How to Pick a Successful Farm

How to Pick a Successful Farm

1. Select a target area with at least 300 homes.
2. Assume that the average turnover rate for Houston-area communities is 9%.
3. Calculate the number of homes expected to sell each year (9% times the number of homes.)
4. Determine the average selling price of homes that have sold in the area over the last year.
5. Determine (using MLS reports) if any one agent owns more than 20% of the listings within the target area.
6. If so, farming will take 9 - 12 months to gain 5% market share.  If not, you can accomplish 5% market share within 6 months.
7. Take the number of homes in the target area and multiply by 17 then by $0.65 - this represents the cost of sending a marketing piece by first class mail (not bulk rate) every 3 weeks for one year.  Divide by 2 to calculate expenses for a six-month farm.
8. Calculate the anticipated commissions to be derived from 5% of the listings (including any splits) as a result of your farming efforts.
9. Calculate the anticipated profit or loss from your marketing efforts.
10. Decide if the potential return is worth the investment in farming.