Lower priced properties present a conundrum for real estate agents. How much time and money do you invest in marketing a property that will bring you little profit? Of course, we all want every property to sell for top dollar, and I'm sure we will all do our best to see that the property sells as quickly as possible, but this can be a challenge.
I had a client a year ago that expected me to spend a fair amount of money each month advertising her property. She was looking at somewhere in the $200 range per month. Depending on where I spent that money, it could have been a lot of the money, or very little. The problem with this scenario is that the house was not a great house. It had issues along with a seller who wanted to overprice it from the beginning. It was not in a highly desirable location, and it was going to be tough to sell.
So, how much was too much? Actually, in this case, $1 was too much. There were too many conflicting issues with this house to make it profitable at $200 a month in advertising. The total listing side commission on this property if it sold for full price would only bring about $4500 after everyone was paid. So, if I spent $200 a month, and the house was difficult to sell, then at 22.5 months I would be at a break even place. Can a house sit on the market for 22.5 months? Absolutely.
I've had this situation with other properties, but here's how I determine what my level of marketing will be with an individual property:
- Price - Is the property priced appropriately to warrant investing into paid advertising?
- Location - Is the property in a desirable location that will attract a lot of buyer traffic?
- Condition - Is the property in sell-able condition? Are there issues? Are there needed repairs? Does the condition detract from the price?
- Neighbors - Would the house sell for the price based on the neighbors? Bad neighbors can drop the price of a house like a cider block.
- Pricing plan - Do you have a plan to systematically drop the price over time if the house doesn't sell immediately
- How much of my commission am I willing to sacrifice in marketing dollars based on the desirability of this house? If you walk into a house and think, "Whew, I wouldn't live here," you might have just answered your question. I've done that. On the other hand, if I love the house, I will invest. It rarely backfires.
- Do I have an understanding with my client that adjustments might need to be made to get the house sold? And, those adjustments don't include me throwing more money after a house this isn't going to sell based upon negatives in the list above.
- Do I have a "drop dead date" on pulling advertising? If a property isn't moving, there is no reason to throw additional money at it. Stop and figure out why it's still sitting.
- Will advertising even make a difference? That is a very realistic question.
You probably have your own list, but the reality is that if we don't have a plan to protect our commissions, sellers will expect us to spend it all on marketing their properties. Sometimes that can leave you empty handed and mad. Make a plan, and stick to it.