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Nowadays, most real estate agents will ask their clients for a contribution to the marketing and promotional costs associated with selling their property.
Vendor Paid Marketing
This trend towards Vendor Paid Marketing (VPA) has occurred partly because of the regulation of fees in 1998, which saw consumers start to negotiate down agent fees following the abolishment of the government’s Scale of Fees. The rapid growth of more sophisticated methods of marketing is another reason for this shift towards VPA.
Ten years ago, agents would typically implement about six key marketing methods, such as print advertising, standard company signage and window cards. Nowadays, agents implement a promotional campaign that includes 16 different activities.
Benefits of VPA
The cost of advertising is high, especially for print media, and there are genuine benefits for the seller if they pay for the promotional campaign of their property.
Firstly, it provides them with an element of control over their marketing campaign. The frequency of the advertising, the style of the campaign and its content are all influenced by those paying for it.
Secondly, it saves the seller money because agents are required by law to justify the precise costs of each and every marketing activity they charge to the seller.
The seller and agent will agree to a maximum marketing cost at the start of the campaign, however if the property is sold early in the campaign, the advertising rate they pay will be reduced.
In other words, agents can only charge their sellers for the advertising they actually use, and must provide a statement of those expenses to their clients.
On the other hand, an agent who absorbs the advertising expenses entirely would have to recoup these costs by charging a higher overall selling fee. In this instance, any savings made from the early sale would not be passed onto the vendor.
Lastly, vendors can be guaranteed a good campaign. Most agents offer marketing alternatives to their clients, such as a Gold, Silver or Bronze package. Sellers are then able to tailor their marketing campaign to their budget and expectations, and can be certain it will be implemented.
Most effective way of selling your home
Of the 16 marketing activities good agents undertake, not all of them will carry a fee (access to the agent's buyers for example). The marketing approach will obviously differ from agency to agency, but generally speaking, if you invest about $2500 for a three month campaign, this will ordinarily ensure your property receives efficient and substantial exposure to the market so all buyers can be found.
I recommend speaking with a local agent about which marketing methods would be most suitable for your property and budget.