Tuesday
September 30, 2014

Getting Your Sellers to Pay for Advertising

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Getting Your Sellers to Pay for Advertising

A trend that has dominated markets in Australia and New Zealand for years could give your clients a significantly higher net result on their sale.

In Australia and New Zealand, real estate professionals do something rather interesting — they ask the sellers to pay the total cost for a professional media mix advertising campaign, often amounting to many thousands of dollars.

Now, before you read further, I would point out that not all real estate agents in Australia do this. Only the best agents present this in their marketing plan — those who have the skills to achieve great results are the ones who obtain substantial advertising dollars from sellers. Other agents, many of whom cut their commissions to win listings when times are tough, pay all the advertising costs (albeit very small campaigns, as it is coming out of their pocket), which reduces their commission further.

The better agents, though, are not only retaining full commission, but those with substantial amounts of advertising dollars are putting together very effective advertising campaigns to generate the best results. What do you think that does for their profile? It goes absolutely through the roof.

That is one of the main reasons newspapers in these two countries are still such powerful tools for the real estate industry, carrying hundreds of millions of dollars in glorious, full-color real estate advertising. As an example, where I now live in the Gold Coast of Queensland, Australia, our daily newspaper has a Saturday real estate supplemental section that usually contains between 70 and 200 pages of ads.

I have heard many times in the United States and Canada that “newspaper advertising doesn't work.” Not true! As long as newspapers have readers, then the right message put in front of them will achieve results. This is particularly true when ads are managed as part of a media mix campaign using Web sites, social media, and other print advertising, as I have discussed in previous articles.

Research Down Under shows the more sellers paid for advertising, the better the campaign, with more sales at higher prices in a shorter amount of time. As proven across the Australian and New Zealand markets, sellers will pay if they believe they will achieve a better end net result. You're also guaranteed to achieve a much higher listing-to-selling success rate and retain full commission.

What’s more, the Real Estate Institute of Queensland came out in support of seller-paid advertising several years ago. This is the industry association the public listens to and trusts.

In Australia and New Zealand, the aim for the advertising budget is between 1 and 2 percent of the selling price.

Warning: If you don't believe you can achieve a better net end result (that's the money in the seller's pocket after all commission and advertising costs have been paid) by using their money for advertising — then don't do it. Sellers don't deserve to pay the money and you don't deserve to get it.

Starting This Trend in Your Marketplace

I believe real estate professionals can start this advertising practice where it currently doesn't exist.

If a proper, professional advertising campaign is presented to the seller as an option, and if the clients can see the dramatic difference between this and the usual campaign, then they can be influenced to invest in a better potential result for them.

Example: In Calgary, Canada, there was a property priced at just under $1 million that had expired, and the owners desperate to sell. What happened next? The price could have been dropped many tens of thousands of dollars to sell the property quickly. However, a local real estate professional suggested the seller give him around $2,000 to produce a better advertising campaign. The result was a record sales price for that area, with an overjoyed seller. Was that a good investment for them? You bet!

Price Reductions: All too Common

In a previous article I mentioned John McKenna from Pennsylvania, who won a listing that had been on the market for three years. The previous agent couldn’t sell the property for $259,000. In desperation, who knows how many thousands of dollars the sellers could have dropped the price to sell their property.

However, not only did the sellers not have to drop the price, but McKenna was also able to achieve an extra $30,000 for them, selling the property quickly at $289,000. Good advertising did that for them, and, as you could appreciate, the sellers would have been more than happy to invest in advertising that would produce those results.

If you are asking sellers to contribute advertising dollars, you may be wondering how you can compete with real estate professionals who offer to do the advertising for free. Let’s take a look at an example from Western Australia, where the practice of sellers contributing towards advertising is very rare.

A long-time agent friend of mine, Mark Passmore from Passmore Real Estate, works in the Western Australia city of Perth. He's very good at what he does and has been in the top 2 percent of Century 21 practitioners worldwide. Passmore has been using my advertising system for more than 10 years now. He said that over his last 10 listings, he averaged more than $6,000 in owner advertising contribution for each. In every instance, he was competing against other agents who said they would do the ads for free, but Passmore’s professional advertising approach convinced the sellers they would achieve a better end net result with him. He can hardly keep up with his repeat and referral business.

With success after success, his job has become easier with hundreds of client testimonials to draw upon. Passmore currently enjoys a staggering 95 percent market share in his area and charges the highest commission in the state. (Watch his recent video on my Web site.)

Of course, to make this a reality, you have to become an advertising expert who knows what you’re doing. You must demonstrate a systematic professional approach to sellers that gives them the confidence to entrust their hard-earned dollars with you, their agent. Your clients must have the knowledge that you will achieve the best possible end result for them.

Don't Get Left Behind!

Be careful of saying things like, "We don't do that here … the sellers would never pay … it wouldn't work in our marketplace … it wouldn't work with our commission structure." Very simply, if an investment of $3,000 gave a return of an extra $10,000 or more, then it would work in any marketplace with any commission structure.

For those of you in markets where this practice doesn't currently exist, I ask you to open your minds and consider the possible benefits. Don't get left behind and then find that others are doing it. Yes, it is already happening in the U.S. and Canadian marketplaces. We are becoming global and ideas and business practices tend to spread around the world. Look to being a leader, not someone who says, "I never thought it would work here." If you need some input, just contact me, Ian Grace, at: amazing@iangrace.com.au.

In my next post, Bonus Tip No. 11, I will cover how to test your ads for effectiveness. I will also give you some great dialog to use when welcoming potential buyers at an open house, which will help you stand out in their minds among all those agents they may have seen at open houses that weekend.

This article is part 10 in a 10-part series on writing great real estate ads. Read more here: 

Part 1: Effective Advertising: It’s All About ‘HOODOO’
Part 2: Write Ads That Sell
Part 3: Match Powerful Photos With Powerful Headlines to Get Ads Noticed
Part 4: Show What It's Like to Live in a Home
Part 5: Humanizing Your Ads
Part 6: Different Ads for Different Markets
Part 7: Media Match: Make all Your Ad Media Work Together
Part 8: Keep the Same (Good) Ad Running

Part 9: Pricing: Take Your Sellers for a Ride
Part 10: Getting Your Sellers to Pay for Advertising
Bonus Tip 11: Research Your Advertising to Guarantee its Effectiveness

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