25 facts about real estate advertising

By Neil Jenman

If home sellers knew the truth about advertising, if they knew what went on behind-the-scenes, they’d realise they are part of what can best be described as a billion-dollar scam.

To help home sellers, here are 25 FACTS about real estate advertising.

FACT 1. ADVERTISING IS ABOUT ‘PROFILE’ FOR AGENTS

Agents promote themselves at your expense. It’s the biggest joke in real estate. Agents are using your money to build their own profiles. As the Real Estate institute of NSW told agents years ago, “The more ads you have with your name on them the more successful you will look.” From the agents’ point, the main purpose of advertising is not to sell your home, it’s to build the profile of the agents. They talk about it in their offices and training sessions. It’s called “building profile” and they love it, especially when they get it for “free”.

FACT 2. AGENTS ARE WASTING SELLERS’ MONEY

The old saying: “Never he who spends so much as he who does not intend to pay,” is so true with real estate advertising. The man who calls himself Australia’s number one real estate trainer is employed by the biggest real estate advertising website. This is what he tells agents: “What I want you to do is get more advertising dollars from sellers so that you can use that advertising to get more sellers.” If agents want to promote themselves, let them pay for it.

FACT 3. COMMISSION CAN INCLUDE AD COSTS

Agents’ commission is usually big enough to cover the cost of any advertising needed. Why should sellers pay twice – once for commission and once for advertising?

FACT 4. SELLERS SHOULD REFUSE TO PAY

Sellers who refuse to pay upfront advertising fees get the best deal. Faced with the cost of getting a large commission or no commission, smart agents will take the commission. On rare occasions when advertising is necessary, good agents will either include the ad costs in their commission or charge the sellers if (or when) their home sells.

FACT 5. IT’S UNETHICAL TO PROFIT FROM YOUR CLIENTS’ LOSSES

When homes do not sell – which often happens – thousands of sellers lose as much as thousands of dollars each in needless advertising expenses. Agents get a huge commercial advantage from advertising paid for by the sellers whose homes failed to sell. To make a profit from the losses of your clients is highly unethical.

FACT 6. AGENTS GET KICKBACKS ON ADVERTISING

Many real estate agents get kickbacks on the money that sellers have paid to advertising websites or newspapers. Or, in states where kickbacks have been banned, agents get “benefits” such as holidays to Asia or maybe a tram painted with the name and colours of the agent and paid by the advertising medium.

FACT 7. WHY NOT ASK BUYERS TO PAY INSTEAD OF SELLERS?

Consider this: You have a home to sell. You go to an agent. The agent says, “Give us some money to advertise to find buyers.” What?! Did the agency just open its doors? Don’t they already have buyers on their books? Of course. Asking sellers to pay money so the agent can find buyers makes as much sense as asking buyers to pay money so the agent can find sellers.

FACT 8. BUTCHERS DON’T ASK FOR ADVERTISING MONEY

Real estate agents are the only businesses that ask clients to pay to advertise to find customers. Imagine you plan a barbeque in a few weeks and you go to your butcher to order steaks. How would you respond if the butcher said: “Pay us some money so we can advertise to find some cows.” That’s how you should respond to real estate agents.

FACT 9. BEING COMMON DOESN’T MAKE IT RIGHT

Just because many agents ask sellers to pay for advertising costs (which are rarely of any benefit to the sellers) doesn’t make it right. If a lot of agents do the wrong thing, it’s still wrong.

FACT 10. ADVERTISING IS PART OF “CONDITIONING”

Agents use advertising as part of the conditioning process. It helps them to talk the sellers down in price. The agents say to sellers, “See, your home has been advertised and it hasn’t sold. The market is telling us you need to lower your price.”

FACT 11. ADVERTISING MAKES HOMES GO STALE

If your home does not sell within a month or so, it starts to look ‘stale’. Buyers – often encouraged by agents – may then have two thoughts about your home: First, the price is too high or second, something is wrong with your home. Neither may be true. Advertising can damage your home’s value.

FACT 12. ADVERTISING IS A SIGN OF LAZINESS

The famous saying: “Advertising is what you do when you are too lazy to go and talk to people,” is very true in real estate. Agents seldom return calls from buyers or follow them up. They’d prefer to spend the sellers’ money and sit at an open-for-inspection waiting for a buyer to turn up and make an offer. Then they pressure sellers to accept a low offer and, bingo, it’s all over – money for jam.

FACT 13. YOU COULD DO WHAT AGENTS ARE DOING

Here’s the most obvious advertising fact with real estate ads: Agents want you to pay your money so the agents can put an ad on the internet and, supposedly, attract buyers for your home. Well, what are these agents doing that you could not do yourself? Nothing. Don’t be intimidated. You don’t need high intelligence to sell real estate the ways most agents do it.

FACT 14. AGENTS ARE IN DANGER OF EXTINCTION

By asking sellers for advertising expenses, agents are sowing the seeds of their extinction. One day, sellers – or a well-funded, customer-focused start-up – will replace most agents for a fraction of the cost. Indeed, why pay a large commission plus a large advertising account? One or the other, not both!

FACT 15. KILLER QUESTIONS THAT EXPOSE AGENT INCOMPETENCE

Agents brag about their marketing campaigns. Here’s how to expose their incompetence: Ask about the most buyers who have inspected a home. Agents won’t be able to resist. They may say: “We had 300 buyers through a home on Jones Street.” Tell them how impressed you are. They’ll purr with pleasure. Well, here are the two killer questions: “Three hundred buyers, wow, that’s great, but tell me: How many buyers bought the home?” The obvious answer is, “One,” to which you ask the second killer question: “What happened to the other 299 buyers?”

FACT 16. TENS OF MILLIONS OF DOLLARS ARE WASTED

Here’s what happens. A seller in Street One wants to sell. The agent persuades the sellers to part with $5,000 for a marketing campaign. One hundred people inspect the home. And then, a seller in Street Two wants to sell their home too. The same agent visits the second sellers, and also persuades them to pay $5,000 for a marketing campaign. The same hundred buyers turn up to the second home. This is how it happens.

FACT 17. ADVERTISING HAS EXPLODED SINCE SELLERS PAID

Since agents started pushing the costs of advertising from themselves on to home sellers, advertising has exploded. There is now around a hundred times as much money spent on real estate advertising compared with when agents paid ad costs from commissions.

FACT 18. THE BIG AD WEBSITES ARE NOT ESSENTIAL

If the two major advertising websites – which are currently raking in more than a billion dollars a year in advertising income – were to shut-down, what would happen to the number of property sales in Australia? Nothing. Advertising does not create property sales.

FACT 19. FACEBOOK IS FAR MORE EFFECTIVE – IN ALL WAYS

Smart agents are now discovering that ads on Facebook are far more effective – both in response and cost. Early test results are impressive. One agent reports spending $20,000 on a major real estate website and $275 on Facebook in the same period. Facebook was far better and almost 98 per cent cheaper.

FACT 20. THERE ARE ONLY 5 TYPES OF PROPERTIES

There are only five types of residential properties. If agents have a hundred properties, why advertise every property? Why not just advertise a couple of the properties in each of the five categories? This will ensure they attract more than enough buyers to sell all the homes on their books. But, of course, it will mean less ‘profile’ for the agents and fewer dollars in kickbacks.

FACT 21. ADVERTISING YOUR ADDRESS CAN HURT YOU

Advertising the address of your property leaves a ‘digital footprint’ on-line. If your circumstances change (or you can’t get your price) and you decide not to sell, there will be a record of what seems a failed sale. In the future, if you try to sell, buyers will see your past failed attempt. Never allow an agent to advertise the address of your property

FACT 22. AGENTS FIND SELLERS FROM ADS FOR BUYERS

Agents exploit sellers by asking for advertising money that benefits the agents by attracting more sellers to the agent. One of the first things agents ask prospective buyers is: “Do you have a home to sell?” Agents can get several ‘listings’ (homes for sale) from advertising money paid by one home-seller which can mean tens of thousands of dollars to the agents who still charge the sellers a few thousand dollars for the cost of advertising their property. It cannot be stressed often enough – real estate advertising benefits agents far more than home sellers.

FACT 23. THE “SELL A SECRET” LINE

One of the most common ways agents dupe sellers into paying for needless advertising costs is by telling them, “You can’t sell a secret.” Rubbish. Any skilled negotiator knows that “secrets” often sell at a premium, much more than widely advertised properties. The problem for sellers, of course, is that most agents are good at exploitation but hopeless at negotiation.

FACT 24. ADVERTISING GETS YOU A LOWER PRICE

Yes, advertising might lead to a buyer. But at what price? Often a lower price, especially the way most agents advertise. For example, when sellers want, say, $900,000 for their home, some agents suggest advertising at “offers above $750,000”. Sellers will be told that advertising their home at a lower price, will attract more buyers. This is true, but they will attract buyers at a lower price. Agents will then tell sellers, “But this is what the market is saying.” Er no, you are looking in the wrong market! If you want to sell your home for $900,000, the first thing you need is buyers who can afford $900,000. If you advertise a “price range” buyers offer the bottom of the range, not the top!

FACT 25. TRUST YOUR FEELINGS

Sellers often say that real estate advertising, doesn’t make sense. But they allow themselves to be duped for three reasons: First, most sellers have little or no experience in selling real estate; second, they think the agent knows what’s best and three, they ignore their feelings. Three of the most important words when selling real estate should be “trust your gut”. The reason many things in real estate don’t feel right is because they are not right. Find an agent you can trust, no matter how long it takes. Trust your feelings.

If you want to know how to get the highest price for your home without wasting thousands of dollars on needless advertising, please contact us at Stephen Smith Real Estate (07) 3880 4311.