So you’re selling a house and the agent presents you with a schedule for marketing fees. And suddenly, you’re full of questions. Why doesn’t the agent cover the marketing costs? Is this a fair charge? What are all these real estate marketing costs and do I need them?
Read on to learn more about real estate marketing costs and how the process works.
What does real estate marketing cost?
It can be a big variance, but on average, marketing costs are from $6k-$20k, to give you an idea. Some agents and areas tend to do a lot more in-house whereas others outsource which can also affect the pricing.
What does real estate marketing costs cover?
The majority of your marketing cost goes to online listings, particularly with realestate.com.au (REA). As the market leader for online property listings, the majority of buyers use REA to search for properties, so it’s near-impossible to avoid this expense. Says The Guardian, ‘Given its market-leading reach, realestate.com.au has become almost obligatory for consumers advertising their homes for sale online.’
With REA, the listing prices are postcode-driven. This means that the more exclusive your postcode, the more expensive your listing will be. As an example, for our client selling a property in Albert Park, the total marketing charges were $12,000, and the REA listing fees were $8799—nearly three quarters of the total real estate marketing costs.
REA offers premier listings, which means your property appears higher in the search results—giving it maximum visibility. This is more expensive, but we always recommend you make the investment, to get as many people seeing your property. Investing in the upgrade also means your property goes on a rotation to pop back to the top of the page usually around day 14-15.
What other costs are involved?
The other real estate marketing costs are fairly minimal in comparison to REA fees. These include:
- artwork and printing—for flyers to share at open homes; about $275
- drawing of a site plan and floor plan; about $300
- photography—to showcase your home at its very best; about $700-1000
- boards at the front of your home—to gain attention amongst locals; up to $900
- copywriter—to highlight the wonderful appeal to your target buyers; $250-500
- auction day services and admin—preparing for auction; prices vary
Do I need a video or a 3D graphic of my property?
Agents love to recommend investing in an expensive video or 3D mockup to showcase the property. But we generally recommend against it. We know from data that buyers browsing online rarely watch the videos, so it can be a wasted expense. 3D mockups look great, but there’s little evidence to demonstrate they influence more buyers to inspect the property.
Beware of marketing that promotes the agent—not your property
Some agents love to promote themselves at your expense. This might include the aforementioned video with the agent walking through the property and their logo blasted everywhere. Another is the coffee carts sharing free hot drinks at open houses—a nice touch for buyers, but it does more to promote the agency, with their logo on the coffee cup. Your buyers might love a free coffee but it won’t influence their decision to purchase your home. If the agent wants to invest in coffee carts, extra signage or more razzle dazzle, tell them they’re welcome to do so out of their own pocket.
Do I need newspaper or magazine advertising?
We advise against listing your property in local papers or magazines. They were popular decades ago, but with the prevalence of online listings, expensive print advertising is not at all necessary these days. Unless your property is in a location that does have regular publications that people read or your property is one that will attract a passive buyer it is wasted money .
There’s typically two ways to pay your real estate marketing costs
Most agents offer two options for marketing costs:
- pay now with an upfront fee
- pay later, plus around 6-7% interest
Whatever payment plan you choose, the marketing is a cost that you will incur even if the property does not sell, it’s an agreed fee that won’t change.The agents commission is only payable if the property sells but the marketing is payable no matter what. Think of it as the risk money that you pay to take the property to market.
The benefit of the pay-later scheme means that you won’t be out of pocket in advance. You’ll simply allocate a portion of the deposit paid for the house, which is appealing to many vendors.
Usually a third party company will take on the marketing costs and you’ll be charged an interest fee usually equivalent to around 6-7%. If this option is presented to you, read your contract carefully so you understand your commitments.
Why won’t the agent pay my real estate marketing costs?
It’s a good question. And many vendors feel like it would be logical for agents to include the cost in their commissions. However, the marketing fees are separate from the agent’s commission and do not go to the agent. They are fees paid to third party suppliers therefore if the vendor is not paying, the agent would be paying out of their pocket. The agent will spend many hours working on your property campaign, driving buyer interest, negotiating with interested buyers, hosting open homes and so forth and that is why they get paid a commission.
The agent’s commission is only payable upon sale so if the vendor decides not to sell after all, or the home fails to sell, they’ll be left with no income, despite the hard work they’ve invested. Agents’ income is based on commission. So if they’d stumped up all the marketing costs, they’d be at a loss if the home doesn’t sell or the vendor changes their mind.
How can I reduce my real estate marketing costs?
There are a few tactics you can consider to cut expenses. For example, if the agent wants to print a four-page brochure, perhaps you can reduce the size to a cheaper two-pager. Or you can opt for a simple board to present at the front of your house, which will reduce your costs. A custom-designed board with photos of your home is more expensive as it requires design and printing. Whereas agents usually have a generic stock ‘for sale’ board as well, which can be re-used amongst many properties, and will reduce your costs. (However, if your home is located in a heavy-traffic area, or has something to showcase that is not evident from the street the photo boards will be much better at attracting local interest, so be careful of penny-pinching too much here.) You can also ask for a smaller size board, which will be cheaper as well.
Can I sell my home off-market to reduce my marketing costs?
You can, but often it is not the best outcome. Vendors like the idea of minimising costs, but it really depends on your agent. If you have a highly connected agent who can use their little black book to find interested buyers, you may be able to avoid the expensive marketing costs with an off-market listing.
But we find that the investment in marketing pays off in the final sale price. If your market brings more interested buyers to your property, it can drive demand and competition. This means more interested parties bidding and competing at the auction and a higher final sale price for you, the vendor. For $6-20k in marketing you might find your final house price is $20-$50k higher, making it well worth the investment. Off-market buyers know you’re saving on marketing costs and they often won’t budge on price and will negotiate accordingly. You get one good shot at going to market so a good marketing campaign often trumps the secret sale.
To recap: real estate marketing costs explained
- Most marketing campaigns will cost $6,000-$20,000.
- The majority of that price is spent on listing with realestate.com.au.
- It is worthwhile investing for a premium listing, which will appear higher in search results.
- Other costs include photography, design, printing, copywriting, boards and other expenses.
- Marketing costs are separate from the agent commission.
- You can opt to pay your real estate marketing costs as a flat upfront fee, or later with interest.
- Selling your home off-market will reduce your costs, but may result in a lower final sale price—we recommend giving it your best shot with a strong campaign from the start.
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