Are You Investing Enough in Your Luxury Real Estate Marketing Budget?
August 3, 2023
After receiving that nice commission check (and of course paying taxes on it), it's hard to part with any additional money. Sometimes the choice may be between leasing that shiny new BMW versus investing back into your real estate marketing budget.
While immediate gratification is your natural instinct, money invested now means infinitely more money to enjoy later. (Put another way – why buy the car now when you could buy the whole dealership later?) In this article, we'll explore marketing costs for real estate agents through a sample for “Boca Boca Realty.”
Why Investing in Marketing Matters?
Any time you invest in the growth of your company, you yield more revenue and build greater brand value along the way. Most people understand this basic notion, but may not see what these real estate advertising costs looks like in terms of actual dollars and cents.
How To Calculate Marketing Costs for Real Estate Agents?
Generally, many advise that you should spend 5% to 10% of your annual revenue on marketing, but with real estate marketing budgets, those numbers just don’t work.
Each individual company is unique, with their own needs. To thoroughly evaluate your company's brand potential, you'll need a custom real estate marketing strategy from a marketing agency.
Let's go on a test run using Boca Boca Realty as a case study on real estate marketing costs.
Real Estate Marketing Budget Sample:
This guide is focused on the real estate agent that sells more than $10,000,000 annually. In 2022, Boca Boca Realty sold 10 homes, below is the break down:
Net income: $490,000
How Much Real Estate Budget Should Be for Listing Marketing?
First and foremost, Boca Boca Realty should set aside .25% for listing marketing on any home over $2,000,000. That means they would have spent a total of $20,000 on real estate advertising costs on their $8 million dollar listing and $5,000 on their $2 million dollar listing.
For the homes that fall between $500,000 and $2 million, they’ll likely be spending up to 50% of the earnings on real estate advertising costs. These are the times they should be liberal with their real estate marketing budget, as well as leveraging some of their broker’s connections and marketing.
The total spent on advertising their listings in 2022: $102,500
How To Calculate Real Estate Marketing Budget For Luxury Listings
Boca Boca Realty sets aside 0.25% of the sale price for any home over $2,000,000 for their luxury real estate listings. Scales of economy must be taken into account when calculating real estate marketing budgets. For instance, they allocated $20,000 to the real estate marketing budget for their $8 million dollar listing and $5,000 on their $2 million dollar listing.
Now that you have your real estate marketing budget established, you may find yourself wondering, “How do I spend it?” Fortunately,
Keenability has carefully formulated a 33-Face Luxury Blueprint strategy. Broken down into three key components, this strategy encompasses the basics of a listing, the storytelling elements to draw in buyers, and the highly targeted advertising you need to create a holistic marketing approach.
How Much Do Real Estate Agents Spend on Marketing for Mid-Range Homes?
Homes falling between $500,000 and $2 million require up to 50% of the earnings to be allocated to real estate marketing costs. During this stage, marketing real estate budget and leveraging broker connections are vital.
How Much Do Real Estate Companies Spend on Branding?
With $24.5 million in real estate sales, Boca Boca Realty invests between $88,200 to $132,300 real estate advertising costs, depending on their objectives, and how much growth they desire the following year.
The ROI of Real Estate Marketing Costs:
Boca Boca Realty's intelligent approach to investing in marketing and building their brand allows them to spend $132,300, which is approximately 27% of their net income (broker paid). This investment helps them build brand recognition, take market share from competitors, and secure more revenue in the future.
Total Marketing Spend: $235,000
Net Income (post marketing spend): $255,000
While this may seem high, it ensures a return on investment of approximately 3X what was invested, this indicates that they will sell an additional $23,500,000, and net an additional $470,000, for a total net income of $960,000 in 2023. If they continue to invest they will continue to multiply their return on investment.
How Do Real Estate Agents Create Marketing Strategies?
The marketing they’ve invested in includes public relations, videos, photos, print ads, direct mailers, digital ads, email blasts, and digital ads. These comprehensive marketing strategies are essential for their success in the competitive real estate industry.
Marketing is an investment, but in real estate, it's one that is limitless in potential and necessary to stay afloat.
The Boca Boca Realty sample demonstrates the power of real estate advertising costs to achieve long-term success in the luxury real estate market.
If you're looking for a full-service marketing agency specialized in the real estate industry, Keenability is here to help. We've transformed and repositioned brands, providing unique solutions to elevate company performance.