To Pay, or Not to Pay…?

I saw a video recently where a real estate agent was suggesting that agents who do NOT charge sellers for marketing their property, were not acting in the seller’s best interest.

I found this to be an interesting and different perspective on this rather vexed question of Vendor Paid Advertising or VPA.

It is probably fair to say that a majority of real estate agent’s now charge sellers either up front or at settlement to market their property. Various people have told me that they were charged anywhere from $500 up to $4300 by real estate agents for marketing.

At the extreme I recently heard of a case where the seller had paid $9000 to the agent and the property still hasn’t sold.

The problem with paying up front for marketing is that if the property does not sell, then you, the seller lose your money. The agent cannot refund your money because it has all been wasted, sorry, spent on advertising.

Also, if you take the property off the market then you are presented with an account to cover the cost of marketing, assuming you haven’t already paid up front.

In the past 10 to 15 years the financial risk in marketing a property has shifted from the real estate agent to the seller.

So why do agents insist you pay up front?

If there is now no financial risk to the agent because the seller is paying for marketing (more often than not the marketing is all about the agent and not much to do with the property), then the agent is free to waste your money advertising in places which no longer work as far as selling the property is concerned, such as newspapers.

I can’t remember the last time I sold a property where the buyer came from a newspaper advert. The main reason is because most buyers (approximately 90%) enquire having seen the property on the internet and another 6% to 7% enquire off a For Sale sign seen while driving around the area where they are looking to buy.

The internet is a very inexpensive and much more effective way to market most products these days but especially real estate. Therefore, I cannot see how NOT charging for marketing is not working in the sellers best interest. Maybe I’m missing something?

I’d be interested to know your thoughts …. ->

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