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Home Seller Paid Advertising - Win/Win For Everyone

Published: 03/05/2011
By: larry

This is a guest post
by Brett Clements, of PlatinumHD Propvid Australia (note that in AU the refer to the home seller as the "vendor"):

As PlatinumHD Propvid slowly expands internationally, we’re being exposed to different ways of doing things. Different ways Agents do things. Different business models.

Increasingly, we are being asked, why is the quality of real estate marketing in Australia so high and how overseas Agents can achieve these results? The most defining answer, in terms of how it effects the quality and creativity of what we do, as content-makers, is Vendor Paid Advertising (VPA). Quite simply, the home owner invests in the marketing of their property and the Agency sources the best professionals (suppliers) for the production. Everybody has skin in the game and a healthy and highly competitive ‘industry’ of content makers focused on quality and innovation is just one of the many by products. Anybody deriving an income from real estate marketing in Australia has all the agencies and agents who’ve pioneered and championed this business model to thank.

In many markets outside Australia, especially the United States, there’s no such thing as VPA. The Agent has to pay for all the advertising themselves. So, rather than hire anybody to do the job, they do it themselves. The Agent does it all, often using smart phones to take photographs and even video, and using software programs to write scripts. Yes. One of the last stalwarts of human creativity, that of creative writing, is now being done by applications (mark 1 up for Singularity) although one could argue if any type of writing could be done by a drone, its that of real estate classified where the murdering of adjectives is serial (as in killer).

Advances in smart phone and camera technology will no doubt make it cheaper and easier for anybody to take great pictures and make great video. All that will be missing is the ‘will’ to want to do it and the ‘passion’ to want to exceed. No doubt they’ll have an ‘app’ for that one day. For PASSION, click to install.

But at the moment, in production, there’s no first prize in a race to the bottom. At PlatinumHD Propvid, we re-invest heavily in our business, ensuring we’ve got the best cameras, lenses, lighting and technology and insurance. Let’s not forget about insurance. Cutting prices cuts corners and that can be dangerous, especially in film production when you’re using constant lighting and heavy equipment, like jibs and cranes. We regularly set up three big 2,000 watt lights to flood the exteriors of homes. These things run hot. You don’t want to be burning down a Hedges Avenue estate without $21 million in public liability.

A lot of things go into scheduling, producing, shooting, cutting and streaming content, and to stand out in a buyers’ market, you need great quality marketing materials. Cheap content cheapens homes and cheapens professional reputation. As that old saying goes, you get what you pay for.

Note from Larry: My experience as a listing agent for 10 years in the US, getting home sellers to pay for advertising probably wouldn't be that difficult. We've discussed many times on this blog, how to sell real estate photography directly to home sellers and many have been successful at doing that. I think Brett is right, seller paid advertising would be a win-win for everyone in the real estate transaction.

15 comments on “Home Seller Paid Advertising - Win/Win For Everyone”

  1. Although I don't write as eloquently as Brett, I have tried to make several of these points in other threads on this forum. In the US quite frankly realtors don't get it. I know that the realtors on this site (and others) will say that I don't get it, I don't understand how the Real Estate market works, no I do, but I'm not the one sitting on a $10M dollar listing that they can't get anyone to look at for the past year or two.

    The problem in the US isn't whether something like PlatinumHD would work here, of coarse it will, the problem is when and can you build and maintain a profitable business until it does. It is changing, just very slowly. Out of the six properties I'm currently working on I have met with all of the owners of those properties, those meetings take place in part because the realtor is floating a balloon for having the owner pay for the marketing which can lead to some awkward moments. That's what I'm looking to this forum for help with, how do we change the debate? How do we address the systemic, now anemic business practices of the real estate industry?

    One of the drivers for change, at least in the luxury market, that I pointed out to the owner in my last meeting is that if there was someone willing to purchase their property in California, it, in all likelihood, would have sold over the past year. The fact that it hasn't means that you have to reach out beyond, way beyond most realtors circle of influence. Its rather alarming how many luxury properties are being sold to foreign investors and how do you reach them.

    Then the next issue is do they really need a "Neo" quality video? Yes, you do! If I spend $50M for the ranch I created the video for, I'm Jamie Fox's neighbor in an obscure valley that people associate with salad dressing, if I spent the same amount in New Zealand, I'm royalty or I could just buy Greece. But in the US we have this, what I would characterize as a perverse system where you meet to discuss the marketing strategy for the property, the owner shares his grandiose ideas but then looks to the realtor to pay for it, the realtor stands up and hums a few bars from a popular song and suggest we create a slide show with a graphic at the end. Seriously I almost fell out of my chair.

    The realtor will appease the owner by talking about marketing strategies knowing that they intend on spending as little as possible instead of telling him that if he wants to implement that marketing strategy he needs to pay for it. There expectation are miles apart.

    How can we work together to help each other manage the listing agent and owners expectations?

  2. It is interesting how the agents in different countries have such different approaches. In the UK the agent will often pay for the photography/brochure or organise everything and then bill the vendor when the property sells. The general marketing by the agents is also different in that the larger companies which cover the whole of the UK will want to protect their brand and will not allow substandard photography to come from any of their offices in the UK. Three of the largest companies have their head offices in London and their marketing approach to the whole of the UK is that if it is not good enough for London it is not good enough anywhere else. They way the agents are employed is very different as well I think (Could someone clarify?)

    Australia looks to have a similar approach but in the USA it is so different to what I am used to!

    Also, video is very much in its infancy in the UK. Occasional use but it is not something that many agents are looking at developing at the moment.

  3. Brett
    Thanks for opening this subject, Larry thanks for publishing it.
    The US system of marketing real estate is clearly broken or at least obsolete compared to Australia. There is no excuse for a million dollar properties to be so poorly marketed in the US.
    I have worked with 2 brokers who ask sellers to pay for photography and get reimbursed at closing. These sellers don't seem to mind at all when they cut me a check while other brokers are complaining that they cannot afford photography and they are loosing listings to those who can.
    I have shot a few videos with sellers present and they are thrilled with the process and the product. I am sure they would participate in the cost when they know the upside to great marketing.
    Breaking the old ways of thinking in real estate circles may be harder than we think. Established brokers have made allot of money using the current system and when one pioneer broker goes out and shakes things up by providing (pro) video and other cutting edge marketing they risk becoming a black sheep who listings do not get shown by other jealous brokers. I know it sounds unbelievable but apparently it happens.
    Going straight to the seller may be the best solution. They control the money and can demand products and services if they know they exist.
    I am starting an ad campaign targeted at sellers. I am sure it will anger some brokers when their clients call and ask about having a video done of their home but we all need to take some risks if we are going to change the way real estate is marketed.

  4. I can see both sides of the picture between the US market and the Aussie market. The big question is: if the seller is paying for the marketing, then how do realtors differentiate between themselves to gain the listing?

    In the US, you have a huge pick of various realtors. The major difference between each of them is their experience, how much they charge to list your property, and what their marketing plan is to sell your house. The experience usually ties right in to the marketing aspect.

    So, as a Realtor, if you take away your pitch on how you are going to get a client's house sold, then how do you separate yourself from any other agent? The only answer left (that I can see) is by reducing your commission.

    I often brand my videos to the agents in my area as a way to separate themselves from the masses, and that is what makes them successful in getting house listings more often then the agents that don't offer video.

    Hey, I am all fine and dandy for the Australian system, as I am just a video vendor. I get paid in either system! But if I were a Realtor, going into a listing meeting with a potential client and asking them to pay their own marketing fees would most likely get me shafted for the next realtor down the block who is going to offer free pics from their iPhone, which is at least something!

  5. A major factor for the listing agent in todays US market is the risk that after spending a bunch of money on advertising the home seller will cancel the listing and list with another listing agent. This risk is increased by the fact that nowadays US properties are worth about as much as $100,000 less than most home sellers think they are and it takes a huge amount of time and energy to get most home sellers in touch with what their home is actually worth.

    By having the home seller pay for the advertising costs it would as Brett says, make the home sellers have some "skin in the game" and get them more engaged in the sale of their property.

  6. Evocative video / photos undoubtedly make a difference.

    Buyers buy emotionally before they do the sums, and photography / video aids that.

    One thing not mentioned here, and probably one of the reasons why the US situation is that bit different I feel, is that were we in Australia or NZ to charge 6% we would get a swift kick in the proverbial.

    What I'm saying is that down-under sellers are usually charged standard fees in the 3 - 4% range, so can understand whereas a US seller being charged a full 6%m is probably questioning extra investment.

  7. Hi David. I believe the average percentage in Australia is around 2.6%. From that, Agents also have to pay costs. And taxes. Agents differentiate themselves through their own professional reputation, and alliances with quality suppliers. They don't win a listing because they have an iphone that shoots HD or they'll take photographs for free.

  8. David
    Is the Australian system 3% total or 3% per side. In the US it is 3% per side for a total of 6% typically.
    As I was typing my post above I got an email from a broker who is having me video a property and the seller is paying me directly. He cc'd me on the email and he simply suggested to the seller that he pay for a professional video for the property. 15 minutes later he cc'd me the response, "Great, when do we start and how soon do you need the check."
    Maybe it is just a matter of asking. I think to a smart seller who has some equity it is not such a big deal if the quality is good.

  9. I see sellers participating more and more...

    Oftentimes the seller hires me, THEN hires the agent. This way, if they want to switch agents, they own the photos and videos and can use them with the new agent.

    Other agents have the sellers pay, and they reimburse the seller upon closing. That way the agent is only out the marketing money if the property sells. If a seller gets an itch and wants to change agents, the agent isn't hung for the marketing costs.

    Other agents split the cost with the seller.

    However, I think the attitude of many sellers is that "if I'm paying 5% or 6% commission.... YOU pay for the marketing (i.e. you do YOUR job).

  10. A hybrid system could be used where you market to owners saying "have your agent call to get your home marketed like this". Agents would ultimately pay the final cost.

  11. Heath
    Australian figures like those quoted by Brett above and my earlier ones are all totals; both sides combined percentage.
    Although very thin on the ground currently in NZ, the use of a "buyers agent" is certainly growing in popularity at the top end. The majority of real estate transactions in NZ, and more than likely Australia, are conducted by the same agency, in other words no MLS exists at all. That is certainly the case here, and I'm sure from my 18 years of living in Oz, the same there.... (although I stand to be corrected) least in the Eastern states.

    Acknowledge that agents do have similar expenses to North American ones, my point was that 6% of something is ......anyway you look at it, a tad more than 2.6 or 3.75%, especially in these times. (eg; $300k home means USD$18000 v AUD$7800 v NZD$11250)
    So agents have to be able to justify things and illustrate value.
    Having said that buyers do certainly appreciate evocative video / photography and recognise that there is definitely a "cost factor" there. High Profile marketing certainly works for those who realise it's value.
    Costs usually don't come down in real estate marketing, crickey just been told a glossy paper factory affected by Japan eq will result in higher publishing costs to printers for the "glossier" weekly property magazines, suggestion is another 5 - 10% more.
    I don't know of any agent in NZ who shoots HD on their smartphone either.

    That last sentence best describes the sellers / vendors thoughts that I was trying to get across, a point brought more home since this GFC thing hit.

  12. The only issue I take with anyone other than the realtor paying for the photos is that it leads to a licensing problem.

    You give the realtor the license to use the photos, and when the homeowner pays for them, they do not understand why they cannot have a copy, or even worse, take them to the next agent in line if they fire the first agent.

    It has been the case that I have seen my photos on other agents sites, and when I confront them, I am told that the homeowner owns the photos.

    Now, instead of having a conversation with the realtor, having them understand licensing, and sign contracts, you also have to have these conversations with each homeowner, and that assumes they are present at the time of shooting.

  13. As a broker in Spain it’s very rare to have an exclusive right to sell the property. Local residents, will often put their own sign up, as there is no law saying you have to use an agent. I thought VPA would work well here. Someone with the all round skill set, who could produce high end video and all this entails, great photography, professional writing (proof) , floor plans and even the ability to help make sure papers are in order. We have a Notary system and they have the last word on any transaction. Package this for the seller to send to multiple agents or market themselves. VPA would be a very nice business in many parts of the world.

  14. Great post! I'm a new agent and find it rather silly that agents don't ask their seller to pay for photos. It's called advance funds, it's common, it's easy to get most sellers to agree to it, and it makes you a much more effective agent. Any seller who isn't willing to help market their home probably isn't the best client to represent.

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