk about market share we’re talking about what portion of the business in your target market you are getting.  In real estate, that means closed sides.  So, last year, how many closed sides were done in your target market, and how many of them were done by you?  Is it 2% or 5%?  Is that percentage growing or shrinking?  What is a reasonable goal for next year?  And what are you going to do differently to achieve that?

Close Sides market share is a wonderful metric, however there are problems with it, too.  First, it’s a big number that fluctuates a lot in our business.  It wouldn’t make sense to measure closed sides monthly; in our business we have big closing months and not so big ones.  It makes more sense to measure it annually or semi-annually, and you should.

What makes more sense to measure your effectiveness month in and month out in your target market is Listing Share.  This month, how many listings were taken in the target?  How many of them were taken by you?  What share is that?  20%? 50%?

Not only does Listing Share give you a metric you can track from month-to-month, hopefully seeing growth throughout the year, it measures your success at getting your key message into your target market.  You are in the business of teaching home sellers that they can ‘Sell Fast and Save Thousands’ with your Help-U-Sell office.  If your Listing Share is growing, so is your effectiveness in marketing that message.  I think you should be measuring Listing Share every month and cumulatively throughout the year.

Going one step further, there are a couple of Key Performance Indicators that don’t really demonstrate the success of your business but rather your ability to deliver on the promises you make your home seller clients. They are Days on Market, Sale to List price ratio, and % of in house or seller generated sales.

To me, Days on Market is from Listing to Pending status.  We don’t really control how long it takes to get from contract to closing and that’s why I don’t like to include it.  However some MLS’s don’t report the under contract date, so you have to work with the data you can get.

Sale to List price ratio shows how far off list price sellers had to come to make a sale.  Did they 95% of list price on sale?  Or was it 97%.  This does indicate your effectiveness at helping sellers set a realistic price but can also demonstrate the power of your marketing to generate a flow of buyer prospects.

% of In House Sales and/or seller generated sales is important to Help-U-Sell Brokers because these are the situations where sellers save the most.

All three of the KPI can be used as powerful marketing ammunition.  Compare your results on the first two against the MLS in your target market.  You will almost certainly find that your performance is far better than the MLS, and that’s something to share with potential sellers.  The third KPI is valuable in helping a seller decide to participate in the selling process by holding their own open houses.  It says, ‘You really can do this and save a lot of money!’

Before we leave this topic I want to hammer home one point.  Most of what I’ve talked about here involves your Target Market.  That’s probably NOT a Zip Code or Codes (too big) or the entire MLS (WAY too big).  It is that town or collection of Carrier Routes you have analyzed and chosen to plant your flag.  It’s where you focus your marketing, where you are the expert.  Measure your Market Share, Listing Share and KPI there, where your program is aimed.

GET CO-OP’d!!

Ok, gang it’s time (FYI:  ‘gang’ means Help-U-Sell Brokers).  Mike Paholke and the folks at Excel have opened ordering for the Co-op EDDM program.  You can order your mailers now through Jan. 15, in bulk, for close to half what it would cost at any other time.  The Co-op program runs four times a year, so if your target market is, say, 2,000 households and you want to be in their mailboxes once a month, you probably need to order 6,000 pieces now to get you through to the next Co-op date.  In fact, I’d probably order 8,000 just to be sure.  Mike will warehouse your pieces for free and send them out whenever you tell him to.

Just to be sure you understand what a deal this is, if you were to order 2,000 EDDMs at random, your cost, including postage, would be about 50 cents per piece.  Ordering during the Co-op run, the cost drops to:

29 cents per household!

Not too shabby!

So let’s get serious about marketing in 2016, make regular EDDMs to your target market a key component and minimize your cost by ordering during the co-op.  Just in case you forgot, here’s the website:  www.husmailnow.com.

 

A Must See For The New Year

Help-U-Sell Brokers, you know we talk about list to sale price ratio and days on market all the time.  We use those metrics to show that our production is far superior to that of the average broker/agent in the MLS.  And, honestly:  I have never seen a Help-U-Sell office that did not beat the MLS on those two metrics!

Well . . . you need to see this 10 minute video.  It documents how a Coldwell Banker mega-team in Miami manipulated that important data to skew the ‘truth’ in their own favor.  What they did is truly devious and has big implications for decision makers in lots of industries.

So, grab a cup of coffee and settle back, maybe toggle to full-screen view, and close out the year learning how NOT to do it.

What Does 1/4% Increase in Interest Rates Mean to You?

With the Fed raising interest rates for the first time in almost a decade this week, there are a lot of questions about what it means to home buyers.  People want to know how much that kind of increase might impact their anticipated mortgage payment and how much it might affect the amount they can borrow.  I’ll attempt to give some guidance in those areas in this post.

First, understand that this is a tiny increase.  The Fed didn’t want to shock anyone.  They wanted to signal that we are beginning a period of gradual increases.  Most experts believe we will experience several small increases in the rate during 2016, which should be a motivating factor for anyone thinking of buying.  Every time the interest rate inches up, so do anticipated mortgage payments; and as payments rise, the amount one can borrow decreases.  Add to this the fact that prices are slowly rising and soon many may find themselves priced out of the market.

1/4% is not much; but to give you an idea about how this small bump up affects payments and the amount you may be able to borrow, I prepared the following chart.  You can see just how small the increase is:  at 3.75% interest, a 30 year fixed rate mortgage costs $4.63 per month per thousand borrowed.  At 4% it is just 14 cents higher, $4.77 per thousand borrowed.  I’ve shown the principal and interest payment at 3.75% and 4% for 4 different mortgage amounts and the difference.  You can see that a $500,000 mortgage will cost $71.50 more per month after a 1/4% increase in rates.

Continuing with that $500,000 example:  what if the $2,315.58 payment at 3.75% was the most you could afford?  What if the increase in rate meant you needed to decrease the amount borrowed to keep that original payment?  That’s what’s on the next line down:  $485,447.  So if you were looking at houses based on a $500,000 mortgage (probably in the $650,000 – $700,000 price range), this little 1/4% bump in rates may have cost you $14,553 in purchasing power!

increase

I realize the type is a little small but if you’ll click on the chart, it will open in a larger view.

 

Accessibility Toolbar