Written By: Brian Fox, VP Business Development, Benutech, Inc.
We live in a world today where we know where we are going before we even get there – and life is easier and better because of it. The best restaurants, stores, and shops can be located online, reviewed on various sites such as Yelp, viewed on a map, and if we want we can even see the front of the location using a street view before we arrive. In other words, there are very few mysteries in area of direction in today’s world… we can very easily know before we go and for the most part, it’s how we roll.
Yet for some odd reason, this know before you go mentality has not been used in real estate as often as it should. Most Realtors, seem to market into geographic areas or to family and friends… as in the people closest to where they live, or closest to where they work. It’s random, it’s best known as the “shotgun approach” to marketing, and it’s like heading to a new spot in your city without reviews, maps, or direction. It was how it was done in the 1980’s but why so today?
Real estate coaches throughout the U.S. seem to be on board with the know before you go mentality. Seems every coach I have ever read or heard, is focused on finding areas that are selling (areas of 7% turnover rate or higher per year), and then coach their students to market into those areas for better marketing results. Turnover rates or other “reasons to sell” such as divorce, mortgage default, or empty-nester status are all available… and easily accessible. So why in 2016 should we market from Front St., to Market St., between Main St. and South St. when we could be marketing to owners that have reasons to sell their property?
To illustrate this point, let’s take a quick look at the wonderful city of McKinney, TX. It happens to be the city that CNN Money named in 2014 First Place for “Best Places to live in the U.S.” The U.S. Census Bureau also named it the fastest growing city from 2000 – 2003 and again in 2006. The Realtors in McKinney obviously have a lot of selling points for their fine city and the sellers in McKinney should be in a good position to profit from these accolades if they choose to sell.
But let’s use data to take a closer look at the city… There are 15,187 rooftops in McKinney, most of which are single family residences. For most Realtors, it’s not possible to market to all 15,187 of those residences. There are just too many rooftops in McKinney, not enough funds in the marketing budget, and not enough time to accomplish marketing to each of those residences once per month. So rather than marketing to all residences, or just the residences nearest you… can we find the needles in the McKinney haystack? In other words, can we find the folks that have a higher probability of selling their homes in McKinney this year or next? The answer is: Yes.
Homes in McKinney traditionally sell at rate of about 3.3% per year. In the most recent couple of years, homes have been selling at better than 10% per year with the added popularity of McKinney. But newly sold homes rarely go back on the market and sell in the upcoming few years… so today, how do we find the most probable sellers for 2016 & 2017 in McKinney? The same way you use your phone to find the best lunch spot in McKinney. You leverage information to know, before you go.
All Realtors can think back to listings they have taken and sold in the past and why they were able to acquire them. A homeowner filed for divorce, and then they listed and sold their home to make an equitable split. A mortgage default occurred at a property, you got the listing. An owner passed away, then you got the listing. Preceding most sales is a “life event” of some sort… and the life event may simply be the increasing age of the homeowner that then leads to their property selling.
Most life events are available to the general public. Divorce, eviction, probate, bankruptcy, and mortgage ortax default filings are all made public by courts. When matched to owned property, it creates a database of homeowners that are much more likely to sell in coming years than their neighbors. When homeowners decide to go FSBO, or have an Estate Sale to sell personal belongings prior to a move – they post the information online to drive traffic to the event. Again, knowing these addresses provides a timing advantage to the Realtors that find them and market to them.
Let’s now get back to McKinney. We have already discussed that there are 15,187 rooftops in the McKinney haystack. A closer look at available information on “life events” in McKinney reveals the following: There are 87 homeowners that have filed for divorce in the past 12 months that have not yet sold their homes. These folks may be going from 2 incomes to 1, and may need to sell. They may have more equity in their property than money in the bank. Either of those reasons could lead to the equity being liquidated by property sale in order to facilitate a fair split between the owners. Statistically, 22.1% of couples that file for divorce sell their homes in the first 12 months after filing. A good Realtor is going to be an important piece of that puzzle.
Also in McKinney, there are 32 homes with mortgage default filings in the past 6 months. Better than 50% of these will result in property sale within 12 months. Eight homeowners have filed bankruptcy in the past 6 months. Fourteen homes are trying to “For Sale by Owner”, but have not yet sold. Seven homes are in Probate. There are also 1,498 homes with approved “Senior (Property) Tax Exemptions”. Of those, 570 of them also have 4 bedrooms or more (large homes). These are your classic “Empty-Nesters”, and they sell property for many reasons. The home may be too big for them now, the stairs are no longer a good idea, they may soon need an elderly care facility, or their passing may facilitate the home sale.
In each of these situations, it has been statistically proven that when these types of events occur, the properties associated to them sell more frequently. There is no way of knowing that these events are occurring by looking at the street address or by staring at the outside of the home. Life event data has to be matched to owned property, and when that match occurs, the results are eye opening.
ReboGateway, a product by Benutech, Inc., identifies and matches these types of life events and more to owned property. ReboGateway allows Realtors to quickly identify probable sellers by “life events” so that they can be smarter about whom they market to and when to market to them.
So the next time you are in McKinney, TX or in your hometown, don’t just stop at any lunch spot. Use select data to know before you go. In case you were wondering, in a state known for its barbecue, the best BBQ in McKinney, TX is Hutchin’s BBQ and Grill. It is ranked the 2nd best restaurant in the city and 356 reviews say it’s a “must go” as the “Best BBQ in North Texas”. Similarly, the next time you choose to make yourself known to homeowners with your focus on acquiring new listings… find the addresses that are more likely to sell, and market consistently to those addresses. The correct select data matched to a consistent marketing plan is how it should be done today and in doing so; Once again, life is easier and better because of it.