VPA on the rise

The cost of advertising a home is rising and beginning to resemble the newspaper era. Owners are being offered or sold advertising campaigns up to and above $10,000. The cost of the campaign is paid upfront by the seller regardless of the success of the campaign.

VPA stands for Vendor Paid Advertising. Agents will also charge a commission in addition to the VPA. As one observer noted, VPA is for profile, the commission is for profit.

Sellers need to establish the true cost of advertising their home and avoid inadvertently paying to promote the agent.

Before the internet changed the world, newspaper classifieds were known as the Rivers of Gold. Cars, employment and real estate advertising created an absolute bonanza for the publishers.

As consumers migrated from print to digital, previously non-existent companies/websites such as carsales.com.au, seek.com.au and realestate.com.au stole the classified market from their print rivals.

The move into digital classifieds was a win for everyone that moved into that space. Consumers enjoyed a better experience with search functions and more photographs being available. Those placing the ads such as agents, direct vendors and third party operators were exposed to a larger market on the internet. At a lower cost too. And the owners of the websites enjoyed a healthy profit margin in comparison to print rivals.

Suddenly the cost of advertising a property has done a full circle. The costs are similar to what home sellers previously paid in expensive print campaigns. Maybe the agents know where the home sellers, pain threshold for VPA is from back in the the glory days of print?!?!

A real estate trainer recently cautioned his clientele that ‘Australia was now the world’s most expensive market to run an internet campaign’. Essentially, agents are so busy trying to out-promote each other with vendors’ money that they are driving the cost of advertising up.

As the ads become more expensive, the agents aim to convince the next vendor to spend more.

The good news for home sellers is that buyers are interested in buying your house not the size of the advertisement. Just because an agent asks you to spend $10,000 on a VPA campaign, it does not mean you have to agree.

One home seller recently challenged an agent that asked for an excessive sum for advertising. The agent very quickly slashed the advertising in the hope of being granted the listing.

The agent’s lack of belief in the proposed campaign was apparent very rapidly. Understandably the owner wanted to know why the agent asked for $10,000 in VPA if $3000 was sufficient, after a few tough questions.

Some agents have adjusted positively to the benefits of the internet and slashed operating and marketing costs in the process. Others are aiming to replicate the print and vendor pays model from a bygone era.

When employing an agent, negotiate a package that involves them selling your house rather than you buying advertising. Bundle the advertising and commission into one fee, only payable on settlement of the sale. You will find the agent is suddenly economical and thrifty with the amount of advertising required to sell a property. The savings is yours to keep.

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