Should You Use Deferred Payment Strategies For Real Estate Photography

December 14th, 2014

DeferredPaymentStephen in Spain asked the following question about deferring payment until closing:

A client with whom I am about to begin working with, has told me that some photographers in my area agree to invoice the jobs only after the property is sold, and whether I would consider doing the same. My immediate reaction was of course to flat out reject linking my fees to a condition like that, but it got me thinking. What about negotiating a share of the sales commission? This would increase the risk the photographer takes, so the eventual reward would naturally need to be in proportion to that. Several factors would need to be considered when establishing the share, such as the realtors inventory turnover, whether they have exclusivity, average sales lead time and surely many other aspects. With respect to this particular client, this aspect of the contract is certainly not a make or break issue, and I am confident I will be working with them extensively regardless, on a normal post-shoot invoicing basis. But I was wondering whether anyone has ever established an agreement with realtors by which they are compensated by sharing the sale commission of the properties they have shot, and if so what experience they could contribute?

On the PFRE blog and the flickr forum over the years, we’ve discussed variations of defer until closing payment schemes number of times. Here are some points that you should consider:
  1. Successful agents have enough income that that can pay for their marketing costs up front. In the long run, photographers are better off working for successful agents that pay up front.
  2. I heard of this kind of payment arrangement used (in Europe) where a percentage is paid up front (like 75%) and the rest when the property closes.
  3. Any photographer doing this kind of closing payment type of arrangement should get the contract in B&W and even have the payment listed on the closing documents so your fee must legally and automatically be paid just like a lien from the water company on the property.
  4. On the average, typical listing agents close less than 50% of the properties they list, so the payment on closing arrangement is extremely risky.
  5. Doing this kind of thing means you have to take time to track the sale of the home. Not something that most photographers want to spend their time on.
This kind of risky arrangement and a lot more work than is necessary. The photographers shoot price is small in the overall scheme of selling a property. It is not unreasonable to expect to get paid up front. Has anyone had a positive experience at charging this way?
Share this

26 Responses to “Should You Use Deferred Payment Strategies For Real Estate Photography”

  • NO, NO and NOOOOOOO

    I would not align my business with an agent who could not upfront the cosy for photography………. Period

    Run away from those types of clients as soon as you can!

    Lets her from some dissenting opinions, but why go through all the hassle!

  • Not a chance!

  • I learned a long time ago, never say never!

    I learned about this form of payment from a group in Colorado offering just that. Pay when your listing sells. It got me thinking. In their case you have be a ‘member’ of their organization and pay a small monthly fee (around $30 or so I believe). You then can have your properties photographed with the Pay At Closing plan for a premium. The images are for that agent/property combo only and if the listing does not sell the rights to the images terminate. The next agent gets the same deal (no reshoot need be done) and so it goes until the property sells. Ultimately, while an agent might have a 50% close rate, the property probably has closer to a 90% sale rate.

    So this got me thinking as I’m relocating to a new area and have to start all over with the local agents. While house hunting I’ve discussed this with 3 agents and all seem to like the idea of either paying now or Pay at Closing for a premium. One agent explained it to me this way; (and I paraphrase) ‘I want to have 50 open listing at all times and if I had to pay for photography on all the listings I would have thousands invested up front. I’d rather keep that expense down and shoot some ourselves. But if I could do the Pay at Closing then I would have professional photos for all my properties and for that I would be willing to pay a premium”

    It has some merit, especially for starting up new in an area or trying to increase your business when things are slow. It could be looked at that you are partnering with the agent and your investment is your time shooting properties for them.

    The question is what premium should you charge? My thoughts would be around 25%. So, if you charge $200 for cash payment now or $250 at closing if they sell it. I might have to give that ideas some serious thought. I think once you are established to the level where you just don’t have time, that program could be terminated. Of course, the downside is you could lose business as the agent got used to the idea. I can see it working both ways.

    So, would I say NEVER? No, and personally I’m going to evaluate the merits of this idea when I ultimately do relocate to the new area. It’s a great question.

  • I use a payment scheme that is similar to “pay when it closes” however, it’s truly a NET 90 deal. I give agents 90 days from when I shoot/invoice to pay, the catch is that they pay an additional 75% of the normal price for the chance to just cut a check out of the DA at closing. They don’t all close, and the agents are still good about paying when 90 days are up. I’ve only had two or three agents out of 60+ that I’ve worked with who flat out refuse to pay. Needless to say they’re not selling real estate any more either. It’s not something I do with every agent either – I have them fill out a credit app like any other business would do when extending credit. I will accept agents without a sales track record if their broker agrees to “co-sign” on their listing photos and be held responsible for the costs incurred.

    In essence, I fund their marketing efforts, with a small amount of risk, and get paid a premium to do that. Now I have a mix of agents who pay immediately upon shooting, and other agents who pay up to 90 days after shooting. Statements are sent out every month.

  • As an agent, I have to tell you no way! What if the property never closes? I sure would not take this deal.

  • I use a payment method like this and it works great. I have also posted that many times here, so you need to correct the blog.

    This type of billing does have it’s pros and cons. On the pro side, you are significantly more likely to get new agents and new customers to try your service. Thus your business will grow much faster with this style of billing.

    On the con side, you are not getting paid for sometimes months after the shooting. However, once the payment pipeline is full, this really doesn’t amount to much. It can even be a positive aspect because you will still be receiving payment during your slow months.

    This does require that you keep track of what sells, which is not very hard. A simple spreadsheet will make it easy. Plus ninety five percent of the agent will call you and tell you a property sold. It also requires that you understand your market, so that you can adjust your prices accordingly. Prices should also be adjusted for payment risk and the increase in payment time.

    The biggest con is that sometime a new agent will disappear after their first sale. This does happen. But, since you will be getting increase business with this system, it is a trade off that will be in your favor.

  • I do this for certain agents every now and then, I will usually raise the rate from 50 to 100 percent.
    It has worked out just fine for me.

  • I’ve done the work, so they can pay me now. Sounds like a scheme to fleece people if you ask me. Who on earth dreams up these ridiculous schemes?

  • As a real estate agent, I do like to be able to pay people when I get paid. However, I’m not willing to pay a premium for the privilege of doing so.

    I’m surprised that all the responses so far have focused on when the photographer is paid and no one has addressed Stephen’s question of “What about negotiating a share of the sales commission?”

    I’m not sure how things work in Spain, but in Massachusetts and many other parts of the USA that would be considered paying a referral fee. In many states, it’s illegal to pay a referral fee (which is essentially paying a commission) to someone who doesn’t have a real estate license.

  • Very good article, and well rounded responses. I considered this angle to promote my RE business. But I would be re-inventing the wheel…..as I’d be wading through the muck that other RE Foto types without knowing what our industry thinks about deferred payment, thank you for the responses folks. I will attack this problem / challenge from a different angle now.

  • @Neal – Sorry, I didn’t recall your comments. I removed that sentence.

  • I have MORE than enough to do without that.

  • Like Russell, I do not have the time to add this kind of non-profit work to my schedule. I would never agree to gamble that the work I’ve done might get paid down the road sometime or might not. For the amount that 99.9% of the pro RE photographers charge, it is sad that some think it is necessary to offer payment plans. If you think about it, it does not say much for the stature of agents who can not afford a few hundred dollars.

    That said, a few years ago when times were tough for all, I did work with some of my agents to differ payment until they got on their feet again. But this was for established agents, that had a history with me.

  • No way! I’m not willing to take a chance that the property never sells, or the seller backs out and pulls the house from the market. It’s happened to a few clients of mine this year.

  • NO. In fact, hell no. 🙂 I keep most of the agent’s card #’s on file, and I text for approval to charge and let them know the amount, and they get charged before actual DB delivery. The only agents I even bill out are one’s I’ve known and worked with for years that have a track record of consistent payment.

  • Absolutely not. Would never risk my business on a model that relies on someone else’s work/work ethic to succeed. Never.

  • Hello. I’m in England and I have an arrangement like this.

    Originally, when I started working with a new estate agent I invoiced him straight away, like other clients. Then as the jobs mounted up I started invoicing him in arrears and in bulk. I wait until I have 10 houses or so done.

    Then he asked if I’d invoice 3 months in arrears because the agency have changed the way they invoice clients. They used to charge a fee to put the property on the market and now that won’t be paid until the home is sold.

    I was happy to agree to this! It makes sense for both of us. I was always in arrears anyway! I think if it’s a client who is financially sound and you have a good relationship with there’s no harm in doing it.

  • OH HAIL NO!!! I don’t even release images until full payment is made (99% of the time at the session) because I have been BURNED.

  • The contractor renovating a house for a flip doesn’t wait until it sells to get paid. A service hired to clean the home for showings isn’t going to delay getting paid with a chance of not getting anything for the job. Landscapers brought in to spruce up the yard want cash. Getting a dumpster from the waste company? Not without paying them in advance.

    It’s not enough money to pursue action against an agent if they don’t pay up. I am not informed enough to know if the agent has priced a property properly so it has a chance of selling. I don’t have time to track whether a listing I have photographed has been sold. To offer the best pricing that I can, there is no way I can carry the receivables for an unspecified period of time with a possibility of not making anything on the job (accounting nightmare).

    If an agent is strapped and really can’t pay a modest fee for photography, it makes more sense for the seller to put up the money up with the agent refunding the expense at closing (or not). If the seller decides to pull the home off of the market or change agents, they will have to bear the cost of relicensing the images if the photography didn’t contract with the seller directly.

    I find it much simpler to have a job closed out upon approval of the delivered images. It’s just less to keep track of and worry about. If I were working with a large client that did a lot of business with me on a monthly basis, I could offer them payment terms with a signed contract spelling out the terms and penalties. I would also want good verifiable credit references from local service providers. I don’t see the value of a customer who I have to chase constantly to get paid.

  • There have been a great number of comments stating no. That’s OK, everyone is welcome to their opinion. However, I would be interested in someone presenting a business case against using this type of method. I would also be interested in hearing from photographers that have tried deferred payments, found they didn’t work and are willing to share why they didn’t work.

  • I have tried this in the beginning and regretted it. Consider why an agent would ask for this type arrangement:

    1-It’s a struggling agent who sells very few homes each year and thus struggles financially, (why target that kind of client?), or
    2- They know they are taking a listing that is overpriced and probably won’t sell. And odds are very high that, premium or not, you’ll never get paid.

    Add to that the time spent tracking down down which homes sold, and which didn’t , who owes what and when, and you find yourself with a second full-time job. That time would be much more efficiently spent aggressively marketing to top-producing agents in your area.

    Has anyone tried “bill me later”? It has a different name now…

  • “On the average, typical listing agents close less than 50% of the properties they list”

    That alone is enough for me to say no…

    In a hot market, yeah I can easily see it working. But what about a slow or declining market..?

  • I tried it and discovered that I was usually on the loosing end of the deal.

  • Answer these questions. How long have you been in business?
    1. A short time? – no keep it simple stupid!
    2. A long time and you have good cash flow – then consider the broker.

    How long have they been in the business?
    1. A short time – See answer 1!
    2. Really established and doing lots of volume? – Consider who you are dealing with.
    Now is the time for you to put on your negotiating hat. Established brokers all have cash accounts for small repairs, PHOTOGRAPHY, and other day to day actions that need to be done to move the sale along. If your broker falls into this last category, he is playing you, so play back. You live in Spain , haggle! I would not go beyond 30 days! I have large accounts that I have done business with for a long time that have terms but none of them on closing. 30 days max. I hope this helps.

  • My thinking here is, Why bother?

    My general requirement is like any service provider: pay at time service is rendered. Though, the one difference is payment up-front, rather than after-the-click, of course.

    This sort of situation is so rare for me, the ‘special handling’ the situation dictates isn’t worth considering. Most of my commercial customers (e.g. developers, other-than realtors) pay up-front without even debating the issue.

    When invoicing customers (e.g. invoiced one customer 18 times this year, for 30 shoots), it’s enough work staying atop AR without chasing this too…which is just another AR concern.

    What I find bemusing, is how no one would consider doing this to a plumber or electrician. But the don’t think twice about asking a photographer. The answer’s relatively simple: A lack of respect. The intangible deliverable doesn’t help any.

  • The agent does not get paid until the home sells. Why not work with the agent and make the same risk of time and effort in trying to sell a home. Yes, you might not get paid, but the agent does not get paid if the home does not sell. Why not offer two methods for professional photos.

    Example only … charge a flat fee of $200 up front or $300 when the home sells.

Trackback URI Comments RSS

Leave a Reply