Are you familiar with the Danish Proverb: Many Streams Make A River?
One of the first things you do as a new or seasoned real estate professional each year is to identify your referral sources for business planning purposes. Your various referral sources are your streams that all feed into your 'flowing river of referrals.' In order to add additional streams to your river, you should not overlook the power of certain niches.
Niche marketing can be defined as a specialty and the more defined your 'niche', the more targeted your marketing. The more targeted your marketing, the more return on your marketing dollars resulting in higher conversion rates from a smaller pool of leads.
Why the need for niche marketing rather than the traditional sphere of influence? Let me ask you this: Do you really understand your current market?
I'm not just talking about whether or not homes are selling in your market or what the current interest rates are. I'm talking about do you know how your market MOVES? This is important information because it can really help you understand some potential opportunities as well as why your current marketing efforts may be missing your target.
According to the National Association of Home Builders: The average single family homeowner now stays in their home for 13 years. The average 1st time homebuyer now stays in their home for 11 years. These numbers are significantly up from just a few years ago.
I'm not discounting the value of the purchase market because there will always be new homebuyers as well as move up buyers - My point to you is this: the time frame in which you will have repeat clients has gotten longer and you have to have a plan to consistently attract new clients on a consistent basis - otherwise you're going to stay stuck on that famous cyclical roller coaster we are all familiar with in the real estate industry.
There are many niches you can specialize in; however, one very overlooked niche in both real estate and mortgage lending is the Divorce market.
There is an average of 2.4 Million divorces every year in America. That breaks down to one divorce being filed every 13 seconds.
- Did you know that 70% of these divorces involve real estate?
- Did you know that 47% of divorces involving real estate either need to sell or refinance the marital home?
There is a direct correlation between new household formations and divorce. As a business savvy real estate professional, you cannot overlook the power of the divorce market.
Let's look at the divorce market in a different way - the high number of divorces in America also means there is an opportunity for you to help these divorcing clients make that transition into their new life post-divorce.
Summarizing the numbers above (70% of all divorces in America involve real estate and 47% either sell or refinance) - that breaks down to 14 opportunities every minute accross America. 14 opportunities to help set divorcing clients up for success which is a direct correlation between being a transactional real estate professional vs. a relational one.
Here is a different look at the opportunities of working with divorcing clients:
With every divorce that involves real estate, there are potentially 1, 2 or 3 opportunities within that one referral.
- Perhaps the marital home is sold and both parties rent. (1 opportunity)
- Either the marital home is retained, perhaps to be sold at a later date and the vacating spouse buys (2 opportunities)
- The marital home is sold and both spouses purchase new homes (3 opportunities)
Identifying the multiple opportunities present in the divorce real estate market can really play an important role in growing your business in the divorce niche.
Let's take a look inside the divorce market -
Behind every for sale sign is a story and sometimes the story is a sad tale about a marriage that didn't end happily ever after. One might think that as a mortgage or a real estate professional, working with divorcing couples is just another listing or mortgage transaction. Just as there are specific nuances of family law and IRS tax law as they relate to real estate in divorce situations, there are also several nuances of working with divorcing clients as a mortgage or real estate professional.
Rather than dive in and start telling you what the divorce market is, let's look at what the divorce market is NOT.
- The divorce real estate market is not about providing free property valuations to attorneys and divorcing clients.
- It is not about providing free rate quotes and pre-approvals.
- The divorce market is definitely not about babysitting or incubating leads in your database until they finally decide to make a move.
The divorce market is; however, about becoming a Subject Matter Expert. It is about having the strong knowledge base allowing you to educate your clients as well as your referral partners. The divorce market is also about consistency - consistency in delivering that knowledge as well as staying up to date on the changes that will affect your divorcing clients when selling; buying or refinancing real estate during a divorce.
To really succeed in any niche market it requires that you become the Subject Matter Expert in your chosen niche. There are two key benefits as a Subject Matter Expert:
- It differentiates you from your competition.
- You will gain more respect and stability.
How does one become a Subject Matter Expert in the divorce real estate market?
This puzzle image is a key concept and visual for real estate and mortgage professionals contemplating the divorce market. I love this image for two reasons. One, it shows how the puzzle pieces of Divorce Law, IRS Tax Law, Mortgage Financing and Real Estate fit together in the divorce puzzle. Two, it shows how the pieces are still disconnected at the same time.
I cannot over emphasize the importance of becoming the Subject Matter Expert in the divorce real estate market and that goes way above and beyond the ability to list a home for sale or take a mortgage application.
I'm not saying you need a law degree and I'm not saying you need to become a tax accountant. But you do have to have a strong foundational knowledge base of how each puzzle piece fits together - because if you don't and you believe you can get by with just an understanding of divorce lending guidelines or a great listing presentation, then I can pretty much guarantee you will probably be on to a new niche in just a few months.
Here is an example of how disconnected these pieces are. I am currently working with a client who is going through a divorce. Two years ago this client went to a real estate professional and said she was planning to get a divorce but wanted to go ahead and purchase a new home. The real estate professional gladly found her the home - purchased and closed. Now, two years later in a crazy Denver market and in the middle of the divorce, she is being forced to sell the home and give her soon-to-be ex-husband his share of the equity. And if you are at all familiar with the current Denver market then you know the home has greatly appreciated in the two years since purchase.
Why is she being forced to sell the home and pay her ex-husband? Lack of knowledge - the real estate professional failed to inform her to seek legal counsel because when she purchased the home she was still married and the home was considered marital property. Additionally, so is all of the new furnishings purchased to furnish the home. This is by far one of the simplest examples but one that we can really relate to.
Please look for my follow up post: Niche Marketing: Divorce Real Estate Market Part 2 of 2.
I will share must have knowledge when working with divorcing clients - whether it's a one time transaction or a desire to create your niche as the preferred divorce real estate professional in your market!
Be sure to follow me so you don't miss the follow up post!
Jody Bruns, CDLP
President Divorce Lending & Real Estate Association
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