Zero-ing out the cost of your real estate marketing is more fantasy than reality.
All of us Conference Goers have heard the spiels:
“Your Dry Cleaner will flip for the chance to put an ad on your door hanger!’
“Get your banker to pay for the moving van you just financed by telling her you’ll put the bank’s ad on the side of the truck!”
“Become an expert ad salesperson so you can get your real estate marketing for free!”
Probably well-intentioned pitches, I’m sure, but nonetheless… just pitches. Isn’t it amazing how hard it is to get a theory banged into a practice?
We still love our Conference Presenters, of course, but what is usually lacking in their vision is the proper medium. The basic idea is terrific – sponsors or advertisers can substantially defray your marketing costs, but if they turn into one-shot deals, what’s the point?
What you need to have is a bona fide method of getting some of your marketing costs paid for, and you shouldn’t have to distract yourself by becoming an ad salesperson. Think about the value of your time and how much more of a “return” you get building listings versus pinching pennies.
Our Experience with What Works
We’d like to speak from our own experience with what has worked to lower real estate marketing costs. Perhaps these principals can be applied to other forms of marketing you do, if you aren’t currently publishing a 12-page paper. Our clients are all top-producing Realtors for whom we publish and mail custom newspapers. It’s for them individually, not for an office or an entire brokerage, which differentiates them from competing agents.
Because our agents are well established, they tend to have excellent vendor relationships in place. They are also using a medium that makes sense for including advertisers, so they are set up for success with lowering the cost of their direct mail marketing (without compromising effectiveness or spending time selling ads).
On average, our clients save 15-20% with ads. They do this by leaning into our RESPA-compliant program and sticking to the right advertisers.
Follow RESPA guidelines
The guidelines vary from state to state, but every state has them: RESPA laws. These rules which govern how (and to what degree) certain industries can share in the cost of a real estate agent’s marketing.
In general, lenders and title agents are prohibited from paying fees for referrals or leads from agents. In some stricter states they are even prohibited from “co-marketing” with agents, as it could be construed as paying a referral fee. But in even the strictest states, an agent can get a lender and title agent in their publication by following a few simple rules.
First, the vendor must receive a tangible good or service in exchange for their payment. It would be illegal in most states for a title agent to “sponsor” your marketing without having an ad in your publication, for example. Make sure they have an actual visible ad spot just for them, and that the details (and benefits) of the advertising are documented and clear.
Second, the vendor should not pay you directly. Even if your state allows them to pay for certain things, it’s best to avoid this practice altogether, lest you be scrutinized. Here at Discover, we are set up to invoice and collect payment directly from your ad partners. For these industries in particular, it is highly recommended that you take advantage of that.
Third, the vendor should not pay more than is allowed by law. If you aren’t familiar with the specific rules for how much (or what percentage) a RESPA-covered vendor can pay, let us know. We have worksheets and calculators for the stricter states (such as California) and can tell you to the penny exactly how much a title agent or lender can pay for an ad in your marketing.
Once you have your thumb on the “dos and don’ts” of RESPA compliance, the single most important factor when it comes to leveraging your vendors is to pick the right ones.
Pick the Right Advertisers
Our biggest nugget of advice: don’t spin wheels. Stay focused on your business and reduce your marketing costs by leveraging the partnerships you have already built. Your paper (or any comparable medium you use) should carry ads for products and services that are needed by virtually all buyers or sellers, and most importantly, should be from vendors with which you already have a great relationship:
- Mortgage Broker
- Moving Companies
- Power Washers
- Home Inspector
- Pest Inspector
- Professional Stagers
- Home Detailers
- General Handymen
- Service Tradesmen (Repairs)
- Closing Attorney
- Title Company/Agency
These advertisers are “Right” for an important reason – you don’t need to be an ad salesperson to explain to them that you’ll be personally pointing out their ad in your own newspaper when the need presents itself. And they understand that by helping with your marketing efforts, they get more work because your business increases.
We have sample letters you can use to email to your list of service providers along with suggestions for advertising rates, and we also offer complimentary ad sales service – just ask your sales professional if you’d like more information. Under our model of “Trying to Reduce Marketing Costs” the rates should be quoted by the nature of the service, not the space of the ad. In fact, the “ad” could be as simple as a “Directory of Recommended Service Providers” with rates determined by the type of service, that is, a bank would pay more since their reward is much higher than a pest control vendor.
Even though we rarely see anyone get to Zero with their publication, please be warmly consoled by how easy it is to offset a reasonable portion of your marketing costs, especially with a Discover publication. See you at the next Conference!