How Advertising Gets Lower Prices

Protect yourself from one of real estate's greatest traps.

Thousands of home-sellers fall into the advertising trap. They do not realise that advertising does not sell their homes or that agents use advertising to promote themselves. They do not realise that many agents earn thousands of dollars from kickbacks, or that advertising is one of the agents' best weapons to convince sellers to lower their prices.
But worst of all, few sellers realise how real estate advertising gets lower prices.

The Great Conditioning Tool.
Behind the scenes, advertising is known as a great "listing tool" because it tricks sellers into believing that agents who do the most advertising must be the best agents. But once you sign up with an agent, advertising becomes a great "conditioning tool". It is used to persuade you to lower your price.

Agents will tell you that advertising is "essential". They will say, "The more people who hear about your home, the more likely you are to get a good price. More advertising means more money for you."

It sounds so sensible. But, it is rarely true. By advertising your home- on the pretence of attracting buyers  - the agents can show lots of activity. And then, within a few weeks, when you have been sufficiently conditioned to the "reality" of the market, the pressure is applied to persuade you to lower your price. Your home is sold and the agents get paid.

If advertising really was the cause of selling your home, why would you need an agent? Why wouldn't you just advertise your home yourself and attract the buyers for yourself? Why pay twice- once for advertising and once for commission?

In boom times, agents will say there are hundreds of buyers. But they still place advertisements saying that they are "looking for buyers". Something doesn't make sense.
Home-sellers are waking up to what's really going on- agents advertise to promote themselves, to attract more sellers and to condition the sellers who have already become their clients.

How typical real estate advertising gets lower prices
The more a home is advertised and the longer it remains unsold the easier it becomes for agents to persuade home-sellers to lower their asking prices. "Look, we've advertised your home and it hasn't sold. The market is telling us it's too dear." What the agents are not saying, of course- and, incredibly, what many of them don't realise- is that the advertising itself may be the biggest reason the home has not sold.

In so many cases, if the home had not been advertised, the selling price could have been much higher. The advertising ruined the market for the home.
Agents will argue that you need to advertise as widely as possible because you do not know where the buyers are going to come from. These agents are displaying their ignorance of marketing. Sure, you may not know where the buyers are coming from, but you know where they are coming to. They are all coming to your area.

The right buyers must see your home
The right buyers have to see your home. They have to come inside, they have to feel the atmosphere- or, if it needs repair, they have to feel its potential. They cannot get this feeling from an advertisement.
Think about it. What is the best feature of your home? It's probably inside. Sure, it might look nice from outside, but you have to be inside to feel its atmosphere.
Advertising kills atmosphere. It spoils the joyous surprise. Many buyers are turned off by the look of an advertisement and don't enquire about the homes which may have been perfect for them. This is how you can miss out on the right buyers and have to accept a lower price from other buyers.

Disappointment and anger
Agents are notorious for using "puffery" in advertising. Good features are exaggerated and bad features are ignored -or at best, played down. As one buyer commented,
"These real estate advertisements double the good news and halve the bad news. We are sick of looking at homes which are nothing like what is described in the ads."
"Puffery" makes buyers angry. Even if they like the home, they will not like being tricked. If they are still interested, they will almost certainly offer a lower price -almost as revenge for being deceived.

Comparisons cause huge damage to the value
Typical real estate advertising allows buyers to make inaccurate price comparisons. Many homes look similar from the outside. But some owners may have spent thousands of dollars internally, while others have spent almost nothing. When homes look similar in advertisements this damages the value of the better homes.
The buyers compare the higher prices with homes advertised for lower prices. They often judge the value of a home before they see it.

Advertising to non-buyers
By mass advertising a home it comes to the attention of thousands of people who do not want to buy it. Aside from the wastage of money in reaching these "non-buyers", this leads to criticism of the home. People who have no interest in buying a home are unlikely to praise it.
On the contrary, many people "knock" the home. Saying such things as "They must be kidding. They'll never get that price." This is very common in small communities where everyone knows each other. The opinions of the non-buyers influence the real buyers. Big mistake.
The only people who should know that your home is for sale are genuine buyers.
An agent who understands the difference between advertising and marketing will know how to market your home to the right buyers instead of damaging its value by advertising it to thousands of people who don't want to buy it.

What's wrong with the home?
The more a home is advertised the less chance there is of getting the best price for it. People see it advertised week after week. They begin to wonder what is wrong with it.The home quickly acquires what is known as the lemon tag.
As one buyer aptly put it, "The more they advertise them, the less i want them."
This is one of the worst ways that typical advertising damages the value of a home.
Valuable homes which should attract excellent prices are having their values damaged because buyers are asking one of the worst questions which can ever be asked about a home, "Whats wrong with it?" Even if they can't find something wrong with it, they think something must be wrong. They either reject the home altogether or offer a lower price.
Don't be fooled with the 'exposure' line. It's like sunburn. The more you expose your home with typical real estate advertising, the more you burn your price.
Many agents who have stopped doing typical real estate advertising have noticed three things;
1) They save their clients thousands of dollars.
2) They get better prices, and
3) They sell more homes.

Maximum financial danger -The trap of maximum coverage
In the 21st century, there are a multitude of places to advertise. Naturally, each has a price. Attempts will be made to convince you that they all help get "maximum coverage". This means maximum profit for the companies who own the advertising mediums- and the agents who receive kickbacks.
There are major city newspapers, local papers, speciality papers, feature sections or lift-outs  in papers; and, of course, real estate magazines. Plus, many agents now produce- at great expense - their own magazines, each vying to be bigger, better and more frequent than the next.
As a home-seller, you can have colour brochures, floor plans, flyers, mammoth signboards filled with detail -even colour photos on the signs. Some agents charge for specialist copywriters to write advertisements. And then there may be the cost of a professional photographer.

But let's not forget the world-wide-web with its widespread coverage of a "potential" 876 million people with access to the internet.
And, just to make sure you are totally "sold" on ALL of these places, each one has its own reason why  you must use it. Be prepared, also, for the great sales convincer -the story of someone who sold for a great price just because of one of these methods. And if you don't use it, you could miss out. Just like the great stories about lottery winners which never mention the millions of losers, agents will tell similar stories with advertising.

As a home-seller, you are the seller of a home, not the buyer of advertising. It cannot be stressed enough- all these advertising methods are not designed to benefit sellers.
"Maximum exposure" means maximum profit for everyone except the home-sellers. For sellers, it means maximum danger, both in the cost of the advertising and in the damage to the value of their homes.

Protect yourself
It's bad enough to have the value of your home damaged through advertising, but it's worse if you are tricked into paying for it.
DON'T SIGN ANYTHING unless the agent can show you how to sell your home without damaging it's value.
And DON'T SIGN ANYTHING which requires you to pay any money for advertising at any time for any reason. All costs should be included in the agent's commission which should only be paid after your home has been sold for the best market price.

Real estate advertising solutions
Advertisements do not sell homes. The major attraction to buyers is the area. Research shows that 98 percent of home-buyers cite the area as their first and major reason for buying. They all come to an area before they buy.
So, all an agent has to do is attract the buyers who are looking to buy in the area.

Attracting the buyers
Agents who understand marketing know how to attract buyers to their offices. They know that one of the first principles of marketing is to make it easy for buyers to buy. These agents will make themselves readily available to genuine buyers.
These agents attract buyers into their offices and then they discuss the homes they have for sale.
If, instead of advertising full details of all their homes, the agent advertises that the agency has many more homes for sale, the more genuine buyers will contact the agent. They will want to know what is for sale.

The best agents keep records of buyers who contact them. They accumulate lists of buyers, just as they have lists of sellers (listings). Many times, the best agents will find the right buyer very quickly because the buyers are already "on their books". This is intelligent marketing, the opposite to what most agents do.
Home-buyers spend an average of 107 days searching for the right home. These buyers are IN the area, looking around. They want that special home. And they will pay the best prices for the homes which they see as special.

Keep your home special
One of the worst things agents do is allow homes to lose that special appeal. Freshness attracts buyers. Homes that appear to have been rejected by many buyers are very hard to sell. The same principle applies in most selling situations -fresh stock always gets the best price. Old stock gets the lowest prices.

Advertise to Buyers Only
To protect the value of the homes for sale, an agent should only discuss each home with the buyers who are likely to buy it. This is the opposite to the 'hit and miss' method typically used by agents where they allow anyone to inspect homes. There is a difference between doing mass advertising and only doing advertising to buyers who might like to buy their homes.
First, the agent attracts the buyers to the office. And then, once the agent has listened to the buyers and discovered what they want, the agent can discuss homes for sale. The agent may produce photographs and some details about each home. The agent will describe the features of each home.
The more interest the buyers show, the more information the agent will reveal. This is "advertising" to buyers only. It is allowing the agent to protect the value of the home by keeping it special.
Knowing that all buyers come into the area - and most of them spend weeks looking for that special home, here is what the best agents do: Attract buyers by appealing to them all. The agent then tells the buyers about homes which may suit each buyer. And then the buyers inspect the homes at a time which suits them. The buyers buy the homes that suit them, the special homes.

Everyone is happy -the sellers who got the best market price, the buyers because they found an agent who found them a special home.
And the agent then gets paid for doing what the sellers want. It's good honest business where no-one gets hurt.

It's your home- You are the boss
You hire an agent to sell your home for the best market price. You do not hire an agent to advertise your home, take kickbacks, damage the value of your home and then demand payment from you when your home does not sell or when it sells for thousands below what you expected. This is madness. There is no other industry where consumers are treated so badly. What goes on in today's real estate industry is almost certainly our greatest hidden consumer scandal.
You can protect yourself from the tricks and traps of real estate advertising.
DON'T SIGN ANYTHING unless you are guaranteed that the agent will not damage the value of your home with typical real estate advertising. It's your home. Protect it.