You may be one of them, but I hope not! I’ve talked to so many agents who are terrified of competition in their farm. This fear stops a lot of agents from ever starting a farm. And that makes me sad! I’ve heard it time and time again. “I can’t farm this area, there is already someone doing a ton of business in my farm!”
There is some good news and some bad news. So I’ll start with the bad news.
The bad news
Your competition WILL stop you from succeeding. IF YOU LET IT!
The good news
In most cases, there aren’t many agents farming at a high enough level that I would be worried about competition.
So why bother talking about your competition if it isn’t that important? I never said it wasn’t important, I said I wouldn’t be let your competition stop you from starting your farm.
Why worry about competition
You may be wondering what you should be looking for when it comes to your competition. Obviously if you are going to farm a new area you want to know what you are up against. Knowing who else is farming your area is one of the deciding factors in choosing a farm. But it’s not the ONLY factor.
Let’s look at how you measure your competition. Market share is one way to check your competition. How many deals are other agents doing compared to the total sales in your farm? If there are 100 sales in your farm and “Agent A” has 10 listings, then they would have a 10% market share.
But do they really have 10% market share? Let’s look a little deeper. If there are 100 sales in the farm, there are actually 200 sides. 100 sellers and 100 buyers.
Knowing that, let’s look at “Agent A” again. Let’s say they had 10 listings, but only had 5 buyers in the farm. That actually makes their total market share 7.5% of the total sales.
In many cases there are agents who farm an area for listings but leave a ton of deals on the table because they aren’t getting buyers in their farm. So you want to take that into consideration in your calculations.
Are they actually farming
One other thing you want to consider when it comes to competition is “are they actually farming the area”? Just because they have a certain percentage of marketshare, doesn’t mean they are farming the area. Where I live there are a few teams that are doing 400+ deals a year. So if you look in most neighbourhoods, just by pure volume, they are going to have a higher rate of deals than most. That doesn’t mean they are actually farming the area. That’s great news for you!
Should you worry?
You may be wondering how much market share you should worry about. The reality is I can’t give you an exact number because it really depends on your risk level, how serious you are with your farming plan and what your overall budget is. As a general rule of thumb I tell agents that if your competition has 50% or more market share, I would look elsewhere. If they had 25-50% market share I’d have to really consider if it was worth it. 10-25% can definitely be worth going after, but you would want to make sure you have a solid plan and are committed to making it work. If they have less than 10% market share, I say its fair game.
The reality is it doesn’t take much market share to get mindshare in your farm so if you can come out of the gate and you can get 5-10% market share, you can quickly get momentum happening in your farm. This momentum can help you grow your market share even quicker.
Competition trends
The last thing I want bring to your attention is competition trends. When it comes to your competition, you want to see what their long term and short term trends are.
Are they holding their market share consistently? That could be good news for you. It could mean they aren’t in growth mode and are stagnant. This could provide an opportunity for you to break in.
Many times agents lose their market share. They get complacent and don’t adapt and as a result, they lose what they worked so hard to get. There is an agent in my area that used to have 15% market share a few years ago, but for the last 7 or 8 years, her over all market share kept dropping on average of 2% a year. At the time of writing this, she had just over 1% market share for the last 365 days. The total numbers of sales have gone up drastically in the area, and her number of sales dropped off drastically.
If you were looking to farm this area 5 or 6 years ago, you may have been turned off because of her market share, but if you followed the trends, you would have seen that she was losing market share fast and there was a huge opportunity for you to take over.
The other trend you want to watch is the upward trend. Like the downward trend, it can happen pretty quickly. You may not realize someone is farming an area and their sales stats show they only have a few deals, but before you know it, they could be the dominate player in your farm in no time. (But I’d rather that be you than them!) They could be tweaking their business and focusing on growth and may not have 20% market share now, but they are moving in that direction. So be sure to see if they are in growth mode before you try and take over.
Conclusion
After all that, I hope you don’t fall into the category of agents who let the competition stop you from farming. In my experience, there are so few agents who are not only farming, but farming at a high level, that there is so much opportunities for you to build your farm. Who knows, maybe one day, someone will be checking out the competition in an area they want to farm, and your market share will be scaring them away! I hope that’s the case.
Happy Farming!
Ryan Smith – Founder/Creator
Launch Your Farm
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