If I asked you “what business are you in” and your answer is “the real estate business,” you (like 98% of REALTORS®) are wrong according to Michael Russer of Russer Communications. Michael is a genius of sorts; he claimed the title Mr. Internet before we even found out that Al Gore invented it. Russer was tech before tech was cool. He made quite a name for himself in real estate circles back in the 90’s with his Mr. Internet moniker and a passionate belief that the Internet is not about technology, it is about connecting people. Now he flies all over the world telling real estate and other businesses how to use the Internet to market themselves and connect with clients and customers.
So why does Michael Russer think 98% of agents don’t know what business they are in? Actually, he asks his classes a different question. He asks attendees at his seminars if they have a specific target market that would be recognizable by visiting their personal web site. 98% do not have such a specialty or niche market. In other words, only 2% of REALTORS® are NOT generalist.
I am not a REALTOR®, but I did stay in a Holiday Inn Express last night, and that empowered me to come up with a few niche market suggestions for those of you who might want to stand out from the 1.3 million other REALTORS®. One of my strong beliefs is that if you try to be everything to everybody, you will end up being nothing to nobody. This is as true for an association of REALTORS® as it is for each individual member. It is also true in every other part of our lives. Remember High School? If you did not find your niche (band, AV Club, football team, etc.) you really struggled to fit in – to be relevant.
Why then, do 98% of REALTORS® fail to develop a niche within the overall real estate industry? For the same reason many other businesses fail to find a target market – they fear that limiting the pool of potential clients will limit their success. The concept that less is more is both counter-intuitive and irrational. Associations often try to serve all their members, but that just leads to catering to the lowest common denominator.
The association I work for in Charlottesville has defined our primary customer as the professional REALTOR®. That means we develop products and service – create value – for the top agents and brokers and do not worry about serving the needs of the part-time agents that are not in the business as a profession. If the products and services we develop for the professional agents are also attractive to other agents, so be it, but we do not try to cater to their needs.
If you apply this logic (or illogic if you prefer) to real estate, then an agent or firm would have to decide who they wanted to have as a primary customer. Currently, it seems 98% of REALTORS® think every human that might buy, sell, lease, or rent real estate is their primary customer. I’d suggest that is a little broad and by spreading yourself out, you have made your market niche unidentifiable. That’s okay if you don’t mind competing head to head with 98% of the other agents in your area.
Less is More Math
Just for illustration purposes, here is some simplified math to explain the less is more philosophy. Let’s look at a typical local marketplace that has a city as a core and is surrounded by counties. For this illustration, we’ll just look at residential buyers and seller.
20% buy/sell in the City
20% buy/sell in Green County
40% buy/sell Blue County
10% buy/sell Orange County
10% buy/sell Red County
Total 100%
If 100 average agents are working the entire market, each would get roughly 1%. On the other hand, if 2 agents decide to specialize in a niche market, the math changes. Let’s say the 2 agents decide to develop a niche in one county – agent A in Green and Agent B is Blue. They focus their efforts on marketing themselves as the Green County Agent and the Blue County Agent. Agent A captures 10% of the Green County market which equates to 2% of the overall market. Agent B captures 5% of the Blue market which is also 2% of the overall market. That leaves 98 agents to fight over the remaining 96%.
Picking a Niche
Geography is just one potential niche for REALTORS®. Here is a short list of specialty areas for you to consider:
- Country Properties
- Condos
- Homes for Veterans
- Senior Specialist
- Cowboys and Farmers
- High-tech Homes
- Blogger Bungalows
- Green Homes
This list could go on forever (kinda like this post), so let’s wrap this up. The less is more principle is not for everyone. If you have unlimited marketing resources to capture more than your fair share of the general market, this principle is NOT for you. If, on the other hand, you have limited resources, the less is more concept will allow you to effectively target a well-defined smaller group of potential clients. As Michael Russer puts it, “if you’re not targeting, you’re not marketing.”
Greg Cremia says:
Real estate markets fluctuate from one arena to another on a regular basis in good times and bad. If I pick a market that I want to specialize in and that market changes I could be left standing with my hands in my pocket.
When I first got into real estate in 1989 I saw agents who specialized in the upper end of the market lose their houses to foreclosure because that part of the market had dried up.
Agents who had worked in all of the markets managed to hold onto their careers and ride out the slow down.
As a green agent I learned that a niche is a hole in the wall and to survive I had better not let myself get stuck in one.
March 25, 2008 — 1:35 pm
David Patterson, Broker CRS ABR says:
Dave:
This is a great post. Though I agree with the niche concept, I want to ask a question from the Devil’s Advocate position.
My niche is first time home buyers. Most Brokers-in-Charge and Seminar gurus say…..You must list to last!
Do you agree with this statement? Your answer to this question will help answer the next question.
Are agents with first time home buyer niches doomed to fail under that philosophy?
Thanks to anyone sharing their thoughts on my comments!
March 25, 2008 — 2:41 pm
Paul says:
What about the niche of focusing in on and growing your “sphere of influence”?
March 25, 2008 — 3:58 pm
Marty says:
Good article. I am in my sixth year selling Real Estate, Sometimes I wonder what niche I am looking for…. an area? or type of Property? I have to admit I start feeling a little nervous when I start thinking of focusing on a certain niche. It is a good thing I finally set up my web site (thanks blueroof, Greg) I am just starting to Blog so any advice is great. This Web 2.0 stuff is something I will start working at more.
March 25, 2008 — 4:43 pm
Bawldguy Talking says:
I’ve been a niche guy virtually from day one. Your points are so well taken.
My experience with generalists is how short their shelf life is. Though some end up doing a pretty decent job, most quickly learn they can’t compete against the various specialists in each niche.
Good stuff Dave.
March 25, 2008 — 9:00 pm
Sean Purcell says:
Greg,
Your point about working a select part of the market is well taken, but not an indictment of niches. I agree with Jeff: a gerneralist is always competing against someone that knows more and is better positioned because it is his/her niche. Tough row to hoe.
That does not mean that all long-tail marketing is a golden ticket to retirement though! Working only one area; be it high end homes, foreclosures, short sales or whatever the current flavor of the month is, does not mean long term success. As important as niche marketing is, picking the right niche (or possessing the ability to move with the markets) is at least equally as important.
I have always taught that marketing is a three-legged stool. Each leg is a niche. One can have more than three, but it is quite difficult to get more than three up and running at the same time. Making one of those legs a buyer’s agent is fine, but watch out for trend shifts. (For instance, if disbrokeration happens even close to the way I suggest, buyers’ agents will be members of a super team and there will be little call for an independent specialist. On the other hand, if buyers’ agent commission gets divorced as Greg writes about – you may be riding a tidal wave of business.)
As for sphere of influence, that is not a niche – that is THE GOAL! Your niche is the place you show off our expertise and “run for mayor”. No matter what your niche is, the goal of your marketing is to move people into your “community of raving fans”. Once you have grown that community sufficiently, your days of external martketing will be all but over and your income will be dictated only by how much you want to work.
March 25, 2008 — 10:27 pm
Dan Sullivan says:
If you decide to become the townhome specialist of northwest Tulsa, and you pour all of your marketing efforts and energy into that, I believe that it is almost inevitible that you will succeed in selling townhomes in northwest Tulsa.
If however, you decide to ‘sell real estate in tulsa’ and wake up every morning with the same energy spread all over the map, I think your odds will decrease significantly.
All successful agents I know have a niche of some sort. Maybe they found it, or maybe it found them. The bottom line is that you can go broke waiting for your niche to find you. So go create your niche instead.
March 25, 2008 — 10:50 pm
Allen Butler says:
Unfortunatey, I have become a short sales and foreclosure specialist. Barry. . .you stay atta this!
March 25, 2008 — 11:55 pm
Tara Jacobsen says:
Another nice thing about a niche is that it saves you money. When you get those calls to buy the newest product or service, you can hold whatever it is up against the definition of your niche and see if it DOES work for your target. If your niche is high end homebuyers you will not need to market in the Penny Saver and conversly if you are targeting first time homebuyers a $3 per piece sales package will break the bank fast!
March 26, 2008 — 4:06 am
Greg Cremia says:
I guess it all depends on the size of your market. I would starve if I had 50% of the town home market here. I specialize? in 9 geographic locations because they are all too small to specialize in individually.
None of the successful agents here specialize in one segment of the market. We don’t have any markets big enough.
One area I have found to be very profitable is specializing in lead generation.
March 26, 2008 — 5:43 am
Dave Phillips says:
Thanks for all the great comments. You all must be either night owls or from the West Coast. Here are a few replies…
Greg, every market has a niche, but every niche is not in every market. Buyer Agency is a niche, so is lead generation. Choosing the right niche where you can find long-term success is important. A hard working generalist will likely be generally successful, but a hard working niche player has the opportunity for greater reward and, as you point out, the risk of greater failure.
David P, I think 1st timers are a future gold mine. Over the next 15 years, first-timers will take over the market as Gen Y pushes the Boomers aside. I do not think you have to list to exist. In fact, the listing side of the transaction has a far greater chance of being marginalized than the selling side.
Marty, your fears are natural and verbalizing them is a great first step to overcoming them. Sounds like you are headed in the right direction.
Sean, love the “run for mayor” concept.
March 26, 2008 — 6:49 am
Bawldguy Talking says:
Greg — Lead generation as a niche — what will they think of next? 🙂
Seriously, I realize Sean and his super team concept relies on the leader doing just that. It’s amazing to me generating leads can actually be turned into a viable niche.
March 26, 2008 — 9:44 am
Sean Purcell says:
Jeff,
I will tell you what is even more amazing. I deleted three emails ahead of the one notifying me of your comment and another four following it; each one was a company or individual trying to sell me their latest, greatest scheme that will generate untold leads for me so that I will never have to work again. The way I understand it I just sit on the couch and commission checks get deposited directly into my account. 🙂
I will say this: I think the vast majority of agents think they are primarily in the real estate business… which is why so few do any business.
March 26, 2008 — 11:03 am
Mitch Argon, Reno Real Estate Agent says:
Focus is a very good thing in any business. Like many of the folks who have commented here ahead of me, I am in a small market as well. Becoming too focused means starving.
To the contrary, I see brokerages in my area who have staked out a position as “luxury home specialists”. When I see their yard sign in front of a beat up old house that may be luxurious for field mice, I laugh to myself at the way they are destroying their branded niche.
March 26, 2008 — 6:29 pm