Marketing is a Commodity
There are any number of things that a broker can do to market your property. But for most properties, the basics will get the job done. Price and presentation including excellent photos and floor plans, a MLS listing with internet syndication (to Zillow and other sites), an attractive, noticeable yard sign with flyers, accessibility to the property. Beyond the basics, anything else is fine. Just don't pay extra for them, no matter how eloquent the broker's Marketing Plan.
I will let you in on a little secret: Assuming you hire a minimally competent broker, these marketing basics are commodities and should be priced as such. Sure, some brokers are worth more than others. But the price differential should not be based on anything other than transactional competence. Any idiot can add your property to the MLS; a savvy real estate negotiator is something else entirely.
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I want to tell you what absolutely no one else will: Residential real estate marketing is a commodity endeavor.
Yes, heresy! My marketing professor would be appalled.
Let’s start with an example of two brokers:
The first broker does only the basics described above. And no more. But let’s talk about those basics for a second: They must be competently executed. The price must be correct13 and the presentation must be excellent, the photos are the most important marketing asset and must also be excellent, floor plans and feature sheets have become standard, the property must be properly syndicated so that it shows up everywhere on the internet. Even in 2020, attractive yard signs with informative flyers are still important. And brokers must have a discussion with sellers about making sure buyers have access to the property without difficulty. Okay, you get the basic idea.
Now the second broker comes in with the most beautiful Marketing Plan you’ve ever seen. Printed on crisp fifty-pound, richly-colored paper to leave with you as a keepsake. Then, he whips out his iPad to go through it all with you PowerPoint-style. Naturally it includes the basics above. But he sniffs: I go above and beyond. He advertises on radio and television, he has a billboard on the highway. He’ll have open houses and broker open houses. His firm is part of a pricey national franchise that will send him buyer leads, he pays Zillow for additional leads, and he pays relocation companies for even more leads. He sends out mailings and pays for an email marketing service, his office is in an expensive retail center, he pays for a talking house service, and individual property websites, and a moving van for buyer and sellers. And he pays a motivational sales coach to keep himself in the right frame of mind, and he leases an expensive car to make the right impression. He makes a dozen phone calls a day looking for buyers for each listing. Look, the list could be endless.
Now this extra stuff is great and all, and certainly cannot hurt, but make no mistake about it, it is not designed to sell your house. The basics will be more than adequate for 99% of all houses. So what is all this extra stuff and elaborate Marketing Plan really about? Well two things.
First, it is simply designed to acquire the seller as a client. Mr. Seller, look at everything I am going to do for you. But it is not about conveying real property because much of this stuff is nonsense. It is entirely about client acquisition. That is, putting on a dog-and-pony show for the seller. I mean look at this stuff: Email marketing campaigns? Mailings? Talking houses? Phone calls? Franchises and expensive offices in an internet age? Surely they’re kidding? And none of it is going to sway a buyer one way or the other. No, buyers will only buy the right house for them, no matter what. The real purpose of all this crap is to acquire the seller as a client.
And second, while this stuff may not help market the seller’s house, much of it will help market the broker, himself, and help him secure more clients. So what the broker is really doing is marketing himself, to other potential clients, on the seller’s dime.
I just have to say that again: Brokers market themselves on the seller’s dime.
Now some will say: But surely everything that can be done to attract buyers, should be done. Well guess what? Serious home buyers are not passive. Buyers are not sitting around waiting for you to reach out to them: Hey, buy my house! No, serious buyers are actively searching for the right home. So what sellers need to do is to make sure that those buyers can find them. Do more if you like, but you are wasting your time, effort, and money. And probably doing more for your broker than for yourself.
Now let’s ask: Is there such a thing as a passive home buyer? You know someone not really looking to move, but might possibly be convinced, if they were informed about your house being for sale? Well brokers would have you believe this is the bulk of the buyer pool. And they want to convince you that this is where they need to focus their marketing, and this is why all this elaborate marketing and expense is necessary. But to the extent that brokers do reach these people, the broker is not asking them to buy your home. The odds there are simply too long. No, the broker is hoping to also acquire them as clients, either as buyers or sellers. It has nothing to do with the seller or the seller’s house.
So, is it possible that a passive home buyer will make an offer on your house? Sure. But what are the odds? My position is: Let’s spend our limited resources on those most likely to buy your house: Actively searching buyers. Overwhelmingly so. Let’s put the question another way. What is more likely: That a seller locates the right buyer, or that a buyer locates the right house?
Let’s not allow ourselves to be distracted by a bunch of nonsense here. The way these brokers market, both houses and themselves, is dishonest and contemptible. Don’t fall for it.
So let’s continue with the basics: Surely not all marketing basics are the same? Surely, some brokers are better marketers than other brokers, and some marketing is better than other marketing? Right?
Clearly so. But with a minimal level of competence, the results are the same. Do some real estate brokers write better copy than others? Absolutely. Does it matter? Probably not.
Let’s take another example: Two houses for sale in the same neighborhood. One has the most beautiful ad copy that you have ever seen, in the MLS listing and on the expensively-printed marketing flyer, full color, high gloss, artistic photos from a bespoke photographer, and a three-dimensional floor plan. The other has minimally competent copy, black-and-white flyers printed on plain copy paper, rather journeyman-like photos, and a two-dimensional floor plan. You get the distinction.
Which house gets seen the most? Which house gets sold fastest and for the most money? Well if all else is equal, we don’t have enough information to answer these questions.
Notice, I did not ask, which house gets seen first? Because yes, maybe the best marketing will lead buyers to come see that house first. But guess what? They are going to see the other house as well. Every single time. And which of the two will they buy? The one that meets their needs and desires. And that may or may not be the one with the best marketing. We’ll come to this in the next chapter.
But for now, my fellow real estate brokers will argue: But the goal is to get buyers to come see this house first and make an offer before seeing anything else. And then my question to these brokers becomes: Oh really…how stupid do you think buyers are? Even if they leave the first house to go write an offer on it, the buyers are going to stop at the second house, for a quick look, on the way out of the neighborhood. But brokers do not think enough of buyers or sellers to even acknowledge this. Again, it’s a lack of respect.
Look, I am not saying that marketing is not important. The difference here is not between marketing and no marketing. Rather it is between the absolute best and most elaborate and most expensive marketing and perfectly sufficient marketing. Between one broker’s beautifully-written and elaborate Marketing Plan and another broker who simply, but competently, executes the basics.
Because for most residential properties, the basics are more than enough. If you have a million-dollar villa on a mountaintop, those buyers are few and far between, and perhaps you need the best marketing money can buy. But if you have our typical $500,000 house in our typical $500,000 neighborhood, you need the basics.
Now why is this important? If a broker offers more marketing or the best marketing, why would a seller not take it? It certainly cannot hurt. The answer is: Because brokers are using the illusion of over-the-top marketing to first acquire the seller as a client, and then as an excuse to charge that seller top dollar. Hire me, and pay me six percent, because my marketing is second to none.
But you do not need second to none marketing. So don’t pay for it. Much of it does not work anyway, much of it just helps the broker, and none of it will sway a buyer.
One final point: Remember at the top of this chapter, I said: assuming you hire a minimally competent broker. So I am not saying that incompetent marketing is sufficient. The photos cannot be bad (and we’ve all seen bad real estate photos). The curb appeal and presentation must be sufficiently attractive. The ad copy must be more than merely articulate. I would go so far as to say that, of course, the basic marketing must be excellent. Competent. Just don’t overpay for it and don’t allow a broker to use marketing basics or extras to justify their inflated fee.
Because all competent brokers will do the basics, sure with some variations, the basics are commodities and should be priced as such. Don’t pay for more.
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13. But I do not mean underpriced. I mean correct as we have discussed it.