I wrote a “Member’s Only” post pointed at real estate professionals on ActiveRain that was mostly a rant about one of the many emails I received in regards to email marketing. In essence, this email said that as a real estate agent, I should be pulling back on my marketing because the market is tough… WHT?!?
I should pull back on marketing property because it is tougher?
That seems to me to be the exact opposite of what I should do in order to make MY client’s home competitive in the market. It seems to me that I should be making sure that the homes I have listed are effectively marketed to consumers…
So, here is the exact question:
Lane – how do you determine the marketing budget for a particular property? Do you use a percentage of listing or the expected commission?
Here was my first answer:
That is a very tough question. I think it has to kind of be “on the fly.” I certainly base it on the price of the house and the size of the potential commission, but it also has to include wiggle room for the uniqueness of the property, and the properties needs. I would say that the actual potential of completing the sale would come in, but if I don’t think it will sell, I won’t take it, so that isn’t a consideration for me.
The bottom line is that I want to budget enough to get the job done right. For a $1m listing, I need to plan a different marketing strategy than for a $200k home. The level of the materials plays into this as well…
Was that enough of a non-answer?
The respondent’s reply was:
Lane – too much of a non-answer 😉 I’m just curious what you would allocate for a $200,000 listing. $1,500 would be a big marketing budget for a property of that price.
I can’t give a specific dollar amount, because situations are so different from property to property, but there are a few things that I can give as (breakable) rules. To start with, I would love to be able to market a $200k house the same way I market a $1m home, but it is pretty dangerous. We are in a market where less that 25% of homes that are listed are likely to sell… I have a MUCH better percentage than that, but we still have to make business decisions in order to survive. However, there are some things that can be done to stretch the marketing budget.
- Single Property Blogs
- Search Engine Optimization
- Cool Virtual Tours
- Loads of Pictures
For the most part, these are not expensive solutions. And, the level of production value for a $200k home is different than for a $1m home. So, we can add some of the higher end touches to the entry level homes like:
- Video Tours
- Virtual Interactive Floor Plans
- Targeted Mailings
For a high end listing, there can be a few thousand dollars invested in these things. For an entry level listing, we would have to pull back and spend a smaller percentage… but if we have a few listings in the same subdivision, perhaps we can group them together for the mailings and other marketing. Keeping in mind that each home is only needing ONE buyer, there may be a competition between the listings, but buyers aren’t all looking for the same home.
Bottom Line:
I can’t give a hard and fast rule, but I am VERY willing to say that even a $200k home needs a few hundred dollars in marketing, not just the $20 email blast (that is spam, BTW). Also, utilizing economies of scale, an agent can be more competitive than someone even spending more money (like a FSBO spending all of the money they are saving on commission on marketing).