How to Select A Niche Market in Real Estate

Once you segment your market, you’ll have numerous groups with common interests, characteristics, and motivations, but not all will be right for you. How do you know which segments to choose?

The best target markets are:

Easy to Reach
Your target market should be easy to reach by some means. If your target is based on a demographic, look for trade shows, mailing lists, publications, associations, and other media targeted at this group. Sometimes people have great ideas for prospects they’d like to target, but the group is virtually impossible to reach. If you can’t find any type of organization that caters specifically to these people, odds are that it isn’t a good target.

• What organizations do they belong to?
• What events do they attend? (networking, conferences, workshops, religious activities, charities)
• What do they read? (magazines, newsletters, websites)?
• What do they do for fun? (cooking, gardening, sports, video games, traveling, etc)
• What tv shows do they watch?

Small enough to be manageable
Most successful agents pick a target market of 500-3000 prospects to market to regularly. I suggest starting small and as you pick up new clients, slowly expand your target market. Keep in mind that it is much better to reach fewer people on a consistent basis (10-12 times per year) than it is to reach more people less often. Taking that into consideration, how much can you afford initially?

Fit with your personality and strengths
Your ideal target market will value the strengths you bring to the transaction. In the previous chapter, you uncovered a number of your passions and strengths. Look for a target market that you are passionate about working with and that fits with your strengths. What knowledge, skills and talents do you have, and which market segments would find them most valuable.

Profitable
How can you tell if a market segment will be profitable? Look at statistics like the turnover rate, how long homes will be on the market, and the number of real estate agents who are serving this market. If you’re focused on a particular geographic area, for instance, drive through the area and count the number of “for sale” signs, making note of the selling agent. Do a handful of agents’ names come up? You can also search your local MLS for this information, or go down to your local NAR organization or Chamber of Commerce and browse through their real estate statistics. Look at the trends. Does it look like you can make money with this target?

Underserved
To be successful, you need to pick a target that isn’t being served to capacity by other real estate agents. If another agent has more than 30% dominance in your marketplace, you should consider picking a different target market. How do you know if other agents are targeting your market? Go back to the “Easy to Reach” section and make note of other agents that are going to those organizations and advertising in those publications you listed.