In this blog, we explain why we include top tier real estate advertising in our commission and other agents don’t.
As an experienced real estate agent, I often hear many sellers asking why advertising costs aren’t typically included in the agency commission.
On the surface this may seem reasonable. But, if you delve into real costs of running a traditional real estate agency and the impact of including the advertising and marketing in the commission (see Traditional and Franchise Real Estate Agents Commission below) you can understand why advertising is not included in the commission by almost all agencies.
But the real cause for concern is not actually whether these marketing costs are included, rather the type of advertising you end up opting for.
For this reason, Gott Realty has taken an entirely different approach.
We include top tier advertising in our competitive commission rates as standard.
It’s part of our no smoke and mirrors, data-driven approach to get you the best sale result – with as little stress or inconvenience to your family. You need to invest in quality advertising from the get-go.
Unlike traditional real estate agencies, we don’t have the franchise fees, bricks and mortar shop space, or staff overheads. Therefore, we can include top tier advertising and marketing campaigns, which include numerous still shots, floor plans, video and now 3D, for almost all the properties we list within our commission structure.
Traditional and Franchise Real Estate Agents Commission
If you’ve been shopping around for a real estate agent, take this example from an agency and salesperson’s point of view of how the commission fee is split up…
For a $550,000 property, the total agency commission would be approximately $13,750 at 2.5%. The agency would then pay approximately $1237.00 franchise fee that would leave a balance of $12,375, less the salesperson’s share of $5,200, leaving an after-sale balance of $7,175.
Now let’s look at the costs of a second-tier advertising campaign that could be offered by an agency. Even worse, the agency might even choose third or fourth tier advertising resulting in even less buyer interest, as seen in the graph.
Estimated costs for a second-tier real estate advertising campaign:
- Internet ad that would sit on page 2-3 or 4 on one major portal – approximately $1,500 for 45 days. (With more than 50% of buyers using mobile devices to search for their next home you dramatically reduce the chances of your property being exposed to buyers because lower tier ads don’t rank as high as top tier advertisements.)
- Photography $250 for 12 – 15 still shots and maybe a floor plan.
- Total cost of advertising $1,750.
- Balance of $5,425 to cover rent, staff, operating costs and allow for some profit margin.
The worst part of traditional agencies paying for the advertising, is in this example below, where the quality of advertising used is virtually a waste of time.
Being second or low tier advertising, the number of buyers’ interest is minimal, because the property does not rank as high on mobile devices as top tier advertising ranks on the first few pages, meaning less inspections and a longer time on the market resulting in a lower sale price for you, the client.
Source: Statistics collated by Gott Realty from an actual property we marketed on RealEstate.com.au.
Advertising Your Property
In summary, Gott Realty strongly recommends that you don’t skimp on advertising, match it to market condition. This will result in a great sale price within a reasonable selling time up to 90 days.
If you choose not to spend money on advertising, expect your property to take a longer time to sell and in a lot of cases when it does sell, it will be at a very low price.
Request a Free Appraisal
If you want to skip the smoke and mirrors and deal with a real estate agent that is genuinely interested in helping you sell your home for the best price. Contact Steve Gott and the team at Gott Realty. Request a free appraisal here, or call us on 0419 777 577.