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Does It Make More Sense For the Home Seller to Pay For Marketing Photography Than the Agent?

April 29th, 2012

Lee Jinks a Realtor and Photographer in McAllen, TX brought up a subject subject that I’ve talked about before (here and here). It’s the issue of if it makes more sense for the home owner to pay for marketing photography than the listing agent. Apparently having the some seller pay for marketing photography is very common in AU and NZ.

Lee argues that listing agents completely understand that great marketing photography is important but are reluctant to put up risk money up front because the risk is high these days that when the listing expires the home owner will contract with another listing agent and all first listing agent’s up front marketing money is wasted. So here are a couple reasons why it makes more sense for the home seller to pay for marketing photography than agents:

  1. If the photos are licensed to the home seller then if and when the listing agent changes the home seller can use the same photos for subsequent listings.
  2. Home sellers are ALWAYS enthusiastic about great markting. In dealing with literally hundreds of home seller I’ve never met one that was willing to skimp on photography! They all understand and recognize good marketing.

Okay, so it’s easy to see  and agree that it makes sense for the home seller to pay than the agent. The practical question is how to we get the industry to make this transition? The real estate industry in the US is conditioned for the listing agent to front all the marketing costs up front. For good reason, the home seller is typically paying 3% to the listing agent at closing so why can’t the listing agent spend a couple of hundred dollars to get professional photos? That’s $3000 commission for every $100,000 of listing price!

The reason listing agents are not willing to spend a few hundred dollars up front to make several thousand commission is that 80% or more of listing agents are not selling more than a few listings a year. This arithmetic demonstrates why as a home seller or a real estate photographer you MUST deal with successful listing agents. If you deal with a listing agent that does a handful of transactions a year then they are not going to think spending a few hundred dollars up front for marketing (photography) makes sense because it’s cutting into their food budget.

Conclusion: As long as listing agents are making 3% of the listing sale price I think it makes perfect sense for listing agents to spend a couple hundred dollars up front for marketing photography, what’s more I think they are negligent in doing the marketing if they don’t. If they are getting a discounted commission (less than 3%) then that’s a different story. Anyone dealing with unsuccessful listing agents is going to encounter irrational behavior.

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15 Responses to “Does It Make More Sense For the Home Seller to Pay For Marketing Photography Than the Agent?”

  • I’ve done lots of research on these numbers. It’s true that about 80% of the agents in the business don’t do enough business to call it a business. But lets talk about the agent that does earn the 3% commission. The agent might have to pay a referral fee to a relocation company and will have to give a portion to the broker of the company they work for so the agent is left with $2,100 to $1,470 of that $3,000 commission. The agent is responsible for all of his own expenses, ie. education, licensing, mls dues, association dues, print advertising, website design and maintenance, computers, and on and on. Now factor into the equation that even the producing agents will sell about one third of the properties they list. So after all the deductions to the commission and expenses an agent who spends $100 per listing for photos will effectively spend $300 for each commission in photography services alone. Is it not now obvious why most agents would rather snap the shot with their cell phone than pay a professional photographer?

    On the other hand, Larry’s already pointed out that sellers are enthusiastic about good marketing photos. I suggest that RE Photographers do what they can to make RE agents not feel bad about asking the seller to pay for professional photos and give them the information they need to sell photography services to the seller on your behalf.

  • I know it is different here in the UK but I am paid 50/50 by vendors and agents. One way around the issue that I find works, is for the agent to charge an upfront marketing fee to the vendor, which is then returned on completion of the sale.

    It is the best of both worlds, the vendor gets the top marketing without extra expense and, the agent has no upfront expense (or risk) but better marketing and an increased prospect of a sale.

    I do agree with Lee, I have never yet come across a vendor that doesn’t “get it”, I am just in the process of having flyers printed to give out to homes with for sale boards that I come across on my travels.

  • Forgot to add, my flyers are designed to double up as material that agents can also use.

  • It makes sense since is the seller who owns the property and not the agent. The agent promotes the house at 0 expense for the seller. Basically we work for free, not much of a motivation. That’s why a very high percentage of agents is a failure.
    But it’s hard to sell the idea that a seller must pay the agent before closure. That’s why it never happens like that because they can opt for another agent.

    What I usually do if I want to do something different like stating or fixing some things or painting or making a garden look good or something else is to negotiate with the seller. I make him see that if he spends X money that his property will sell much more easily and for an higher price. It also facilitates my job. If he doesn’t want to spend money I try to negotiate by splinting the expenses in half. Being discounted to my commission at closure, NOT before. In that way I reduce the risk in my business and also increase the selling probabilities not only because the property looks better but also because the seller motivation is higher since he already spent money in the property.
    I charge a 6% commission (actually I never ever work for less then 5000 even if the property is worth like 30000 or even less) or even higher at some properties and I never had to deal with the objection that the commission is too high. I always compare myself to the competition and the seller doesn’t mind paying me more a few % since he knowns that I will be much more successful then any other agent in the area and that he will sell for the highest possible price.
    Sure I’m not super man and many times they say no because the price I want to work with is too low but it’s ok because I know for sure that in the future he will come to me and we will sell it. During that time a random number of agents tried to sell it and wasted money in marketing.
    It’s a tricky business but I rarely get wrong. I only work with properties that I known for sure that I will sell. That’s why I don’t mind spending money in marketing. Also the higher commission sometimes compensates that. And if it doesn’t that’s ok because I’ll sell a lot more. It’s better to have 80% or 70% of the commission of something then 100% of nothing. But that’s very very rare.
    I even had sellers that in the end broke the agreement we made and insisted in paying the full commission because I made such a good job.
    Once I had a seller that was a professional photographer so he shoot the photos himself.
    So in the end if you are a good agent, the seller in a way or another always pay for the marketing.
    I also have some agreements with some builders that they pay for a % of the marketing. But it’s different since there’s dozens of houses to sell. And because in the marketing I promote his own brand.
    Actually to be honest I rarely pay for marketing since I always have some sponsors from real estate related companies. So in the end, I get paid to marketing instead of paying for it.
    Even when promoting a house, I’m already earning money.
    That’s how my business works.

  • Just what is a “successful listing agent”? The leaders in this area are typically a small handful of Realtors that have a direct relationship with a bank and receives their foreclosures directly without having to compete with other Realtors for the business. Statistically, they lead in listings, units sold, revenue and make all other Realtors look like goof-offs. They, usually organized in teams, are so busy that have actually seen notes in MLS not to call, email only.Of course the public, when looking for “successful lising agent” don’t know that, or that the high number generators are not going to seek their business because it is not part of their business model. The general public also does not know the quality of the listing with short sales being the most manpower intensive for the same (or worse – bank mandated reduced) commission. They also don’t realize as they want to skimp on commission that the least manpower intensive is to take buyers to new home construction where – in theory more than practice – introduce client, let their sales staff handle the sale details, and come back 30 days later to collect 3%, many times with a bonus on top of it.

    What Lee said was very true as the general public typically says 3% (or more likely the full 6%) and QUIT THINKING! They are totally oblivious of the breakdown and how everybody has their hands out. Even the foreclosure listings above, while the bank reimburses in 6 weeks or so, if the realtor is independent, they have to front the entire cost including unpaid utilities before will be turned back on, fix-up costs including major repairs like roof or AC, and if part of a national chain they have a department that will cover – but charges a 30-40% referral fee to the commission in addition to what your split is with the brokerage firm which can range from 10-40% based on production with low producers at 40.

    The way to sell a home is 1) price it right, 2) exemplary photo and staging, and 3) a marketing plan coupled with cooperative sellers. It it is not priced right, nothing else really matters. Unfortunately, many of those mega-listing (non-forclosure) agents have the fear that it won’t sell because they artificially hiked up the price just to get the listing. Why pay for photography when you are more dependent on convincing the owner to reduce price in a few weeks.

    This is a script for a video I have in my head but haven’t produced yet. Abolish the word “commission” and call it what it is – the seller’s marketing expense, risk free (unlike For Sale By Owner) that is paid at closing. Then the question becomes -not “what is your commission” but “what am I getting for my marketing dollars.” It begins putting the entire markeing plan in focus, including professional photogrphy. More important, would differenciate those listing machines whose only marketing plan is to get the listing, throw it against the wall (put on MLS) and see what sticks.

  • Then there is the idea of marketing your photos to the home owner in another way. Getting a listing can be competitive between agents. I have had owners tell me that they insisted on professional photography when they chose their agent. Sometimes those agents don;t typically use pros to shoot, but will make that promise. So you still get paid by the agent as usual, but it is because of the owner. I often then retain those agents as clients after they see the difference.

  • imo at least here, successful agents never work with the banks. banks don’t bring them buyers and pay awful commissions like you said. successful agents always only work with private owners.
    It is great that the sellers don’t known all those things and that they don’t known how to differentiate a listing. It’s my job to teach them about that. I’ll show them the difference to work with a real professional and always at the end of my presentation they are amazed on what I offer them and the commission issue always disappears. I don’t ever have to mention it. It’s fixed and non negotiable and that’s it and if they don’t want it’s ok they can work bad agents that will not sell the house. I will for sure in the future when they come back to me again. I defend my seller price as I defend my commission, they understand that when it’s explained well. Sellers are not stupid.
    If it wasn’t for the other agents commission I couldn’t differentiate myself. It’s really easy for me if X agent charges Y percent. All I need to say is this is my work, I’ll do this, this is my results my price is Y + X% because of that.
    So, I really need the word commission.
    Also I don’t want the seller to known how much things cost. That would mine all the work I do. He doesn’t need to known that 1000 flyers costed X or Y. I don’t want them to known. Why should they known? Of course if I print 50k flyers I get discounts anyway. In the rare cases where they ask how much it was I say, for you it’s X in company Y and the conversation ends. Same for all other things.
    Sellers have difficulty in understanding how much time work and effort is put into selling a house. They don’t need to known how much I earn per hour. So, even by explaining them that, a good marketing plan is needed.
    Because of my success sometimes I have sellers saying that they don’t want to work with me because they think I earn too much money. Eventually they understand why but I’ve to work more to get the listing then working with an average seller.

    And the way to sell a house is 1) price 2) price 3) price. If a house has an amazing price, regarding of the photos, it will sell for sure. In fact, even without photos it will be sold.
    On the other hand if a house is priced higher and has the most amazing marketing, photos, stating, video whatever in the world, it will never ever be sold for that price.
    Of course it helps a lot having a good marketing and photos but that, in the most part, is just to attract more sellers, not buyers.
    A mega listing agent can be a good client for a real estate photographer to work with but he will never succeed in this business.
    I have 10 times less listings then the average agent but I sell 20 times more.

  • From what Pedro is saying, his market is completely different than the U.S. Here in California, 60% of all properties on the market are either short sales or foreclosures. Successful agents HAVE to work with banks or they’ll miss the majority of the business. Numerous studies here show that properties on MLS without photos won’t even be shown, so the chance of a sale is dismal, regardless of price. Apples to oranges. When I was selling real estate, our listing presentation used the phrase “marketing fee” and NOT commisssion. Truly, that’s what it is. I like Ian’s technique of the photography cost being split between agent & seller; good strategy!

  • Pedro makes a good point that retaining professional photography is as much about attracting sellers as buyers, a point more RE agents need to think about. I do not think working with homeowners is much of a stretch the question is do you want to work with one or two RE agents in a year or the equivalent listings on a one at a time basis. As the RE photography becomes more competitive you will see the transition from agents to homeowners.

  • It also depends on the price point and what market you are serving. As an architectural photographer I’ve only provided real estate photography on a select few high end homes where the home owner pays for the marketing materials including the photography. However, recently I’ve hooked up with a high end real estate company that markets million dollar homes only in very exclusive neighborhoods. Because of their reputation and sales record many affluent home sellers are eager to have this company represent them and are willing to pay for a “marketing program” that includes photography up front. This is one of those dream scenarios that I was lucky enough to fall into via a referral.
    There is the advantage to the owner owner/seller that the marketing materials remain with the owner if the contract period runs out.
    In order to assure themselves of good marketing materials I believe home sellers should front the money for photography, etc. My 2 cents.
    Ron

  • yes, the markets are very different. For example around here about 80% of the families have their own house.
    “marketing fee” is very reductive. Really? 6% just for marketing? No way I could convince anyone with that arguments.
    My work is so much more then just being a marketer. It involves so many areas and it’s so overwhelming, challenging and demanding. I’ve to be a psychologist, a financial consultant, a lawyer, a decorator, a babysitter, a webdesigner, a marketeer and so on, all at the same time.

    No way I would let a seller keep MY marketing. I also keep all the copyrights of the photos, actually I sued a client because of copyright violation and won. I demand absolute control over how the property is being promoted. I don’t ever let the period run out. EVER. They are always sold. In a few rare cases that I couldn’t sell it’s me that finishes the contract with the owner. In those cases it was me that made an error on accepting to work that property.

    I known many agents that when list a property they don’t known fore sure if they are going to sell it or even sometimes they already known it’s going to be very hard or even if the house will never be sold. I really don’t understand that mentality. Every house I promote I’m absolutely sure that I’m going to sell it and that I’m doing everything in my power to sell it, including a great marketing. Of course I’m not perfect and sometimes I’m wrong. And of course everyday I decline dozens of houses for sale because I known that for that price they won’t sell, ever. I don’t want to waste my money and time. That doesn’t mean I won’t accept them later for a correct price and motivated seller. It is me that chooses the client, it is me that chooses whom to work to, not the other way around. And my terms are fixed and non negotiable. In this business a successful agent needs to known how to say NO.

    Doing a good job or making a good marketing is not price point or market dependent. Every house deserves good photos. That’s why I don’t understand why so many photographers decline certain jobs for a lower price. It’s not like we need HDR and panoramic photos for some ruins that sell for 20k. Sure there’s a price to appearance but photographers fee’s shouldn’t be fixed but rather based on the number of photos and services offered.

    Some sellers don’t understand the need for good photos and will never accept to pay even for a portion of the cost. It’s really ok with me. It’s peanuts. What is 300$ when I known I’m going to sell a house for 600k with 6% commission? It’s called an investment and it happens all the time in business. Sometimes (rarely fortunately) I even fix or change something in the property at my own expenses.

  • Don’t treat every seller like a dead beat. You may encounter one that bails on a realtor….but a realtor has to offer marketing. If the realtor turns to me (as a seller) and asks me to pay for the photos they can take a hike.

    Now for the winning strategy that only 5% of realtors get….spending money makes money. Provide a marketing service like no other….they call…you provide the staging, photos and video.

    So you get stiffed once in awhile…turn that into something positive. If you have to ask me, turn it into what?…then you might have a hard time at this business.

    Try calling the top agents in your area? Think they make you pay for staging, photos and video?? Really??

  • I oftentimes have clients (REALTORS) who split the cost with the seller, or have the seller pay my fees up front. The seller is then reimbursed for those costs at closing by the agent.

    This way, the agent isn’t out the money if the property doesn’t sell or the seller goes to another agent (in which case he uses HIS photos). It also then engages the seller monetarily in the successful sale of the home, so the sellers have something invested as well.

    In this area, sellers generally pay for staging costs, so having them pay for photography/ video isn’t totally out of the question.

  • Steve and Fred you raise very valuable and contrasting points that highlight the necessity for strong interpersonal and negotiation skills for agents. If you’re going to broach the subject of homeowner payment, it needs to be artfully presented. I really like the reimbursement concept as it makes a great deal of difference when the owners become invested in the process, which I think would manifest as a nicely prepared home when I get there, which of course would be appreciated. I have done several hundred shoots though, and have yet to learn of any case where the homeowner paid in any form.

  • This has been one very beneficial thread for me. Having the seller pay for professional services to help the house sell is the norm here for everything except real estate photography. It just seemed to me that professional photography should be included in the mix. Because of this thread, I now have a few more tweaks I can add to my presentation to the next agent.

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