Sales Funnel in the Real Estate Industry - How Does It Work?

A sales funnel is a model that represents the stages a potential customer goes through in the process of buying a property from a developer. It starts with the first contact with a potential customer and takes them through each decision-making stage until the transaction is finalized. This is similar to the sales funnel used in other industries, but tailored specifically for the real estate industry.

Understanding the importance of the sales funnel for developing a real estate business is crucial. With the help of this tool, developers can effectively monitor the progress of potential customers at various stages of the sales process. This allows them to identify areas where they need to improve in order to increase conversions and thus sales.

The sales funnel also enables developers to effectively manage customer relationships. By analyzing the behavior and needs of potential customers at each stage of the funnel, developers can adjust their marketing and sales efforts to increase customer engagement and build lasting relationships.

In short: The funnel process is the method by which we move from a huge pool of prospects to a much smaller pool of more valuable candidates who are determined to buy.

Funnels are everywhere

1. Oil refineries convert a huge amount of crude fossil fuel into a smaller amount of usable gasoline.
   
    
2. A sports team tests many athletes and then allows only the most talented to play.
   
    
3. A corporation publishes job openings for many candidates, then sifts out the weakest candidates

Stages of the sales funnel:

A typical developer's sales funnel includes 5 stages:

1. Leads: The process begins with sourcing leads through various marketing channels, such as online ads, email campaigns or industry events. 
    
2. Qualified Lead : This is followed by evaluation and qualification of the leads gathered. Developers try to determine which ones are the most promising and have the potential to convert into real customers. 
    
3. Offer presentation: In this stage, developers present their offer to potential customers. This can include online presentations, site walks or handouts. 
    
4. Negotiation: In this stage, the developer negotiates the terms of the deal.
    
5. Closing: Finalizing the agreement between the client and the developer - signing the sales contract or reservation agreement.

The five steps look like the following when arranged in a funnel shape:

Stage 1: Leads

We will start by looking for potential customers at the top of our funnel. Since this is the first stage of the funnel, you will probably spend most of your time here, especially if you are a startup.

A lead - is a potential customer who hasn't yet made a purchase, but has the potential to become a specific buyer if properly served and convinced to take advantage of the offer.

Stage 2: Qualified Lead

A qualified lead - is a potential customer who has been subjected to certain qualifying criteria. This means that it has certain characteristics that suggest a higher probability of converting the lead into a customer.

The process of qualifying a lead involves assessing whether the potential customer meets certain parameters set by the company. These parameters may include customer demographics and psychographics, such as location, family size, budget, needs, preferences, etc. The goal is to identify leads who are more likely to purchase a product or service.

You may think that finding qualified leads is our priority because they are higher in the funnel than leads. After all, that's the actual top of the funnel. However, unless someone wants to buy or sell a house, they will not freely travel down the sales funnel. It is therefore advisable to start looking for leads in the "leads" area, because motivation - the need to buy a home - is essential to start the sales process.

Stage 3: Offer presentation

In the offer presentation stage, as a developer or real estate agent you are tasked with presenting your offer to potential customers in an attractive and convincing manner.

One popular method is to hold the presentation in the company's conference room, where the developer can present 3D exterior visualizations of the real estate development, interior visualizations and a 3D virtual tour of the interior of the house or apartment. During the live meeting, the developer can answer all customers' questions and address their concerns. Such a visual experience can help customers imagine how they will be able to live.

In addition to live presentations, developers may also provide informational materials, such as property cards, business cards and advertising brochures.  These materials usually contain detailed information about the project, such as 2d and 3d floor plans of the apartments, a list of available amenities, 3D visualizations and technical data about the building and location information. This allows potential customers to learn more about the offer and analyze it at their own pace.

In addition, developers often organize construction tours. Such a visit gives customers the opportunity to see the property live, assess the quality of workmanship, the real size of the rooms and get a feel for the atmosphere of the future residence. During the tour, real estate developers can answer questions and clarify any doubts customers may have.

All these methods of presenting the offer are aimed at giving potential customers as much information about the real estate project as possible, to help them make an informed purchasing decision. As a developer, strive to provide comprehensive and convincing presentations to encourage customers to take an interest in your offer and start working with you.

Stage 4: Negotiation

During negotiations, both parties try to reach agreement on business terms, such as price, quantity, discounts or other details of the deal. Negotiations can take place in the form of face-to-face meetings, phone calls, email exchanges or through communication platforms.

During negotiations, the real estate developer, real estate agent seeks to maximize profit and at the same time meet the needs of the customer, just as the customer seeks to get the best terms for himself. Both sides can present their arguments, explain the benefits of the deal and negotiate various aspects to reach a final agreement.

It is important that negotiations are conducted in a partnership and fair manner, taking into account the interests of both parties. Open communication, listening skills and joint search for win-win solutions are key to successful negotiations.

Stage 5: Closing

Once an agreement is reached in negotiations, the terms of the deal are formalized and documented in a sales contract.  The next step is the execution of the deal, i.e., delivery of the product or service and financial settlement according to the agreed terms.

Where is the best place to start looking for clients for a development investment?

1. Family 
    
2. Friends 
    
3. Leads
    

Every real estate developer and real estate agent should start collecting leads from these three groups. These are the most benign potential customers. Making mistakes or having unpleasant conversations is much easier when you are with people you already know and like. It's always safe to use these contacts to expand your knowledge, confidence and comfort if you're starting out with selling your first real estate development.

The importance of the sales funnel for real estate developer and real estate agent

The sales funnel is extremely important for developers for several reasons:

1. Focused action: Helps real estate developers focus on the best sales opportunities and ensures efficient use of resources in sales - time, people and money.
    
2. Tracking progress: The sales funnel allows developers to track the progress of the property buying process and identify potential obstacles and customer objections. 
    
3. Optimizing marketing efforts: Sales funnel analysis can reveal which marketing channels are generating the most quality leads, allowing the real estate developer to optimize its marketing efforts and budget.

Summary

Incorporating the sales funnel into the sales strategy of real estate developers and agents is a key element for success in the competitive real estate industry. Proper management of the sales funnel enables effective acquisition and conversion of leads into customers and increases the effectiveness of marketing activities. This enables real estate developers and real estate agents to achieve better sales results and grow their businesses in the real estate market.

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