Updated: Oct 11, 2021
The average real estate agent's income in 2020 was around $62,990, that's an impressive 26% increase from 2019. However, top-performing agents with experience in the industry earned nearly four times that amount. What are these agents doing differently? Well, it turns out they understand the value of real estate marketing.
With over 2 million active real estate licensees across the country, standing out from the crowd can be a challenge. "Perception is reality," notes top New York real estate broker, Manny Pantiga of PantigaGroup. "By being more visible through marketing, you'll get more listings and sell more." To generate that perception, Pantiga is a firm believer that your marketing needs to reflect your goals.
It may come as a surprise, but the biggest reason so many agents underperform is that they do not allocate enough budget towards marketing.
The vast majority of agents fail to implement a marketing strategy that would allow them to compete with other top agents in their area. As most agents undervalue their marketing efforts, there is an opportunity for agents who understand how powerful great marketing can be.
This article will outline why you need a budget in the first place and also give you a proven marketing budget calculation used by professionals. You can use this to jumpstart your real estate marketing or improve on your current strategy.
Do I Need a Real Estate Marketing Strategy?
Before you get started on your marketing budget, it helps to understand why you need a marketing strategy in the first place.
Real Estate Marketing really only has one goal: to turn leads into sales.
The problem, of course, is that finding, nurturing, and closing on leads is going to cost you something. It might cost you time, or it could cost you money, but doing nothing never leads to something.
Also, time is of the essence. Every day you spend your time and money without a strategy is another day lost. You're not making the sales you could be making, and in fact, you might even be losing money.
If you don't have a real estate marketing plan and budget, you're more likely to make reactive decisions with your marketing instead of being proactive and one step ahead of the competition.
How to calculate your marketing budget?
Now that we understand how important a strategy is, let’s calculate a budget that will allow you to implement your chosen strategy (more on that later).
The simplest way to determine your marketing budget is to take a percentage of your net revenue. But, how should you decide on the perfect marketing budget percentage? One way is to look at what other real estate agents are doing and what offers the best value.
The average real estate agent spends about 7% of their total annual revenues on marketing. While this is better than nothing, there is a reason why it is the average marketing budget. To outperform their competition, top agents allocate 12% or more to marketing.
The main advantage of a percentage-based approach is flexibility. Your budget increases (and decreases) along with the revenue it generates.
Marketing is essential for growth, so while this is often a hard decision for new real estate agents to make, the rewards down the road are always worth it.
While spending more on your marketing won't necessarily equate to more sales, doing so wisely will.
The Marketing Budget Calculator Used By Top Real Estate Agents
Whether you are starting out as a new real estate agent or running an established real estate brokerage, it's crucial to have a marketing budget that will get you to where you want to be.
Our marketing budget calculator will help you estimate what your ideal budget should be. It will also help you evaluate if your current budget is below or above where it should be.
If it's below average, increasing your budget and better allocating your funds can help boost sales. If it's over the average and you're still not seeing the results you're hoping for; it could be an indication that your marketing strategy is flawed.
((Gross sales) x (Average Commission %) = (Revenue)) x (12%) = (Estimated Marketing Budget)
(Net Commission Income) x (12%) = (Estimated Marketing Budget)
What should your real estate marketing budget cover?
Your real estate marketing budget should be an essential part of your business plan. Having a properly implemented marketing strategy significantly increases your chances for success.
Naturally, you should focus your marketing budget on the activities that produce the highest returns. Still, it isn’t always obvious to identify which these are, and you can easily spend (or waste) your budget on endless marketing tactics.
Alternatively, you could trust an experienced real estate marketing agency to do the work to maximize your marketing budget’s value.
Top Advertising Methods For Real Estate Agents
There are many different types of advertising that you can use to attract new clients, and it's necessary to employ a combination of methods.
If you don't have experience in marketing, it may take some trial and error to figure out which channels will work best for your agency.
A professional advertising agency will employ the following advertising methods in your marketing plan.
Content Creation • Graphic Design • Landing Pages • Follow Up Steps • Measurement
Advertising • Promotions • PR • Writing • Speaking • Referral Strategies
Social Media • Blogging • Email Marketing • Website Updates
Reviews, Testimonials, Case Studies • Award Submissions • Professional biographies for agents • Helpful guides and brochures
Did you know? Real estate agents earning $100,000 or more in gross commissions are more than twice as likely to use advanced technology in their marketing strategy than agents who earn less.
Should you do your own marketing?
While self-managing your real estate marketing is possible, outsourcing to a professional marketing agency could save you time and money.
The right agency will provide additional support and expertise to help you grow your business and reach.
A marketing agency will help guide you in the right direction and implement a real estate marketing strategy that holds the bigger picture in mind. Marketing experience allows an agency to focus on what works and avoid unnecessary pitfalls.
As an agent, you can then spend your time following up on the quality leads your marketing strategy generates.
“There’s no magic bullet - just great marketing and hard work,” notes Jeff Russel from Russell Real Estates Services. Jeff made the decision to collaborate with Waldo Tejada and his team at RMT back in 2020. RMT now manages all the agency’s marketing initiatives, helping to amplify their brand recognition in the local Ohio market.
“I decided to leave the marketing to the professionals and focus my time and energy on nurturing the influx of new real estate leads. So far it’s paid off”
As a real estate agent, it's important to realize that the world of marketing is constantly changing.
If you'd like to discuss your real estate marketing plan and budget with a professional real estate marketing agency - Remote Marketing Team is ready to help.
Schedule your one-hour free marketing consultation to see how your marketing, and sales, will improve!