This is the last in a three-part series about supercharging your real estate business with a marketing niche. Part I of the series discusses how selecting a niche helps you to grow your business. Part II explained how to identify potential niches. This final entry will help you evaluate a real estate market niche choose one that will work for you.
If you do a search on the internet, you’ll find a wealth of information on how to determine the value of a market. The approach described below is a common sense way to evaluate a real estate market niche that doesn’t require hiring a marketing agency to complete a six-month study.
Evaluate Your Niches’ Potential
The first thing you need to do is evaluate the potential for each real estate market niche you identified.
Identify the activity in the niche for the past year or two.
Naturally, the more information you have, the better your evaluation will be. Therefore, get as much information as you can. You’ll need to pull information from your MLS and other resources, so first determine how you can identify the niche.
You’ll need to use criteria that you can pull from the MLS as a start. For example, determine if you can use zip codes or subdivision names to describe your niche. In addition, think of the other fields you can use to filter transactions. For example, there may be a field agents use to identify the listing as an historical home or a waterfront property.
Make a chart, and for each transaction in the niche, identify:
- The transaction – perhaps by address
- The dollar value of the transaction
- The agents involved in the transaction
Determine if the niche is large enough to support you.
Total up the dollar value of the transactions in the niche. Then, ask yourself: “What if I could capture 5, 10 or 20 percent of the market? Would that allow me to reach my income goals?”
If the answer is that you’d need 50 or 75 percent of the market, you either need the capital required to keep going until you reach that goal, or you need to choose a more active niche.
Evaluate your competition.
Look at the chart and sort it according to agent name, and calculate how much of the real estate market niche each agent has captured. For example, if there were 500 transactions and one agent did 10 transactions, that agent would have 2 percent of the market.
Look for trends. Does one agent have a large part of the market? Are there five agents that do the bulk of the transactions, then it falls off to a number of also-ran agents? If one agent has 90 percent of the market, you’d need have much more to offer to break in to that niche. But, let’s assume that there are five agents that share the bulk of the transactions.
Your next step would be to research those agents. If you know some of them already, you’ve got a head start, but you’ll still need to do some research.
- Look at their websites. Do they promote themselves as experts in the niche you’re evaluating?
- What does their website tell you about how they brand themselves and how they sell their services?
- Look at review websites like Facebook, Zillow and Trulia. Do they have a five star rating on those sites? What do their clients say they liked about their services.
- Find out everything you can about each agent that would affect their strength as a competitor. Are they mid-career and picking up steam? Are they heading toward retirement? Are they brand new? How many transactions do they complete a year? Do they have any production awards?
After you’ve gathered information about a competitor, look for things that you do better than they do. Pay attention to any negative reviews to find out what people don’t like about working with them. At that point, you should be able to make an educated guess as to how difficult it will be to break into the market.
Make a Choice and Go For It!
You can compare the information you gathered about each of your potential niches and make an informed choice to actively pursue the most promising. Once you’ve made that commitment, go all out. Brand yourself and your website for that niche and market to the people in that niche.
Finally, ask yourself this question: Would you rather have a small chance of getting a very small part of a huge market, or a good chance at getting a significant portion of a specialized market? When you become the go-to person in a niche, finding new clients will be a breeze – they’ll come to you.