How much do I have to pay if my Geelong property doesn’t sell?
Selling a property is generally not a regular occurrence for most people, sellers are often unprepared when making decisions around marketing strategy and budget, this can lead to some unpleasant surprises.
Are there different components to marketing and what are they?
Typical industry practice is that there are two different fees payable when you sell your property. Firstly, there is the percentage component or sometimes called commission and then there is the marketing component. With marketing, typically what happens is you get given a menu of different marketing options. Various advertisement sizes, photo quantity, sign size/finishes etc are all available at different levels. The online portals such as realestate.com.au have various costs depending on the suburbs – in Geelong there are typically two bands inner and outer suburbs. With most of the marketing elements there are various inclusions and upgrades. All marketing will also incur a GST component.
Our advice is to be very careful with all these options, it can become quite overwhelming when faced with a myriad of options to choose from, especially when it is not something most people are experienced with. Be mindful of selecting a whole heap of optional extras that you may not need (a bit like ordering that extra side of chips or salad, or dessert/cheese platter when the main course is enough) and remember what the whole point of marketing is to seek enquiries rather than provide every single little bit of information about the property to all buyers all the time. The effectiveness of the campaign needs to be the focus not simply doing the biggest, most expensive of everything. If you do go down the biggest of everything track it can get hugely expensive and may not necessarily be the most efficient way of finding a buyer. At times the biggest beneficiary of the massive upgrade in marketing spend can be to the agent, their brand or the company selling the marketing as opposed to you the home seller.
What is the actual cost of marketing my property then?
Costs vary widely from around $3,000-$10,000, some may even go higher depending on what upgrade boxes you tick. Common industry practice is that the agent should be able to get the seller to commit to 1% of the value of the property through the marketing costs, whether this is needed or not is another very important question.
How does Kardinia Properties Smartre Sale benefit the seller?
We take a zero-based thinking approach and working back from the key question of – “what is the most effective way to market to a buyer?”, not what is the most amount of our client’s money we can use to market our own brand. We feel that our role is to market the property effectively not our brand, we do different internal business marketing for that. One of the big criticisms the industry has is that sellers will go through a marketing campaign, the property doesn’t sell for whatever reason and then they are left with a big marketing bill to pay. They are then stuck. We like to avoid the “sunk cost fallacy” and eliminate any risk for our clients/vendors through our “no sale no charge” approach.
How this works is that if that if a property does go through a campaign and it doesn’t sell Kardinia Property will wear the marketing expense. We still pay it, but we are not passing it on to the client. We don’t think it is fair that clients should have to pay for a failed campaign. There are many other agencies throughout Australia who use the SMARTRE Sale approach who are doing the exact same thing. Being risk averse is becoming more relevant in the current economic conditions that we are in. Working this way is in the best interest of clients and it removes any risk for home sellers.
What is Sunk Cost FALLACY?
“The sunk cost fallacy is our tendency to continue with an endeavor we’ve invested money, effort, or time into—even if the current costs outweigh the benefits. And while the term sounds like technical jargon, it’s a common decision-making pitfall in both life and business.” In real estate many agency strategies use the sunk cost fallacy (either deliberately or through flawed processes) to create motivated sellers who feel stuck and end up accepting a far lower price because of the time and investment made towards a large and costly campaign. It manifests itself by the more investment (time and effort) you make as the seller towards the sale then the more committed you become to obtaining a result. This can be hugely detrimental to seller and result in a lower sale price.
Can I ask for NO SALE NO CHARGE marketing from any agent?
In Victoria, by law all the marketing expenses and costs incurred by vendors are negotiable. Vendors can certainly ask for the NO SALE NO CHARGE yes. Some agents will be more flexible than others however the key take away is that as the seller you are in control because its your house and your money. If an agency does not offer a risk-free way of selling as standard then beware and find one who does, there is a lot of money at stake and unfortunately many agents are very good at spending someone else’s! Just because “it’s the way we do things” or “this is what everyone does” doesn’t mean it’s the right or effective way for you, it’s a terrible feeling to feel like you are locked in and on a conveyer belt that you can’t get off.
Kardinia Property is local, family owned Geelong business. If you are considering making a move and would like more information to help with interviewing agents we are happy to provide free of charge this booklet which run through 8 smart questions to ask when interviewing agents. Simply contact the office on 52928084 and we will arrange a copy for you.