First of all, I must give full credit to the late Jody Hudson of Delaware for this remarkably candid article that is reprinted on several article-based websites. It is so good, it cannot be improved upon. Here it is in his words, 100% as found on articles.pointshop.com.
Why Do Realtors Advertise Your Home in Print,on the Radio, on Television, etc.?
Realtors represent a huge part of the national advertising expenditure each year in newspapers, magazines, radio and television. Every seller would like to see their home in a large, impressive ad. The seller wants the Realtor to run the ads large and constantly until the home is sold. Realtors on the other hand know, if they keep good records, that few buyers purchase as a result of any print ad. The advertising is done to find a person, any person, who is seeking to purchase some sort of property at some price. A prospective purchaser may call on a large, expensive, waterfront home and end up buying a small cottage in the country.
Prospective purchasers sometimes come to our area and pick up some, or even all, of the local papers and sales periodicals of all sorts. At last count I found 29 different newspapers, magazines and real estate sales sheets that promote real estate in our local and surrounding areas. As a buyer is going through the several hundred real estate ads, that buyer then decides on perhaps a dozen to call about. That buyer is only calling to find out which property to eliminate from his list of possible purchases. Most of the time the prospective purchaser will eliminate all of the properties he calls on or all but one or two. For this reason the expensive ads bring in very few calls and far fewer appointments to show properties. Add to this the fact that sellers who want too much money, want the most advertising.
Here is a little inside trivia for you: the average cost per phone call from print advertising is well over $5,000 per call in our area. More than 80% of those calls will not give a phone number or contact data. And most of those calls are not qualified, ready, willing, or able to buy the property they call on. Shocking isn’t it? I kept the records for two years for a 55 person office recently and the cost of print advertising to get ONE purchaser as a direct result of the ad was over $100,000… perhaps well over that because we only had two in two years so that is not a big base to support an average upon.
The average percentages for this area are that for every four thousand dollars in advertising expense, of any kind, a Real Estate agent can expect 1 to 5 calls, if the ad is well presented and if the property is priced right, and advertised with full particulars and it’s in one of the most popular areas.
As a general rule for each 10 calls received the Real Estate agent will set 1 to 3 appointments - seldom is that appointment set for the property that was called on. And then the very best agents will be able to convert 20% of the appointments into sales. So let’s see how this works out in a budgetary sense. The most effective ads on the most popular properties which are priced the most attractively; can result in twenty thousand dollars in ads obtaining perhaps 20 calls, resulting hopefully in 5 appointments and five appointments to get one sale. What a dream this business would be it that were always and predictably true. Most ads, no matter how big, beautiful and attractive get no calls, therefore no appointments and no sales. And, if you remember your math, zeros don’t average well. 
So why do Realtors spend so much money on advertising. The most important reason is that sellers demand to see their property in the paper - hopefully in a large ad and in every paper until it’s sold. In fact it is well known that the more overpriced the property is, the more the seller wants it advertised and the less calls are obtained. The Realtor wants to advertise only the most attractive properties that are the most attractively priced. However, we all know that the bigger the ads and the more advertising that a Realtor does - the more the sellers like it and the more they want to be affiliated with the most well advertised Realtor. Thus the Realtor gets more listings, not more sales!
Most properties are sold because of the MLS and a response from one of the other Realtors, or from a Web Site, OR in more rare cases, the real estate agent calls, writes or speaks to someone about the property that is for sale to someone that the real estate agent has been working with, often a customer the Realtor has been working with for weeks, months or even years.
Real estate agents spend most of their time and energy repeatedly getting back to prospective customers, contacting those who have already looked at properties and found nothing they like - to tell them of a new property and contacting other Realtors to alert them or remind them of a property for sale. We also send out thousands of postcards, letters, and e-mails. The more successful agents may have as many as a dozen people behind the scenes just sending out communications, of various sorts and constantly following up, with the intention of keeping the one senior partner, the visable selling partner busy with appointments.
Each ad, letter, postcard, call, e-mail or personal contact can be called a “Presentation Impression”. It takes several thousand “presentation impressions” as we call them for each appointment and tens of thousands of these presentation impressions per sale.
One of my close friends sold her own house. It took her about a year, holding an open house almost every day, advertising it frequently in the various papers and presenting her home one way or another to perhaps three thousand people in the process. She is quite a good salesperson, her home was very attractive, very well located and finally sold as the market came up PAST the price she was asking for the home.
She found out after she sold it that there had been such unusual appreciation for homes like hers in her neighborhood that she actually sold her home about 15% too cheap after all that time and work and expense. She LOST over $30,000 in sales price in order to save $4,000 in commissions. Although she loved meeting all those people and showing them through her home; she would have saved over a year’s mortgage payments and gotten about 15% more for her home if she had listed it with a local Realtor.
She probably won’t use a Realtor the next time either; she loves selling her own home - it’s like one long house party for her, in my opinion. More power to her! I suspect that with the signs, ads, and those she met at the open house every day - she may have set a new record for the most number of presentation impressions for one house sale. But, then she had no other home she could sell to those who came ready to buy a home and didn’t fit her home. From listening carefully to her talk about her advertising, she spent about 8% of the total she got for the home in newspaper ads, more than the commission would have been. We won’t count her time, she loved showing her home to all those thousands of people!!! She didn’t use a realtor, saved about $4,000 and it cost her at least $50,000 to save the $4,000.
Realtors advertise to find sellers more than buyers, when they use conventional means of print, radio, TV, etc.
There is a new game in town however. Web marketing. Advertising on the Internet with a PROPERLY DONE, Real Estate web site is the most effective way to find buyers we have ever had. Realtors, for that reason, are the second highest user of the Internet.
The most effective real estate web sites have lots of pictures, lots of information and are the most user-friendly to the Internet visitor. Although it is very expensive to have an effective web site - most of that expense is in hours rather than money. Only about 2% of the real estate web sites are effective - actually it looks to be like less than 1% of all the real estate sites that work for the Realtor… according to my observations and experience.
Few Realtors spend the time and money to give the buyers what they want. We hope we are giving our prospective sellers and purchasers what they want to see in every way. We get 2 to 10 emails and about 20 calls a day about our properties and many of them result in appointments to see the exact property they have reviewed on our site. Because we have all the data, maps so they can drive by and numerous pictures of the inside.
If YOU can figure any way that we can be more helpful and better for our prospective purchasers please take a look at the rest of our web site and check it out thoroughly. Write me and let me know if there is something you feel we can do better to help you make a property selection or feel more ready to purchase.
We wish you all the best, and thanks for taking the time to read this.
Copyright 2000-2005 by www.JodyHudson.com (note: no longer works due to his passing)
Jody Hudson has been a Realtor for 30 years across America and in Delaware
Reprinted from:
http://articles.pointshop.com/realestate/1746.php
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