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Transactional Model or Relational Model?

Transactional Model or Relational Model?

There are two basic business models in real estate.  The transactional model and the relational model.  The model you are using will define how you go about growing your real estate business.  Let’s take a look at the characteristics of the transactional model first:

Transactional Model:

Focus = lead generation and lead conversion

Generally these are people who you don’t know and who don’t know you.  Activities that are common to this model are purchasing leads from Zillow, Trulia or, working on Search Engine Optimization, farming a neighborhood, working Internet leads, doing open houses, and getting Pay Per Click leads.

Relational Model:

Focus = relationships and referrals

Generally these are people that know and maybe trust you or people who have used your services or referred someone to you already.  Activities common to this model are: Sending handwritten notes, meeting for lunch, phone calls, networking, consistent contact, giving items of value and client appreciation events.

If we were to categorize people we might do it this way:

A = People who have used or referred you as an agent.

B = People who know you and trust you.

C = Everyone else

The transactional model focuses on “C” people while the relational model focuses on “A” & “B” people.  A lot of agents will use a combination of the two methods.  However it makes a lot of sense to focus on the relational model, since those people are much more likely to produce a return on the money and time invested in them.  It requires a different mindset and different daily activities.  Think about this:  would you rather work with your friends or strangers?  Working with friends is a lot more comfortable and far less threatening than working with strangers.  The rejection rate is much lower too!