Real Estate Investing Adventures

As discussed in a previous post, the development we were building in has its own dedicated sales team. It made sense to have them represent us for a number of reasons:

• They ran both a national and regional advertising campaign
• They typically showed all available properties to potential customers no matter how them became interested in the development
• They were physically located at the development and were selling only this development every day

Real Estate Commission Issues

We met with the head of sales to discuss terms, commissions and their typical marketing plans. Their standard commission, which was non-negotiable was 6%. Their terms were acceptable, but other than the advertising campaigns, they did no specific marketing for individual properties. We thought we could live with everything but the size of the commission. On a list price of $2.3 million, this equates to a $138,000 commission! We threatened to list with an outside agency, which would require them to split the commission reducing their share to 3%. They were still unwilling to budge on the 6% number!

We decided to sell the property ourselves and potentially save the $138,000.

Real Estate Marketing Plan

Our marketing plan was driven by the desire to pre-sell the home prior to construction completion. To support this early sell, we wanted to start marketing the property early in construction and came up with the following multi-pronged approach:

1. Produce color renderings and floor plans and have them mounted and on display at the construction site along with contact information to attract any “drive-by” traffic.
2. Advertise in the NY Times real estate section as well as in a number of other metropolitan papers.
3. Set up a Google Adwords campaign targeting people searching for homes on this particular lake or region.
4. Send out a mailing to everyone who had previously bought in the development to start some word of mouth buzz with family and friends of current owners.
5. Contact the individual sales people in the development and offer a 3% bonus for a sale.

How well we did trying to sell the property ourselves and the results of our marketing plan will be the subject of future posts.