Any wise business owner questions their budgets so they can align sales price to cost in an effort to net a profit. I do this in my business every month and I’m sure you do it too, either in business or in your personal life. Having a firm grasp on your cost structure is critical to having a highly successful business.
As we discussed in a prior article, the cost to sell a home in Austin increases as the market value of your property increases. How that money is invested back into the business will hopefully lead us to understand why the costs continue to climb. After interviewing several real estate brokers and researching this topic, I discovered that a majority of the annual budget spent is on advertising for sales lead generation. This advertising budget varied from 30% to 65%. Below are the primary expenditures to generate new sales leads from those buying and selling homes.
- On-Line Leads from 3rd Party Companies. Zillow and Trulia dominate this market but others play in it too – such as Realtor.com and Homes.com. When a person is looking at a house for sale on these sites they can request more information on specific properties. That “request for information” is actually a “sales lead” an agent has paid to receive. The agent may or may not have data on that specific property, but they have the resources to obtain additional information for you.
- Pay-Per-Click (PPC) Ads. We live in a world of search engines – those that we type like Google or those that we speak to like Siri. In either case, the search will provide you relevant results based on your query but you will also see additional links for those that paid to have their ad available to be clicked. These paid links typically are listed first and are noted as “Ad”. Once you click it they are billed for that click with the hope that you will transact with them on-line or contact them to do business like sell a home in Austin.
- Social Media Advertising. Just the opposite of PPC, this type of advertising is focused on impressions. Money is paid by the brokerage or agent to advertise on your social media page such as Facebook. You don’t have to click it because the impression has been made to you based on your specific information you put on your social media such as when you posted that you were about to sell a home in Austin.
- Mailers and Door Hangers. This is the traditional way of staying in-front of prospects and past clients, but is typically the most expensive. The cost to create, print, and mail each postcard can really add up but some brokerages and agents still do it this way.
Running a MLS real estate business has its costs including training agents, advertising home listings, membership & licensing dues, marketing, and general overhead, but the expense for sales lead generation typically outpaces each of these individual categories. Just remember the next time you agree to pay 3% compensation to sell a home in Austin, 35% to 65% of that fee may be going to pay for the next sales lead.
Why should YOU pay for an agent’s next sales lead? Don’t you think that providing a great service with an exceptional client experience at a fair price (like we do at DIY Home Listings with our Flat Fee Real Estate) is a great sales lead generator for a business? Let me know your thoughts?