Here is a question & answer from a recent commenter on my site. I haven’t much edited my (private) response to him, so excuse the poor grammar and/or incomplete sentences.

Question:

I don’t understand why the seller’s agent automatically picks up the cost for marketing a house.

In the interest of fairness, i think it would be better if my seller’s agent received, for example, 2% commission and billed me for the costs of marketing (photocopies, ads in the Globe, MLS fees, whatever).

That way if the house doesn’t sell, they’ve lost nothing but their time.

What sort of expenses do you run into when you’re selling a house?

Also, I don’t understand why sellers aren’t using youtube to give online buyers a better sense of the flow of a place. Individual pictures are OK, but I’d prefer a video to get a sense of scale and flow. It’s free, and even a moron can figure it out.

Answer:

Hello.

Thanks for the note.

I rarely if ever sell homes, I only work with buyers. It’s my niche and it works well. So, I can’t give you any real-life examples of how sellers’ agents work.

Of course, I know how the sales process works, and, I agree – there are costs involved with marketing any home, yet those costs are never recouped if the home doesn’t sell.

The agent (and his or her agency) will swallow those costs. The agent will use income from other deals that DO close, to cover the losses. It makes little sense, since, in effect, the agent’s successful sale is subsidizing the loss on the unsuccessful sale.

I think it would make much more sense to charge a seller a flat fee, non-refundable, to cover marketing expenses, and then collect a smaller sales commission, payable only upon closing, as an incentive to make the agent work hard for a sale.

Truthfully, over the past several years, sales agents have had to spend very little to market a home successfully. It’s free to list in MLS (beyond a once a month MLS subscription fee of $27). Also, perhaps, an agent might want to have the property listed in his agency’s weekly advertisements and on the web, but those are low-cost or no-cost (directly) to the agent.

To successfully market and sell a home, I think an agent should spend around 10% of his side of the commission (2.5%).

Regarding your statement about youtube, here’s what I can tell you.

I was at Inman News conference, and someone made the point that you can find out more information online about a car you want to buy (or a book, for that matter) than you can about a home you want to buy. It’s perverse. I agree with you totally, that video should be used to market the home. I blame the agents, for being clueless, and I blame the sellers, who may have no idea that it is beneficial to advertise as much as possible. Don’t forget, there’s a cost associated with making a video, and, again, sellers are a stubborn sort.

Also, truthfully, it’s hard to quantify success from making all the extra effort. You might spend thousands on a video and on staging, and all the other web 2.0 marketing, and then someone walks in because he saw a sign on the lawn.

I agree with your thoughts, though.

Thanks.

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