UNcommon Wisdom

The most common wisdom is that going door-to-door, telling people that you are the local real estate specialist, is a good use of your time. There are people in every office in the country who will tell you to do it. If you don't get any business from it, they will tell you it is because you aren't doing it enough.

The common wisdom is that you need to "get your name out there." You can drop off a neighborhood newsletter or market analysis with the homeowners. They will remember you when it's time for them to buy or sell. This practice even has an official name: FARMING.

What a great idea! Right? WRONG!

Try doing the math on this very bad idea. Any group of geographically related properties has a fairly low turn-over rate. Generally it is from 3-7%. That means that for every 100 homeowners you will speak with, three to seven will actually sell that home during the next twelve months. That means the average odds are 20 to 1 against you. You are better off in Las Vegas where it is close to even or 6 to 1 at worst.

Even the 3 to 7 sellers will not identify themselves, so you will never know. Many don't yet know themselves and the others have no reason to share that information with you. Why would they? You are a total stranger with a business card.

More math...

Let's say you want to take 10 listings per year. Then if the turnover is 5%, you need to greet a minimum of 200 people on a long term basis. Over and over again. You won't ever get much more than 20% of the listings in the area, no matter how many times you call on every person. That means you need to talk with 1000 homeowners in the same area every month. If you don't get 20%, say 10%, then you need to talk with 2000.

It is just not going to happen.

That is 66 people EVERY day, including Saturdays and Sundays. Or 100 every weekday. At 10 people per hour, that is 10 hours per day, Monday through Friday. If you annualize this work, it is 2400 hours per listing taken. Not counting the time it takes to service the listing.

Now let's hope all ten of those sell and close escrow, you've earned it.

Here's the math:
2000 homes X 5% turnover = 100 deals X 10% capture rate = 10 listings.
2000 homes X 12 months = 24,000 talks ÷ 10 per hour = 2400 hours per listing.

Should I Start NOW?

The economy is in a shambles, credit is tough, gas is really expensive, unemployment is up...

So why would you want to go into real estate now?

Interestingly enough, people who begin a career in the tough times are often those who maintain a successful career over the years, regardless of the economy.

There is always a reason not to start. But the real reason to start is because it is something you want to do. I offer you a quote from Goethe:

Whatever you can do, or dream you can, begin it.
Boldness has genius, power, and magic in it.

When times are easy, you learn to do the business the easy way. So when things change, as they have recently, you are helpless. As a result many people who started in the up-market years are presently stagnant. They are still doing all they did before, but it isn't working anymore.

When you start in the tough times, you will be forced to master the systems that work, you will not be able to cut corners and still "do all right." Once you learn and master techniques, business principles and systems that drive business in this market, you will be poised to have significant business when the market turns to a bull market.

So the short answer is YES! Now is a great time to start.