Real estate agents regularly use postcards to generate new leads or promote an open house. Sending postcards is not new, but recent innovations in technology and access to beautiful templates make postcards a highly effective marketing strategy. If done right, postcards can offer an extremely high ROI compared to other marketing channels.
One of the most important elements of success with direct mail for real estate agents is proper budgeting. Let’s take a look at how to determine your budget, and utilize the cost of sending postcards consistently to maximize results.
Determine the Size of Your Geo Farm
The first step is to determine the size of the target audience. Calculating the farm size is important because you want to know beforehand how many postcards you will need to generate leads in the long-run.
It also makes sense because not all homes in a particular region are priced the same. Even in cities, there are hot markets and cold markets. For instance, if there is an influx of people moving out to the suburbs and less demand for urban condos, that will have an effect on the pricing.
Another reason why locating the best real estate farm to target involves your image as an expert. If you select a geographic farm that has high demand, homes will sell quickly and further enhance your reputation as an expert real estate agent.
To calculating the farm size, select a geographical area that you’re comfortable serving. Keep in mind that it’s sometimes better to work with certain categories, such as subdivisions and zip codes, because you can easily find MLS data for such areas.
Once you have the data, look for areas that have a turnover rate of at least 5%. For example, if there are 200 homes in a given real estate farm, 10 homes sold is the minimum turnover rate to consider it for farming. Since variance can play a role in a short time frame, a two-year window can provide more information.
The next step is to look for saturation rates in selected areas. The saturation rate tells you how many agents were involved in listing and selling a home in the area. You can easily get this data from MLS. If 20 homes were sold in an area over two years and one agent was responsible for 8 of them, the geographic farm is considered over saturated.
Ideally, one agent will have no more than 10 percent of the listings in an area to make it ripe for farming.
If your chosen Geographic Farm has a sufficient turnover and saturation rate, the next step is establishing your postcard campaign budget.
Calculate Monthly Cost of Your Real Estate Postcard Campaign
Even if you plan to send postcards to a chosen real estate farm indefinitely, it’s good practice to determine your monthly budget to add to your overall marketing budget.
For demonstration purposes, we will use our pricing model to determine the monthly cost of your direct mail campaign. Since we offer no minimum order requirements, the math is made pretty simple.
Here is how to calculate the initial campaign cost using different postcard volumes:
150 postcards x 0.75 = $112.50
200 postcards x 0.75 = $150.00
250 postcards x 0.75 = $187.50
300 postcards x 0.75 = $225.00
500 postcards x 0.75 = $375.00
Why a Monthly Budget for Postcards is Important
In most scenarios, it makes sense to create a monthly budget. It is practical because the cost of sending postcards every month is easily integrated into your monthly real estate expenses. The short-term monthly expense report can also help visualize and calculate any long-term goals, such as your yearly plans.
As a real estate agent, you must remember that you need to send postcards at regular intervals to remind the homeowner that you’re in the area to serve their needs. Under the circumstances, you may need to send multiple postcards to a single address before initiating any type of dialogue.
A ballpark figure for a response rate in real estate is anywhere between 2% and 4%. In other words, it means that you will receive 2 to 4 responses for every 100 postcards you send.
Determine Your Annual Real Estate Direct Mail Budget
A mailing campaign may last for several years but the annual budget for postcard costs allows an agent to determine the volume of real estate transactions they would need to close to be profitable. Here is an example of the ROI:
500 postcards @ .75 cents each = $375 per month.
$150 x 12 months is $4500.
Assume 3% commission as a listing agent,
Break-Even Point: $150,000
Double Your Investment: $300,000
After doing some number crunching, let’s say you determine that it is feasible to send 500 postcards every month to your prospects. At 0.75 cents per postcard, your monthly budget will be $375 per month. In this case, the yearly expense is $4,500.
Assuming that you get a 3% commission as a listing agent, you will need to sell a home costing $150,000 every year to break even. If the average cost of a home in your area is $300,000, you can easily double your investment by selling one average home in just a year.
If you would like to see your potential profits from your real estate prospecting campaigns, check out our ROI Calculator.
Even in a digital age, sending postcards is the most effective way to generate listings. Understanding how much it costs to send your real estate mailers, and implementing a long-term strategy based on those costs, will lead to increased success as an agent.
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