In the world of real estate agents, the term used to describe the process of a seller (vendor), paying for all or some of the components of their marketing campaign (the collateral used to promote their property to potential buyers) is called Vendor Paid Advertising or VPA for short.
For real estate businesses its serves the important purpose of underwriting the expense of marketing properties that ultimately may or may not sell - at this point it is important to remember that aside from the very new (and potentially risky) style of pre-paid real estate operations like Purplebricks and Upside, the vast majority of real estate agents in Australia, including us, operate on a success fee model, meaning that until a property sells - we don’t get paid and the worst case scenario, if we can’t deliver our client a result, the work and time we did invest, is for free.
So…… Why does this matter to you as a home owner? Well on face value it doesn’t, but take the time to conduct some deeper investigation, throw around a little bit of psychology and mix in some accountability and it may be something you might wish to ponder a little more.
To save this article becoming a bit of a thesis, there are some simple aspects of investing into your own campaign that are worth consideration:
By investing in some or all of the marketing budget at the beginning of your campaign, you are very much in the driver’s seat on how those funds are invested and have every right to ensure they are being utilised as per your understanding and in a manner that will provide the best potential return on your investment, in actual fact, your agent then inherits an enforceable fiscal responsibility to report and correctly reconcile the expenditure they have made with your funds on your behalf.
If however, your agent invests its company’s money into your marketing campaign, there is very little in the way of accountability for you to ascertain effective spend and the subsequent return in the marketing of your home.
Another interesting way to look at it would be comparing the Parts and Labour component of a quote from your plumber. When you’re paying for the parts that your plumber uses when installing a new mixer in your kitchen, you get to have your say as to the which brand of tapware and the quality of the parts he is going to use.
Freedom to Perform.
The most overlooked and potentially controversial component of the “should or shouldn’t I invest in my own marketing” conversation is the concept of freeing up your agent to negotiate harder……..
We made mention of psychology earlier in this article and this is where it comes into play. There is a school of thought that promotes; when the burden of recouping their own or their company’s money is lifted – your agent is afforded the freedom to strategically push the buyer they are negotiating with to the very tip of their limits, even if that price is well beyond the figure they know you may have already accepted.
The controversial element of this conversation is the consideration that “regardless of their financial burden, an agent should be negotiating a buyer to their maximum price anyway”, which is a very understandable sentiment but does it consider genuine commercial reality?
At the end of the day, like any decision in life, there are lots of items to consider and the conclusion must be the one you feel most comfortable with. We just like to ensure that before making any decisions, we’ve assisted our clients establish all the facts :)
If at any stage you have any questions regarding the selling process or require additional real estate information – you’re most welcome to contact The Real Estate Establishment at any time.