If you’re just starting out in the real estate business, you might currently be a bit overwhelmed by everything at your disposal in your new role. There’s so much you need to learn, so many new techniques you can use, and so many new people to meet. The world of real estate is more akin to an ocean than anything else, with all the depth and variety you’d expect from such a vast expanse of humanity.
Of all the things that new real estate agents must learn, perhaps the most complex and difficult to understand is marketing. This crucial part of the real estate game is the source of near endless confusion for those just starting out, and can cause less experienced real estate agents to crumble in frustration. Those who don’t learn it, however, shouldn’t expect much from their career as a real estate agent; without marketing, you won’t go far.
There’s an infuriating amount of complexity present in the world of real estate marketing, as anyone who’s ever dipped their toes into these waters no doubt knows. Should you use conventional marketing as your main approach, or is digital marketing the way to go? Should you hire a professional marketing service, or should you go it alone? What about a combination of both? The answers are complex in and of themselves!
Continuing this line of inquiry even further, there’s an important question that needs to be answered: how much do real estate agents spend on marketing, and how much should you spend on marketing? This is a complex question. If you spend more, you may be able to increase your sales substantially. If you spend less, you might come out ahead with some extra cash in your pocket.
The difficulty in quoting exact figures
While it’s always nice to have a ballpark figure to work with, real estate marketing isn’t so friendly to such simplistic metrics. The amount a given real estate agent will spend on marketing differs wildly from individual to individual, based on a myriad of factors that are simply too broad to be covered in their entirety here.
If you google “how much do real estate agents spend on marketing”, the figure most pages quote is between 7-12% of gross commission after sales, varying from site to site. But… What are you supposed to do with this number, exactly? Should you be spending 10% of your overall monthly commission on marketing? And how exactly should you be spending the amount you decide to set aside for advertising your real estate business? The answer depends on you!
Beyond the statistic that we denoted above, the aforementioned query will return very little empirical data as to how much real estate agents spend on marketing. A real estate agent working in Seattle might pay $10,000 a month to rent a billboard on the freeway, while a realtor in a smaller city like Gainesville FL would pay half that price for an equivalent ad space.
The variables don’t stop there, however. Real estate professionals with more expendable cash might be willing to spend more than 12% on their overall commissions on marketing, while newer agents who are still struggling financially might not be able to afford 7%. The list goes on and on, making it ever clearer why a broad average is of very little use.
While we could simply list the average costs associated with the most popular marketing, the following sections will be taking a somewhat more unorthodox approach. Instead, we’ll be focusing on how you should be spending your marketing budget depending on how big your budget is, and how much you have to spare.
Spending money on marketing
When it comes to formulating a marketing strategy and budget, you may be curious where the money actually goes. What is the best way to spend your money when it comes to marketing, and what are the various pros and cons of each expense? In this section, we’ll break down the various ins and outs of each of the most common marketing tools and how much you can expect to pay to use them.
In the digital age, online advertising is one of the most prevalent forms of marketing for ambitious real estate professionals. In general, this advertising takes the form of pay-per-click ads facilitated by services such as Google AdWords. These services are a great way to get your name out there and advertise to a specific client base. How much real estate agents spend on marketing in this way varies, but usually is no higher than several hundred dollars per year.
Generally speaking, the payment for these services is determined on a pay-per-click basis, as denoted by its name. Every time someone clicks on your ad, you are charged a predetermined fee for the traffic. This fee is determined by the popularity of the keywords you choose for your ad and the competition present on the market. In order to secure keywords that are more popular, you’ll have to submit a larger bid.
While the total amount you can expect to pay will vary widely, most real estate agents pay between $0.50 and $4.00 per click for digital advertising. Social media advertising pricing varies even more widely and depends on a variety of factors depending on the model used, your location and the scope and scale of the campaign. An average amount of $300 a month can be considered a slow start as if you get into SEO the costs can increase.
Social media marketing
Another highly useful tool for real estate agents looking to round out their marketing wheelhouse is social media marketing. These tools also allow you to target a highly specific client market via ads on social media platforms. Due to the fact that you can customize the age, location and income ratios of the targeted users, this tool is exceptionally popular among real estate agents who specialize in real estate niches.
The biggest advantage of this type of marketing is the extent to which you can customize your target audience. With certain platforms, you can target clients with specificity depending on their political orientation, gender, relationship status and a wide range of other criteria. Again this is especially useful for real estate agents who target specific real estate niches such as real estate for the elderly and for millennials. It’s recommended for a realtor with a $40 K year budget to spend 30% of it on social media and that adds up to around $1,000 a month.
While there are plenty of clear advantages provided by digital marketing, there’s still plenty of merit in conventional advertising. These methods have stood the test of time for centuries, and are one of the most common expenses for real estate agents when it comes to marketing. So how much do real estate agents spend on marketing using these advertisements?
The answer to that question is a bit complex. There are plenty of ways to market using print media, from free periodicals to flyers and billboards, each of which presents its own set of advantages and disadvantages, as well as unique sets of costs. How much real estate agents spend on marketing using conventional tools therefore varies substantially from agent to agent.
Considering the fact that this category encompasses everything from billboards to flyers to business cards, it’s difficult to put a number on exactly how much real estate agents spend on this type of marketing. The only reliable statistic we can share is the fact that most real estate agents spend around 30% of their budget on this type of marketing materials. Based on location a billboard can cost between $750 to $1,500 per month in rural areas, $1,500 to $2,000 in small or mid-sized cities and $14,000 and up for large cities.
Another expense for real estate agents regarding marketing is premium content. This one is tricky, as it can apply to a wide variety of different services offered by a range of professional agencies such as marketing services and content writing companies. If you’re willing to put in the work, you can even take some time to improve your own writing skills and save yourself the cost of a professional.
While the uses for this premium content varies, one of the most common is real estate agent bios. For those who aren’t aware, real estate agent bios are a great way to kickstart a real estate career, and can dramatically accelerate your sales. Whether you write this content yourself or hire a firm such as RealEstateAgent.com, this aspect of your marketing is crucial.
While the cost of premium content written by a professional copywriter will no doubt depend on your region and the amount you’re willing to pay, most copywriters charge between 10 cents and one dollar per word. You may be able to find cheaper alternatives if you look outside the borders of the country, but the quality of the content may suffer as a result.
Professional photo-video services
Another very worthwhile way to spend your marketing dollars is to hire a photo-video professional to record and edit a set of promotional videos and photos for your website and social media. While this visual marketing material might seem like an unreasonable expense, it’s actually well worth whatever you end up paying for it.
Professionally shot and edited photos and videos can improve your public image immensely, serving to differentiate you from your competitors in a positive way. If you look good on your marketing materials, you’ll already be halfway to gaining new clients for your real estate business. Professional photos and videos are worth their weight in gold!
As is the case with every other marketing expense in existence, the price you pay for these services will vary widely depending on where you work and what company you hire. A small team of film students from your local college might produce impressive videos and photos for $300-400, while a well established photo-video team might charge you anywhere from $1,000-5000 for such a series of photos and videos.
How much should you spend on marketing?
Now that you’re aware of the most common expenses for real estate agents when it comes to marketing, it’s time to take a look at you specifically. If you’re a real estate agent trying to determine your marketing budget, you may be wondering where to spend your advertising dollars, then this section is directed at you. Now, let’s take a look at how much you should be spending on marketing expenses as a real estate agent based on the price of the property.
For a property priced at $500,000, the expected cost of advertising is between $2,500 - $5,000.
A property priced at $750,000 can reach advertising expenses between $3,750 - $7,500. The expected advertising cost of a property evaluated at $1,000,000 is somewhere between $5,000 and $10,000, while properties price above $1,500,000 generate advertising costs between $7,500 and $12,500.
The advantages of spending more on marketing
If you’re willing to shell out the cash, there are a number of ways that spending more on marketing can benefit you in both the short and long term. There are a number of compelling reasons to spend more on marketing, and in the following paragraphs we’ll discuss why and how much real estate agents spend on marketing.
The first thing that you’ll want to keep in mind when spending more on marketing is that most of the benefits of this strategy only come in time. Even if you set your budget substantially higher than the average real estate agent spends on marketing, you won’t see the results immediately. If anything, you may end up spending more in the short term than you make back in sales. You may even report losses for the first few months!
However, in the long term, spending more on marketing will make you more money. The advantage of gradually gaining a larger clientbase may take some time to come to fruition, but eventually you will be treated to greater listing volume and higher-quality, higher-commission properties. Once you start to sell these properties, you’ll see your operation come into bloom, eventually blossoming into a prosperous business venture.
The advantages of having a larger marketing budget aren’t just material; they’ll also improve your overall image and perception among clients. If you conduct yourself ethically and remain beyond reproach in your dealings with clients and colleagues, your efforts will eventually lead to an expanded network of contacts and increased amounts of word-of-mouth referrals.
The advantages of cutting marketing costs
Regardless how advantageous a well-financed marketing strategy can be, most rookie real estate agents only have so much money to work with. Over time, you can expand your marketing budget, but at the beginning there are a number of benefits to spending less on your marketing efforts. What are these benefits? Let’s take a look and see.
One of the most obvious benefits to spending less money on marketing is an increase in your budget for everything else. As a real estate agent, you’ll also need to put time, effort and money into the other aspects of your real estate conduct. Staging open houses, buying a better car or even investing in some accessories and garments that better suit your image are all acceptable alternatives to spending a fortune on marketing.
Another benefit of spending less on marketing is the budget that it frees up to put money into a savings account or other equivalent investments. Over the course of your career, it can be prudent to diversify your investments, both in terms of your time and financial situation. The real estate market does fluctuate, after all, and you should have other alternative sources of income to fall back on.
Finally, spending less on marketing can be an incentive to up your real estate game in other ways. Networking is a great way to secure leads as well as expand your professional circle of friends and allies. You can also invest some time into personally contracting the business of your friends and family should they need it, providing you with even more word-of-mouth advertising and referrals.
With all this said, we think it’s clear to see that marketing is crucial for a successful real estate venture. Whether you choose to spend your operating budget on marketing or instead focus on other means of increasing your profits and leads, we’re sure that you’ll make the right decision. Ultimately it all comes down to your personal situation!