By Sara Wilson
The easiest money to spend is someone else’s. The case is never more poignant than in relation to property marketing. It is not unusual for agents to come up with a flamboyant list of marketing expenses that will “aid the sales campaign” because after all, they are not the ones paying the bill! They are also guaranteed some free marketing for themselves as the individual agent (free, because it is being paid for by the clients) so why wouldn’t they suggest you spend up big? There is absolutely no risk but all gain for them. After all, it is not their money that they are spending.
Many agents are unflinching in their advice – spend large, style the property, move the tenant or even themselves out and the maintenance list is a beauty.
In 2022, with the property market stabilising and returning to what is a ‘normal’ real estate market it is easy for agents to suggest a big marketing spend-up. The pretence is that if you spend big it will guarantee a sale and a big-ticket price. In reality, it is important to provide quality marketing of your property, but it is not the only piece of the selling puzzle that vendors need to ensure they have in place to achieve the highest price when selling. There is indeed a distinct difference between High Profile Marketing and Quality Marketing.
Vendors and agents are now finding that there is quite often a gap between the expectation and market price. This price gap is neither the vendor’s nor the agent’s fault, it is a result of a volatile market. What this can quite often mean for the vendor is that after spending $8000-$10,000 in advertising costs, $7000-$9000 in styling and in the case of landlords, quite often thousands of dollars in forfeited rent, the market price of their property is unacceptably low. If you are a landlord, then you also must provide 90 days eviction notice to tenants which means you’re exposed to 3 more months of interest rate rises.
Spending big on marketing and styling won’t necessarily yield a price worth the campaign investment.
Your property marketing should work for you – not your agent
It is important to note that no one really puts their property on the market, spends $20,000 and expects the campaign to fail to meet its price target. Given that auction clearance rates in the Geelong area are swinging between approximately 50-60% weekly, that is exactly what is happening.
Property owners begin their journey at the top of the mountain of optimism and they end up in a hole. To get out of the hole the seller needs to then reposition the price of the property (normally downward) to achieve a sale or write off the entire cost of the marketing campaign and withdraw the property completely. This is a common scenario daily in the property space. You are damned if you do and damned if you don’t. It also gets to the heart of why the agents were so keen on that upfront expenditure at the beginning of the campaign, when everything was rosy at the top of the mountain of optimism. It is crystal clear at the end of the campaign when it is too late.
Rarely sellers will cop the hit of the $20,000 marketing bill AND not sell the property, leaving the agent with a guaranteed sale and guaranteed commission. The AGENT can breathe easy that they can now pay their own mortgage and feed their own family. They have taken NO risk with spending their own money and they are rewarded with the commissions and accolades of a sale for the time they have put into the campaign. It is all about them, not their client.
To ensure you don’t fall for the upfront sting and end up in a hole, here are 7 ways to ensure your property campaign is working for you and the property and not the agent.
- Tell the agent to wear the cost of the advertising campaign if the best price is below the price the agent quoted you at the time of the listing. You will quickly see what the agent really thinks your property is worth.
- Don’t take false comfort in the marketing costs being “payable on sale” or “withdrawal from market”. This means YOU are carrying the risk.
- Look for risk-free marketing options. An example of a short database campaign to collect price feedback which should certainly be at no cost OR select an agent that will market the property with a NO SALE NO CHARGE guarantee.
- Avoid long agency agreements where you are potentially bound to an agency against your will
- Make an investment before going to market, improve the property. Repairs, painting/re-carpeting or even a fresh load of bark chips on the garden for example.
- Keep in mind the purchaser will be looking at the property, not the furniture/staging. Staging is sometimes suitable and worthwhile but assessment on an individual basis is recommended as it can also be a big waste of money.
- The key piece of the selling puzzle is pricing. Try not to get stuck up the optimism mountain. Perhaps you do sums on the lower end of the expected range and be totally honest with yourself as to whether this is enough for you to move forward and go to the market. Suppose you treat the agent selection process like a bidding war between the agents. In that case, you will ultimately end up with the highest quoting agent who will most probably condition you down in price over a 6–8-week period. The overly friendly and accommodating agent upon your first meeting may not end up being so overly nice and friendly 6 weeks in. Ensure your agent is competent and has a proven strategy that can be adjusted to suit your individual circumstance.
If all the above seems like a “risky effort” you are spot on. This is a market for those who really want or need to sell. If you are considering “selling for a good price” or “selling more than I bought it for 12 months ago” this may not be the time to put your property on the market. If you don’t need to sell, stay put and stay safe and decrease the risks.
No sale, no charge
If you decide you would like to make a move and sell an investment, give us a chat and we can talk you through our NO SALE NO CHARGE guarantee and while there may appear to be other agents doing this, as far as we are aware, we are the only company in Geelong taking 100% of the risk so our clients don’t have to. Chat with our agents on 03 5292 8084 or contact us online.