A past client of mine and I were having a conversation the other day on discount brokers and why he thinks that RE agents, in general, are "grossly overpaid". He, like many others I suspect, placed a stigma on agents that they were basically glorified door openers or even worse, used car salesmen. He seemed to like the idea of the discount brokers in that you essentially only pay for what he felt, initially, was the most important servicea Realtor provides; access to the MLS. Now having sold 2 homes for him (and making 2% on the listing side and consequently much more than the discount broker fee...) I like to think at this point, I have turned him around. I still found it odd, however, that he called me and not them. When I questioned him as to why he choose to go with me, a more traditional, full-service broker, as opposed to a discount broker, he answered with this.
"Well, when you sold my friend's home, you gave him a list of exactly how much you were spending on marketing and where the money was going. You are the only Realtor we have met that was willing to spend their own money to sell the home and actually earmarked the money for things that advertised the home, and not yourself. So, I guess it was because I knew when the home sold that you were actually getting a just return on your investment and were therefore vested in making the deal happen... That was worth the extra commission."
Wow! What stood out in my mind about what he said was that we were the only ones willing to put up our own money to help sell the home and that the money wasn't spent on "face-marketing". Nothing about the time that was about to go into selling his home, although I doubt he fully realized how much that would be. I guess the "value" was in the numbers for him...
For those that are curious, here was the break down I gave him (assuming anyone would give him a lock-box, sign and listing on the MLS, those costs are not included):
- Professional Photography (min. 25 pictures) and Professionally produced Video tour = $500.00
- 5 DVDs of Pictures and Video Tour = $25.00
- Print Publication in 2 regional Home Magazines for 90 days = $150.00
- 50 Full Color Flyers = $20.00
- 50 Black & White Flyers = $2.50
- email-able vFlyer w/ Video Link = $30.00
- Upgrade to Realtor.com Showcase Listing = $25.00
- Additional Signage & Directionals = $25.00
- "Just Listed" Jumbo Postcard to Neighborhood = $125.00
Add all that up and I spent right around $900 to market that listing. $900 for the opportunity to make, in this case, $7000.00 before mls fees and broker split. Not only that, but I was hoping for a Buyer contact somewhere along the way and sure enough I found a buyer from out of state that did not have an agent. That sell alone brought in another $12,000.00 in gross commission. Not that I would, or should, do all those things for every listing, but for a $350K home it seemed the best way to get it in front of as many people as possible. Most importantly he was a referral, so I wanted to make sure he was happy. =)
Granted there are other costs we all pay be it overhead, broker splits or the initial costs of those lock-boxes and yard signs, those items are either already paid for or simply a cost of doing business in most cases. Nevertheless, Seller's rarely see these costs. So, I'm curious.
How much do you spend on average to market a median priced listing?
Is the money spent on advertising that highlights the property or reasons they should call you?
How much money is too much to spend on getting a home sold; Do you really think the house will sell?
Do you share with the Seller how much you do spend or is that just included in the commission?
Thanks for reading and I look forward to the feedback.