What do You Spend to Market a Listing?

By
Real Estate Agent with Georgia Elite Realty

  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. 

money"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):

  1. Professional Photography (min. 25 pictures) and Professionally produced Video tour = $500.00
  2. 5 DVDs of Pictures and Video Tour = $25.00
  3. Print Publication in 2 regional Home Magazines for 90 days = $150.00
  4. 50 Full Color Flyers = $20.00
  5. 50 Black & White Flyers = $2.50
  6. email-able vFlyer w/ Video Link = $30.00
  7. Upgrade to Realtor.com Showcase Listing = $25.00
  8. Additional Signage & Directionals = $25.00
  9. "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.

ILW

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Rainmaker
3,256,177
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce
  Tell your pal that in addition to the money we spend...many of us are available 24/7 and all of us pay out of pocket for the things his employer most probably supplies...like our $1400 a month health insurance..the computer we use at home so we can be available 24/7 with the speediest internet possble...gas, car.....and what was that about vacations again ?
Nov 25, 2007 03:27 PM #1
Rainmaker
564,123
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

I agree with Sally & David.  What's your time worth?  And what occupation would put in anywhere from 20-100 hours per listing (or more) without the expectation of compensation?  It takes time to put together email or print campaigns, design ads, purchase ad space in print or on the Web, take photos, review video tours and other marketing items before they go out, etc.

Yes, I do provide sellers with a pretty detailed idea of what they receive for their commission dollar.  It's a real eye-opener for some.

Nov 25, 2007 03:32 PM #2
Rainer
203,010
Mary Warren
Las Vegas, NV

How about a sign for the front yard? Cost of a lockbox, I always purchase the URL of the address of the property and the listing has it's own website.  There's also time spent in computer advertising.  Most of these are not offered by discount brokers except at an additional cost.

Great post, I'm bookmarking it.

Nov 25, 2007 03:38 PM #3
Rainmaker
125,653
Iran Watson
Georgia Elite Realty - Marietta, GA
Marietta Real Estate Agent - Photographer

@Sally & David, Eric,

Both great points.  And it is an eye-opener for them when they see what it does take, both in time and money.  This particular client has had several bad experiences with Realtors in the past.  Showing him the other side has been a challenge to say the least, but one I'm thankful for nevertheless.

 ILW

Nov 25, 2007 03:45 PM #4
Rainmaker
144,677
DAdrea Davie
Keller Williams Realty - Stockton, CA
Stanislaus & San Joaquin Short Sale Agent

ILW -

Great post! I think it is important to give clients an idea on where your upfront money goes. We also give a weekly update on where I time has gone. It is important that both aspects are looked at.

Nov 25, 2007 03:48 PM #5
Rainmaker
213,659
Nick Bastian
Realty Executives - Tempe, AZ
Real Estate Agent - Tempe
Great points but I believe many consumers (and agents) miss some other very key points. Representation, knowledge, expertise, risk management, contract issues, disclosure etc. etc. etc.. Yep, some people think you just throw up a sign, draw up a "simple" contract and close. What happens when problems arise? A good agent EARNS their fee not just for advertising a property. We work hard well after the initial contract is signed.
Nov 25, 2007 03:55 PM #6
Rainmaker
564,123
Eric Kodner
Madeline Island Realty - La Pointe, WI
CRS, Madeline Island Realty, LaPointe, WI 54850 -

In general, the public has no idea what we do or how much we spend to provide them with services.  That is partly our fault.  We are too busy selling them on all the services we offer and what it will do to sell their property to explain what our overhead is.

CRS instructor Chuck Bode teaches agents to make a list of all the services they provide and to make it part of every listing presentation.

Nov 25, 2007 04:03 PM #7
Rainmaker
111,050
Nancy Brenner
Referral Associates of Georgia, Inc. - Roswell, GA
Roswell Georgia Real Estate Agent
Lee - Great post.  I'm fairly new to this industry and have only worked with buyers so far.  I am working with a seller and hope to have their house listed by the first of next month.  Thanks to this post, I'll have something to show them what my commission goes towards - before I even get it!
Nov 25, 2007 04:41 PM #8
Rainmaker
162,875
Rhonda Burgess
Southern Living Realty Partners - Smyrna, TN
Moving to Nashville TN Real Estate Specialist
I realized how little the public knows about our expenses when I was selling my best friend's condo.  She was asking why I hadn't advertised it in our local newspaper.  I explained how newspapers were old news by the time it was published but more importantly how expensive the ads were and the lack of return on investment.  She said "I didn't know you had to pay for those ads.  I thought they were free."  This was when I started educating all of my clients about the expenses involved, from advertising to my time.
Nov 25, 2007 05:06 PM #9
Rainmaker
45,352
Jeannette Kohlhaas
Keller Williams Jacksonville Realty - Jacksonville, FL
www.MoveFREEwithMe.com

I like that! I just started using Top Producer, and it has a Cost of the ToDo's done!? I never have filled it out, but now yo'uve given me the WHY to fill it out for the sellers!!

Jeannette Kohlhaas - Keller Williams realty JAX 904-735-8666 

Nov 26, 2007 02:22 PM #10
Rainer
67,222
Keith Perry
Coldwell Banker - Hiram, GA
REALTOR - West Metro Atlanta
I do share with the seller a run down on my cost up front. It helps to have the seller fully informed in all aspects of the transaction.
Nov 29, 2007 02:59 AM #11
Rainer
31,583
Goomzee Corporation
Goomzee Corporation - Missoula, MT
www.goomzee.com

This is a great post.  The more information you have about how you sell someone's house, the better.  I have so many young friends who have attempted to sell their home themselves because "they don't want to pay a Realtor for something they can do themselves".  Possible? Yes, but you wouldn't believe the headaches they have.  And by showing them you aren't completely banking off of them, their happy to know that.  They hear 3 and 6% commission, and they think it all goes towards your vacation fund.  If that was the case, I'd have become an agent right out of high school!

The more I learn about real estate professionals, the more I congratulate them for all the hard work they put in.  It's definitely a 24/7 job and I know there are so many people out there that don't think about that.

Dec 10, 2007 10:13 AM #12
Rainmaker
259,533
Melina Tomson
Tomson Burnham, llc Licensed in the State of Oregon - Salem, OR
Principal Broker/Owner, M.S.
I spend anywhere from $700-$1,000 to market an average listing.  So you are right on the money. I also rarely do newspaper advertising since it costs a fortune.  It's just not cost effective for me or the seller.
Dec 10, 2007 01:50 PM #13
Rainer
31,583
Goomzee Corporation
Goomzee Corporation - Missoula, MT
www.goomzee.com
Melina and ILW - do you also offer incentive programs to customers for referalls or return customers?
Dec 11, 2007 04:36 AM #14
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Rainmaker
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Iran Watson

Marietta Real Estate Agent - Photographer
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