Real Estate Myths & Lies: The Real Reason Brokerages Advertise

Real Estate Myths & Lies: The Real Reason Brokerages Advertise

You've seen the impressive real estate ads in the Chicago Tribune and in the Chicago Social/ Modern Luxury magazines showing numerouos homes for sale. The large brokerages will often take out full page ads. Sometimes the bottom of the ads will feature the photos of several real estate agents that hang their licenses (I love that term because it precisely describes exactly what the relationship typically is) with those brokerages.

Do you really think that these ads sell homes?

Consider the fact that today's home buyer is on the Internet all the time and there are highly specialized Web sites that make the home buying experience extremely easy. These buyers are setting up search criteria and sifting through thousands of real estate listings in seconds. If they are looking for a condo in Streeterville are they going to buy a home in Winnetka because they saw it in the newspaper? Likewise, are they going to see a home in Chicago Social magazine that they missed online? Noooooo. Not to mention that in a print ad all you get to see is an exterior shot of the property. What good is that?

So then who is the intended audience of these ads and why do the major brokerages run these ads?

High Profile Real Estate Ads Stroke Home Sellers' Egos

When real estate agents from major brokerages do their listing presentations for expenisve homes they are going to bring copies of these high profile ads with them in order to tantalize the home seller with the very seductive promise that THEIR home will also appear in these ads. Nothing excites a home seller more than the thought of seeing a glossy photo of their home appear in a high end magazine that contains photos of beautiful people in formal wear. It's a great way to get a listing with a high commission.

The irony is that the home seller is more than happy to pay a high commission for this kind of attention but if they were paying a lower commission and covering the realtor's out of pocket costs would they be willing to fork over an extra $1000+ for this kind of advertising? Not if they thought about it for more than 10 seconds.

Notice that above I specifically referred to high priced homes. The lowest priced home I've seen advertised in Chicago Social recently was listed at $850,000. The seller of a $200,000 condo is not likely to get this pitch because of the cost involved, though, as I'm about to explain, there could be value for the brokerage to advertise even lower priced homes in some of these venues.

The Big Payoff In Real Estate Advertising

Just listedAside from impressing the home seller the real payoff in doing this kind of advertising is generating leads for new listings. Contrary to what you would think the major intended audience for the ads are not people who are looking to buy homes for all the reasons I state above. The big payoff comes from people who are thinking about selling their home and see that this brokerage "sells a lot of homes", which must make them good at what they do according to some inexplicable logic. And then of course "my home will be in this magazine too if I list with this brokerage.

It's the same reason that realtors send you those Just Listed or Just Sold post cards. Those certainly aren't going to sell any homes - especially the Just Sold ones.

Oh...And About Those Realtor Photos At The Bottom Of The Ads

And what are those realtor photos at the bottom of some of these ads all about? Pretty cheesy, right?

Yeah, brokerages do that for the recruiting benefits. Remember that traditional real estate brokerages actually make the vast majority of their money not from generating leads but from recruiting agents, who have their own book of business, on which they get a cut. So, running these photos at the bottom of the ads provides the real estate brokerage with a perceived benefit that they can offer their agents - and potential new recruits: "Your photo will appear in the rotation at the bottom of our ads." Of course the implication is that potential home sellers are going to select those agents to sell their home because...well...they saw their photo in the ad.

Probably not. However, there is some academic research that weighs in on whether looks count in this business: Should You Hire A Hot Real Estate Agent?

#RealEstateAds #RealEstate

Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

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