Sales generation is a vital component in business. Without sales, the business will not survive. It is important to keep the sales cycle going. In a competitive industry like real estate, acquiring new clients is not enough. You have to maintain them by establishing long-term relationships because existing clients are a good source of revenues. Therefore, in order to have a healthy and sustainable sales cycle, your prospecting list must be top-quality. If you want to target better clients, you should improve your research methodologies to find qualified prospects.
If you don’t have a client, you don’t have a business. In a service-oriented business such as real estate, you have to proactively look for clients. The act of looking for clients is called prospecting. This is how real estate agents build their list. It is also why many believe the sales cycle in real estate starts with prospecting.
Once you have a prospecting list, you can start making your calls. If you land an appointment for a presentation, that becomes your opportunity to turn a prospect into a client.
However, if your prospect is not interested in what you are offering, it will not matter if you are the best presenter in the industry. Even if you can show irrefutable data that purchasing the property is a viable investment, you will still fail to close the sale.
That is why technically, prospecting is not the first step in the sales process. It should be research.
How Does Research Add Value To Prospecting?
Have you heard these explanations before?
- “I’m afraid I am not liquid at the moment. My money is tied up in long-term placements. I also increased my equity stake in the company so my investible funds have been ploughed back into the business.”
- “I just purchased property worth $880,000. 60% of the payment was facilitated by a 10-year loan. I won’t be able to finance two mortgage payments. Had I known earlier, I would have picked your property.”
- “The property looks great! I’m sure it will appreciate in a few years. Unfortunately, it is out of our price range. We are looking for property in the vicinity of $350,000 to $550,000. That’s why my wife and I were thinking of buying property in 2 years.”
You probably said to yourself, “Things that I should have known before I asked for an appointment!”
Yes, it can be frustrating. Prospecting takes time and effort. Calling for an appointment can seem like a never-ending chore. That’s why landing an appointment can be an exhilarating experience.
Getting a schedule to present a proposal before a prospect is a step in the right direction. Your proximity in moving the person from prospect to client will depend on how you acquired him/her to be part of your list.
The truth is as frustrated as you might get, the onus is on you to prove the prospect is qualified to engage in real estate.
If you want to target qualified clients, you must incorporate research into your prospecting activities.
It’s not just the clients that you should prospect. You should likewise prospect the properties that you want to offer to clients.
Similar to prospects, not all properties are created equal. There are properties that are more in demand than others. They move faster in the market. You can close deals in a shorter time frame. The trade-off is that the commission rate on fast moving, high demand properties will be comparatively lower than slow moving, low demand properties.
The advantage of focusing on high demand properties is that you can bring in revenues to your business faster and maintain the sales cycle.
As a real estate agent, you must decide on the types of properties you want to offer your clients. Once you have determined this, then it will be easier to identify the prospects who may be interested in your properties.
By matching your properties with the right buyers, you will greatly improve your chances of closing deals and generating sales for your real estate business.
Step 1 – Research on the Properties You Plan to Offer
Do you plan to offer commercial or residential properties? Both types of properties will have their share of interested parties. In fact, some real estate agents will offer both types of properties for sale. There are definite opportunities to profit in either commercial or residential real estate.
You should determine through research which type of property has higher demand. Find out if the economic indicators are good enough to offer a promising environment for businesses to rent and set up shops or offices.
Here are some economic indicators that you should use as references:
- What is the lending rate? A low lending rate will encourage people to buy homes. One of your best resources would be a Mortgage Officer. He/she can give you valuable information on lending rate trends and if banks in the area are more receptive to loan applications.
- What is the employment rate? A high employment rate is a sign of a strong economy. It means jobs are being generated and demand for products and services is high. If the economy is strong, its property will have higher prospects for growth and appreciation. High employment rates may also trigger interstate migration which could further put inflationary forces on property prices.
- What is the trend on property prices? If property prices continue to be on the upswing, that is a sign of strong demand. You should also check on the supply of properties that are available for sale. If supply is tight, it will drive property prices higher. High demand will create a sense of urgency for investors.
- What was the average sale price of property in the last 6 months? This is particularly valuable if you plan to sell residential property. You should run a CMA or Comparative Market Analysis. This can be quite tedious. In order to come up with a reliable CMA, you have to list down the features of the houses that were sold. Did it have a pool? Did the house have a garden? What is the size of the garage? Were the interiors of the homes carpeted?
Step 2 – Connect with the Owners of the Properties
Once you’ve pinpointed the properties that you plan to sell, create a database of the properties’ owners. This is fairly easy to do as most property sellers will include pertinent details including contact information.
You can also use your network to give you an advantage when dealing with the property owners. Find out if anyone in your network knows the property owners in your database.
Ask your contact if he/she can give you an endorsement or an introduction. If the prospect has a “gatekeeper” or a secretary, a first-hand introduction will help you gain access to the door.
Reach out to the property owners and sort out the details of the arrangement such as the commission rate, active selling period, best days and hours for viewing, and if there are other agents working on the sale of the property.
Step 3 – Create a Buyer’s Profile
Now that you have identified the types of properties that you want to sell, it’s time to shift your focus on the prospects you plan to offer the properties to.
There are two types of buyers: Investors and Speculators. The Investor is a buyer who wants to acquire property for the purpose of residency. The Investor wants a home for himself/herself or for the family.
His/her motivation is driven by a need to provide shelter. Of course, the Investor understands that real estate property will appreciate in value over time. The Investor would want the property with the best potential to yield good profits should he/she decide to sell.
The Speculator has a high level of disposable income. He/she is looking for a good investment to “park” their cash. The Speculator’s main purpose is not to set up residence. Of course, he/she could. However, the intentions of the Speculator are more varied.
The Speculator can develop the property and rent it out. Likewise, the Speculator can use the property as collateral so that he/she can acquire more properties. Another option is to simply allow the property to gestate and appreciate in value.
Your prospects could be investors or speculators. When making a Buyer’s Profile, identify whether the prospect is an investor or a speculator. Generally, speculators are more liquid. They are ideal for establishing long-term relationships as they are open to buying more properties from you in the future.
What data should you collect for your Buyer’s Profile?
- Complete Name
- Date of Birth
- Current Residence
- Contact Details
- Age
- Gender
- Civil Status
- Number of Children
- Name of Company
- Occupation (Employed/Entrepreneur)
- Designation
- Years Working
- Salary or Estimated Salary Range
- Assets owned (Property, Car, Club Memberships)
These data should help you create an ideal Buyer’s Profile. You will be able to pinpoint which prospects would be more inclined to buy property from your list.
Conclusion
A Buyer’s Profile works like a guiding light. It will illuminate the direction you should take your prospecting activities on. If you plan to prospect using a social media channel like LinkedIn, the Buyer’s Profile will be your guide when you customize the parameters of your search.
When you are doing old- school networking, you will be able to pinpoint the persons that you should target at the event. You will know how to approach them and what questions to ask.
Incorporating research into your prospecting activities will make the time spent more productively. It will shorten the time you need to convert interest into revenue.