In the real estate industry, there has always been a fear that home sellers will discover how easy it is to find a buyer without using a real estate agent. With the advent of the internet, it has become easier than ever to reach potential buyers directly. By using marketing strategies such as online ads, newspaper ads, signboards, and a fair price guide, home sellers can have interested buyers beating a path to their door without the need for an agent. However, many home sellers still choose to work with real estate agents, paying excessive amounts of money for advertising that can be a trap.
Excessive Advertising Costs: A Trap for Home Sellers
Real estate agents have two primary roles when working with home sellers. The first is to find interested buyers using a combination of different strategies such as newspaper ads, internet ads, signboards, databases, brochures, and more. The second objective of the agent is to negotiate the highest possible price with the best terms for the home seller. While some agents can achieve this objective, some cannot.
For home sellers that could competently negotiate for themselves, the real value a real estate agent can offer is one of saving time and effort. However, many agents spend excessive amounts of money finding buyers and then use selling strategies such as auction that undersell properties. The excessive amounts of money being spent by agents looking for buyers is the home seller’s money, not the agents. So, if the home seller is paying upfront for advertising and carrying the risk to find a buyer, what is the home seller really paying for? The answer is the agent’s negotiation skills or lack thereof in some cases.
Don’t Pay $10,000 for an Agent to market a property
If you feel comfortable that the agent does not possess a high level of negotiation skill to sell your home, do it yourself. To pay an agent $10,000 non-refundable in the hope of finding a buyer in this day and age of the internet is absurd. Furthermore, when the agent does find you a buyer, they want to charge a full commission on top.
In most cases, there are two magnificent cut-through questions that home sellers have not asked themselves before “investing” $10,000 towards an advertising campaign. Firstly, who pays for the advertising if the best offer is below the price the agent quoted and/or below the vendor’s reserve price. Secondly, can the same outcome be achieved using a cheaper and much more effective marketing medium?
The Real Estate Industry’s Greatest Fear
The real estate industry’s greatest fear is that home sellers will realize how easy it is to find a buyer without using an agent. With the internet, buyers are just a click away, and sellers can easily reach them with targeted marketing. By using online ads, newspaper ads, signboards, and a fair price guide, sellers can avoid paying excessive fees to agents who may not have their best interests at heart.
What Should I Spend on Marketing?
The answer to this question will vary greatly depending on who you ask and who is going to sell your property. It also depends a lot on what types of marketing are being done. The most important thing to remember when it comes to marketing spend is that there is a point of diminishing returns. Spending more won’t necessarily mean you get more. There is a lot of waste when marketing a property with expensive billboards, TV ads, excessive online ads, and so on.
A fair fee for marketing should be somewhere in the range of $2500–$4000.
Excessive advertising costs can be a trap for home sellers. Real estate agents often spend too much money finding buyers and then use selling strategies that undersell properties. Home sellers can avoid paying $10,000 or more for an agent’s services by selling their homes themselves using targeted marketing strategies such as online ads, newspaper ads, signboards, and a fair price guide. By doing so, home sellers can save time and money while still achieving the same outcome.
- Is it really possible to find a buyer without using a real estate agent?
Yes, it is definitely possible to find a buyer without using a real estate agent. By utilizing various marketing strategies like putting an ad on the internet, an ad in the paper, a signboard on the property and listing it with a fair price guide, home sellers can attract potential buyers.
- How do real estate agents find interested buyers?
Different agents use different strategies to find interested buyers. They will focus on a combination of newspaper ads, underquoting, internet ads, just listed cards, signboards, databases, brochures, etc.
- Why do most agents use auction selling strategies that undersell properties?
Most agents spend excessive amounts of money finding buyers and then use selling strategies, such as auction, that undersell properties. This is because the excessive amounts of money being spent by agents looking for buyers is the home seller’s money, not the agents.
- Can the same outcome be achieved using a cheaper and much more effective marketing medium?
Yes, it is definitely possible to achieve the same outcome using a cheaper and much more effective marketing medium. By using various online platforms, social media, and other digital marketing strategies, home sellers can attract potential buyers and save money on excessive advertising costs.