The Leopard’s New Spots

man hand Finding new property in real estate market with electronic commerce concept


Real estate agents may have been weaned off newspaper ads (very, very reluctantly), but they are now embracing a new form of advertising like there is no tomorrow , expensive internet advertising. 

‘Bigger photos equal more buyers’, sellers are assured. ‘Make your property stand out amongst the crowd, yo u cannot sell a secret’. The cheap lines that agents used to sell needless newspaper ads are now being used to sell unnecessarily expensive internet campaign s.
‘Vendors…If you are not on page 1 of the buyers search you have erected a signboard in the forest’ screams the real estate trainer hired to increase the amount of ‘Vendor Paid Advertising’ (VPA) sold by agents. Negotiators call it the ‘sunk cost syndrome’. If you can get someone to invest upfront – emotionally or financially – in an outcome, they are substantially more motivated to want a return on their investment. The sunk cost syndrome allows agents to sell unmotivated vendors a poison pill, they have unwittingly increased their motivation to sell, tenfold. Agents therefore now love expensive internet ads for exactly the same reason they loved expensive newspaper ads.

The real estate industry still proudly spruiks the idea that campaigns which utilise print marketing have higher clearance rates than those that don’t.  That’s a really weird conclusion to draw when you consider that home buyers rarely look at print ads now!  

What is not said by the industry, is the fact that vendors cajoled into spending money on a print campaign have needlessly spent good money on bad advertising.  While their agent has caused them to become more motivated to sell, they have also caused them to pay for advertising in a medium where buyers don’t look anymore.  To ascertain whether expensive internet ads work, let’s look at them from the perspective of a buyer.  As a buyer would you accept or reject homes based on the size of the home’s respective ads or photographs?   Do you like homes that are on page 1, more than homes listed on page 3?  Are you more or less likely to inspect a home because the internet site allows you to go on a video tour?  If you are like most buyers and the answer is less likely to inspect the home because you have now seen inside, then why would you pay to run a video tour ad in the first place? A few probing questions uncover some surprising answers!

Agents now buy subscription packages from advertisers, which force them to run expensive web campaigns. The rules are simple. Either the consumer or the agent pays upfront for these ads, but pay upfront they must, regardless of the outcome of the sales campaign. It is easy to see then, where an agent’s passion for selling vendors this type of expensive internet advertising is derived from. Stockbrokers love big real estate websites – they are ‘high margin businesses’. That is, they have low costs and high incomes. Their cost base has barely risen as their volume of business and income has exploded in recent years.

In Australia, the real estate industry’s greatest fear is ‘digital disruption’. Industry forums are full of agents who fear their ‘Uber’ moment is imminent. And it may well be if they continue to unnecessarily charge home sellers thousands of dollars for expensive internet campaigns, when inexpensive internet campaigns work just as well, if not better. 

The leopard may have changed his spots from newspaper ads to internet ads, but vendors should be aware, he is still a leopard.


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