How Many Marketing Dollars Should You Spend on a Listing?

By
Real Estate Broker/Owner with Cornerstone Business Group Inc 0225086119

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.

Comments (104)

Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

In general I will not spend too much money advertising beyond the systems I have already paid for to get the information syndicated.  The advantage of the internet is the low cost of getting information out.  Now I have paid for some newspaper advertisng, copies of flyers, and I have done some specific pay per click on a particular listing as I felt the home warranted it and was unique giving me a unique pay per click term.

Sep 21, 2011 06:47 AM
Jim McCormack
Nashville Short Sale Specialist - Jim McCormack - Edge Advantage Realty, LLC - 615-784-EDGE (3343) - Murfreesboro, TN
Nashville Short Sale REALTOR - Stop Foreclosure

Good analysis.  I used to spend several hundred per month on each of my listings for newspaper and homes magazines.  I have found that they are ineffective at selling homes.  I now focus all my marketing on my websites and sell all my listings.  Therefore, I would take a listing where a client wanted me to spend several hundred per month on their listing since it would my wasted money.

Sep 21, 2011 08:17 AM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Great comments everyone.  There are a lot of great ideas above.  My apologies for not getting to each one, but I'm on the run today.  Thanks for commenting!!

Sep 21, 2011 10:09 AM
Monique Ting
INET Realty Honolulu, HI - Honolulu, HI
Your agent under the sun

In the last couple of years, I have trimmed down my marketing budget. Looking at what brings in buyers, I have found that making sure my listings are featured on all of the major online sites (for free or a ery reasonnable rate) gets better results than the costly printed ads on magazines & newspapers. And I am not the only one taking that approach, as I have noticed how few fellow agents advertise there too! If an owner insists on having their property advertised in print, I have the same approach as yours... They have to be willing to price their home at market price, if not I just won't do it!

Sep 21, 2011 12:04 PM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Well said, Monique!

Sep 21, 2011 12:51 PM
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas
Mike, I wonder if the sellers had to pay for the marketing if they would price it to sell quicker or increase their price to cover it, and what would they be willing to do to make it look more presentable? Great post!
Sep 21, 2011 01:07 PM
Steven Pahl
Keller Williams Tampa Properties - Tampa, FL
Real Estate Consultant Tampa, FL 813-319-6423

I would be curious to see a breakdown of what the $200 per month was spent on. Perhaps a followup blog post would be helpful!

Sep 21, 2011 04:00 PM
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

I'm curious what the $200 marketing was.  (Newspaper, print, etc?) and where did that number come from?  Also, does anybody charge the seller's for specific types of marketing?  The property management company that I use charges us $25/week advertising costs.  We don't charge for advertising but I'm curious if people have different plans wherein the seller has the option to pay for their own advertising if they choose?  -Kasey

Sep 21, 2011 06:26 PM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Mike,

I agree.  In my markter where the median price is $82k almost no property justifies marketing dollars.  Besides it is price that is the #1 determining factor that something sells.

See: http://activerain.com/blogsview/2505369/why-won-t-my-home-sell-in-ocala-marion-county-part-1

Sep 21, 2011 11:17 PM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Dee Dee, that is a great question, and it's one I'll likely use in the future.  Thanks!!

I'll give that serious thought, Steve.  Thanks for commenting.

Kasey, this client wanted print media.  Local paper and homes books.  They really do very little here locally. 

Yes it is, Bob. 

Sep 22, 2011 12:24 AM
Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

All your arguments are valid points. Print media is especially expensinve and ineffective, and I now tell my sellers right upfront. Print media is for the agent's aggrandizing image builder. It does not sell homes to today's buyers.

Sep 22, 2011 04:07 AM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

So true, Sylvia.  Thanks for commenting. 

Sep 22, 2011 04:36 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

 I think that many advertising dollars are mis-spent. Consumers tend to look online so much more than in print!

Sep 22, 2011 09:30 AM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

You are so right, Vickie.  For some reason, sellers think getting that listing in front of people in the local papers or Homes magazines is the ticket, but the Internet rules.

Sep 22, 2011 09:33 AM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

It is a good discussion, and I am really glad i work as Buyers broker and do not have at least this problem - LOL

Sep 22, 2011 04:35 PM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Smart man, Jon.  Have a beautiful sunny weekend.

Sep 22, 2011 09:26 PM
DEBORAH STONE
Balboa Real Estate San Diego, CA - San Diego, CA

Mike-

I like the idea of a clause in your contract that has the Seller pay for any marketing if they cancel. Smart move. But I have never had a client put a $$$$ value on the amount of money I need to spend. I guess that would be different if I sold "high-end" homes, which in San Diego are close to $1 million....but with the internet, do it yourself videos, photos and flyers, what extra spending on marketing would really increase the exposure of the property?

Sep 25, 2011 06:11 AM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

It's funny, Deborah, it's the low end houses that I see sellers expect the high end marketing.  I would have no problem upping the marketing on a 1 million dollar home. 8-)

Sep 25, 2011 06:45 AM
Paul Gapski
Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA
619-504-8999,#1 Resource SD Relo

thank you very much for the informative and interesting post. I get so much out of the active rain network.

May 01, 2012 03:20 PM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Me too, Paul.  Have a great week.

May 01, 2012 08:48 PM