Autumn 2019
Why do Real Estate Agents ask Sellers to pay upfront?
In his book ‘Inside Real Estate’, Peter O’Malley describes what negotiators call the sunk cost syndrome. That is, if you can get someone to invest in an outcome upfront, emotionally or
financially, then they are substantially more motivated to want a return on investment.
This is one reason agents like money upfront in the form of VPA (Vendor Paid Advertising).
The other key reason is VPA is used to build the firm’s profile, rather than selling your home. Many agents chasing VPA follow the mantra; why pay for our marketing when we can get our clients to pay for it?
VPA is worth millions of dollars to the real estate industry. A look at the profit and loss
statement of some real estate companies would show that ‘advertising’ appears as an income item not (as most consumers would believe) as an ‘expense’ item.
As a home seller it’s handy to know that agents buy subscription packages from advertisers, and this forces them to run expensive web campaigns. From there, either the seller or the agent must pay upfront for these ads, regardless of the outcome of the sales campaign. Hence, it is easy to see where an agent’s passion for selling vendors this type of expensive, unnecessary
internet campaigns when cost effective internet campaigns work just as well, if not better.
Be aware of the up sell lines such as ‘’Bigger photos equal more buyers’’, ‘’Make your property stand out in the crowd’’ or ‘’You cannot sell a secret’’.
If you are interviewing an agent that is so passionate about the effectiveness of expensive web campaigns, tell them to pay for it, not you.
People buy homes, not real estate advertisements.
For a free copy of Peter O’Malley’s book Inside Real Estate, contact our office.
Click below to download a PDF.
