Get your sellers to pay for the advertising!

Get your sellers to pay for the advertising! - Tip #10

In Australia and New Zealand, Realtors do something rather interesting. They ask the sellers to pay the total costs 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 realtors in Australia do that; only the best agents have the skills and are able to obtain substantial advertising dollars from the sellers and achieve great results for them. Other agents, many of whom cut their commissions to win listings when times are tough, also pay all the advertising (albeit very small campaigns, as it is coming out of their pocket), which reduces their commission further.

The better agents are not only retaining full commission, but also those substantial amounts of advertising dollars, which enable them to put together very effective advertising campaigns and obtain a better result for their sellers. What do you think that does for their profile? Absolutely through the roof.

That is one of the main reasons why 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 at the Gold Coast in Queensland Australia, our daily newspaper recently had a Saturday real estate liftout containing over 200 pages.

I have heard many times in the USA and Canada in particular, 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, particularly when managed as part of a media mix campaign, complementing the other media used, as I have discussed previously.

Research "Down under" shows that the higher the seller paid advertising percentage, the better the campaign, with more sales at higher prices in a shorter time frame. As proven across the Australian and New Zealand markets, sellers will pay, if they believe as a result, they will achieve a better end net result. You're also guaranteed to achieve a much higher listing to selling success rate, retain full commission and also, both ends of the deal or "sides".

Industry support

Some time ago, the real estate Institute of Queensland (REIQ) quoted in the daily newspaper "On the subject of real estate advertising, the REIQ supports the policy of seller paid advertising." This is the industry Association the public listens to and trusts.

1% - 2% of Property Value

In Australia and New Zealand, the aim is for 1% - 2% of the selling price, for the advertising budget. This is merely in line with all other businesses and industries, in terms of what advertising money they spend, as a % of product value or annual turnover. Which means of course, that property is dramatically under promoted compared to everything else, therefore not giving it the exposure it deserves!

As I teach Australian and New Zealand Realtors, if you don't believe you can achieve a better end net 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 -- DON'T DO IT -- they don't deserve to pay the money and you don't deserve to get it!

Can it be done in marketplaces where the practice doesn't currently exist?

Yes, if a proper professional advertising campaign is presented to the seller as an option (and in a consultative selling situation, they have been part of the information gathering process) and they can see the dramatic difference between that and the usual campaign, they can be influenced to invest in what they see will be potentially a better result for them.

Example - Calgary, Canada

I have also been working in this marketplace over the past 11 years and recently there was a property priced at just under $1 million that had expired, with the sellers desperate to sell. What happens next?

All too often, the price could be dropped many tens of thousands of dollars to sell the property in a desperation situation. However, a local Realtor suggested the seller give him around $2000 to produce a better advertising campaign. The result? A record price for the area, with an overjoyed seller. Was that a good investment for them? You bet!

I mentioned John McKenna from Pennsylvania previously winning a listing that had been on the market for three years and the previous Realtor couldn’t sell the property for $259,000. In desperation, who knows how many thousands of dollars they could have dropped, to sell their property.

However, not only did they not have to drop in price, John achieved an amazing extra $30,000 for them, selling the property quickly at $289,000. Good advertising did that for them and as you could appreciate, they would have been more than happy to invest in advertising that would produce those results.

If you are asking for sellers to contribute advertising $$$’s, how can you compete with Realtors offering to do the advertising for free? We have an interesting situation in Australia, where in the Western Australian marketplace, the practice of sellers contributing towards advertising is very rare.

A long-term Realtor friend of mine, Mark Passmore from Passmore Real Estate, works in that marketplace in Perth the Capital. He's very good at what he does and was previously in the top 2% of Century 21 Realtors worldwide.

He has been using my advertising system for around 10 years now and as he said recently "my last 10 listings, I averaged over $6000 in vendor advertising contribution for each one ." In every instance, he was competing against other agents saying they would do the ads for free, but Mark’s professional advertising approach convinced the sellers they would achieve a better end net result with him, and he can hardly keep up with his repeat and referral business.

With success after success, his job is easy, with hundreds of testimonials to draw upon, that potential listings are invited to contact, to get first hand feedback and proof.

Of course, to make this a reality, you have to become an advertising "expert" and really know what you're doing, demonstrating a systematic professional approach to sellers that gives them the confidence to entrust their hard earned dollars to you their Realtor, with a belief that you will achieve the best possible end net 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 $3000 gave a return of an extra $10,000 or more for example, then it would work in any marketplace with any commission structure.

As I mentioned before, while it should never be a focus, the top agents achieving seller advertising contribution gain huge exposure and their profile in their local area goes through the roof. One selling Principal/Broker in Australia has won awards for achieving around $1 million per year in seller advertising contribution. Imagine what that has done for his and his office’s profile!

For those of you in marketplaces where the practice doesn't currently exist, I ask you to open your minds and consider the possible benefits. Don't get left behind and find that others are doing it. It is already happening in the USA 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 left behind, saying "I never thought it would work here", and if you need some input, just contact me, Ian Grace, at amazing@iangrace.com.au

In my next post, I will tell you how to test your ads for effectiveness and also give you some great dialogue for when you are welcoming potential buyers at open houses, to make you "the one" -- the Realtor who will stand out in their minds amongst all those Realtors they may have seen at open houses that day or weekend.