When dealing with buyers or sellers who live outside our community, we need to be aware of the dynamics of “feeder markets”. By definition, a feeder market is a remote location which provides most of our clients. Let’s say that we operate in Tampa Bay. The best way to find feeder markets would be to track down the place of origin of owners and renters that come here for their vacations.
It has in fact been demonstrated that buyers coming from other countries or from other states must have had a previous personal connection with the area before considering to purchase a property. It has also been proven statistically that more people tend to come from the same locations. This can be explained in terms of ease of travel or acquaintance with the area through friends and colleagues.
The initial contact is usually in the form of renting a place either for vacation or for business purposes. It can also be a few nights at a local hotel before returning to their own hometowns. There are therefore various ways we can establish feeder markets and they all begin with a deep study of our local area.
If you are active in the resort and second house markets, you can start by simply checking which airlines have direct flights to your closest airport and where they come from. Each one of the original destinations represents a feeder market. Airlines assign new destinations based on a stable and adequate number of travelers on that specific route. And you don’t even need to look too far: NAR statistics show that the majority of second-home buyers purchase within a 180 miles radius of distance from their home town. If you are in international sales, then international flights will help you narrow even better the feeder markets for your foreigner buyers and investors.
Farming the Feeder Markets
Following the principle of the farm area, which requires us to specialize in a specific sector of the market, we should, therefore, pick a couple of feeder markets to serve. Experts from the Resort and Second-home Property Specialist (RSPS) certification panel suggest that we pick two, not just one. They don’t need to be related, but they must be big enough to provide for the growth of our business over time. The next step is to establish referral connections with other real estate professionals in those locations.
Although the Web can shorten distances and allows us to connect directly with potential buyers, sellers and investors, a robust referral program is the only way to keep our business on solid ground. According to market data, remote buyers and sellers don’t like to shop around for REALTORS. Most of them stay with the first person they contact and often this first contact comes from a referral or an endorsement.
The referral works even better when it can go both ways. Meaning, the areas in play feed reciprocally. Let’s say you serve Canadians who want to vacation in Clearwater. It would be excellent if you could also find local Floridians who want to vacation in Toronto, for example. Not to mention that people move back and forth all the time.
The approach can be different if we are in the relocation business. In such a case, our best option is to contact major local corporations who hire personnel from other states or from abroad. But here again, we can be well ahead of the curve by monitoring the local renters and vacation markets. It has been proven many times that foreign companies open a business on those locations that are already attractive to their managers and to their families. So, this is a relationship game and sometimes you can find a buyer quickly, but most of the times you need to play in the long term. It can actually take from one to 5 years before non-residents change from renter to owner status. And the business will go to those who had the patience and persistence to nurture it.