4. The magic of marketing

By VICKI HOLDER, editor Weekend Herald Real Estate

Regardless of which selling option you choose, each requires marketing support, and marketing a home is a specialist business best left to the professionals.

Selling a home without addressing the marketing is madness, says Ray White's chief executive, Carey Smith. "Marketing has never been more important than now. Though, as a component, it's unknown what part it plays in the success, you do know the result when the marketing is not done."

Mark Thompson, of Barfoot & Thompson, compares selling a home without marketing to playing Russian Roulette with what's likely to be your most valuable asset. "The more people that see your home, the greater chance of getting the elusive purchaser who is prepared to pay the higher price."

A real estate salesperson can prepare a marketing plan that suits you and your budget. Just like any product, a home needs exposure to sell, not just at a price, but at the best price possible. Marketing is the key to success.

"Vendor-paid advertising" is money paid in addition to the agent's commission, set aside for promotional purposes. Commission structures vary and must be negotiated between the vendor and salesperson. But the REINZ says the typical commission fee for a $300,000 home would be around $13,600 and for a $700,000 home, about $23,900. Agencies usually ask for an additional .5 to 1% of the property's asking price to fund the marketing.

Early this year Glyn and Daryl Fenton put their large home on Waiheke Island on the market. The Felton's had a government valuation of $1.3m for their 7.5ha waterfront paradise with its own private beach. Working with Barry Curle, of Bayleys Waiheke, Glyn invested $38,000 to sell the property in an extensive, four-month marketing campaign. The campaign included advertising in nationwide media and on the internet, fliers, colour brochures, utilising Bayley's database, open homes and personal invitations to America's Cup fleets to inspect the property, culminating in an auction.

When the auction started, Glyn had eight people registered as qualified bidders. They had seen the ad in the Herald, on the internet and in the Bayleys brochure. Glyn says: "It was a very competitive auction. And our expectations were realised with a sale for $3.5 million with chattels."

And it's not just the top-end homes that require a marketing push with "vendor-paid advertising".

Peter Haywood, of Barfoot & Thompson, Mt Roskill, works mainly with the mid-level market, the average-priced homes. "In this market, you really have to go for no-price marketing in areas like Mt Eden. Unless you're prepared to let your house sit around for six months, a house has to have a programme with a finite finish date. It's vital you have advertising because you only have about three weeks to tell people about it. With advertising you're confident that you reach the buyers and achieve market value. The difference in response between a classified run-on ad and a colourful display ad is amazing."

This month, Haywood ran a successful marketing campaign for a home in Mt Roskill where the vendor paid $3000 for "vendor-paid advertising". It produced three offers and sold by tender for $405,000.

Christine Fowler recently sold two properties by auction at the lower end of the market - one for $177,000, the other for $188,000. Both vendors spent $2500 on marketing. For this they got "an investment in their home and lots of agent service and feedback. The vendors were prepared to meet the market' and they were happy with the result."

Without the "vendor-paid advertising" these homes would have disappeared into the crowd.

Stuart Jenner, director of Harcourts central Auckland, says each week his company charts the amount spent on vendor funding and relates it to the number of inquiries. "There's a direct correlation between the size of the ad and the amount of enquiry."

An experienced real estate marketing consultant knows your area and the current market. They can tell you the best way to present your property, advise the best method of marketing it to meet your needs and devise a marketing campaign using an assortment of media at their fingertips.

They will help you negotiate and process the sale, and keep the transaction on track. They will inform you of relevant regulations and protect your interests throughout the process. Their expertise will save you time and money.

Next week, we'll take a more in-depth look at buying and selling by auction.

MARKETING IS THE KEY TO SUCCESS

* A house needs exposure to sell, not just at a price, but at the best price possible.

* The more people that see your home, the greater chance of targeting the purchaser prepared to pay the higher price.

* Vendor-paid advertising is designed to help your home stand out from the crowd.

* Real estate salespeople are marketers, not valuers. Their job is to market your property to get the widest range of buyers.

* A good campaign draws foot traffic through your home.

AUCTIONS

Reasons to sell by this method are:

* You get unconditional cash buyers; you have a quick, finite timeframe for selling; the process creates a sense of urgency among prospects; purchasers cannot be deterred by price so more people consider the features and benefits; there are a limited number of open homes; vendors set the terms by staying in control of the reserve' price; competition between bidders is open and transparent; good auctioneers can play on people's emotions to help drive up the price; there is no upper limit on price.

Negatives:

* They can be stressful.

PRIVATE TREATY - SELLING WITH A FIXED PRICE

Reasons to sell by this method are:

* Vendors are under no pressure to sell; vendors can test the market as they await their price; a house with the X-factor can draw several competitive buyers who can push the price upwards.

Negatives:

* Once published, the vendor's price can be driven down; if the price is not right it can be perceived to be overpriced; the lack of a finite timeframe means the property can languish on the market and deter prospective buyers; there is rarely competition between two prospective buyers; buyers can add their own conditions.

TENDERS

Reasons to sell by this method are:

* The timeframe is fixed; there are limited open homes; vendors can set their selling terms; the vendor is in control; the vendor can take more time to make decisions; they are less public than auctions.

Negatives:

* Buyers can attach their own conditions to tenders so there is uncertainty about the strength of offers; competition between prospective buyers is closed, therefore not as emotionally charged

PRIVATE SALE

Reasons to sell by this method are:

* The vendor avoids the cost of the real estate salesperson's commission.

Negatives:

* It's difficult to establish a selling price; it's difficult to be objective about your own home; you have to work hard to get the exposure to achieve market value; it's difficult to negotiate a sale on your own behalf; if the house doesn't sell and vendors then go to a real estate salesperson, the house has already sat on the market giving prospective buyers a bad impression.

5. Under the hammer

* We welcome your comments and ideas. Please send them to Real Estate Summer Feature, The New Zealand Herald, PO Box 32, Auckland.