Real estate marketing is a topic that comes up for our clients across the spectrum. At Icenhower Coaching and Consulting, we coach many of the top producing agents and teams in the country. That said, we also coach many agents who are just starting out. Especially among newer agents, this question comes up a lot: “How much should I be spending on real estate marketing?”
There is no clear cut answer that works for every real estate agent across the board. When it comes to budgeting for real estate marketing, there are a number of factors to consider, including your GCI.
The rule of thumb for real estate marketing spending is 10% of your GCI (gross commission income). This applies to an individual agent or a team, and includes money spent on marketing and lead generation. This is an old, tried and true standard that has been around for years. It still holds true today! The general advise is to hold your marketing budget at around 10% of your GCI.
At ICC we provide our clients with a lot of different options for lead generation activities. We have training and courses on these activities — for example, our SOI course. Our coaching clients all go through these training courses, and we provide a menu of options for how to lead generate. Many of these activities don’t have to cost much money, if any at all.
If you are just starting off in real estate, your GCI might not be 10%. In fact, you may have no income for the first several months. If your GCI is literally at zero, then you will have no money to spend on marketing. There are things you can be doing that are virtually free, monetarily. That said, you have time to spend. You can knock on doors, you can be in touch with your SOI, and be doing lead generation activities until you begin to make money.
So, the focus for new real estate agents needs to be on these activities, and not on spending money on marketing. When you’re just starting out, it could be months before you see a commission check. We don’t want you digging yourself into a hole by spending money you don’t have! There should not be many expenses early on in your career. The focus should be on real estate marketing and lead generation activities.
A lot of new agents see seasoned agents and what they are doing for marketing. They feel like they need a fancy website, too. Or, they see some great ads up on social media and feel like they need to do the same.
All of these nice marketing pieces are sprinkles on the cake. As a new agent, you need to bake the cake first before you get carried away with decorating it! Your lead generation activities are represented by baking your cake. That fancy website and marketing materials are the frosting and sprinkles.
It’s really important that you put lead generation first. Get into action before you begin printing off business cards. Everything is back burner to lead generation activities for new agents.
So, when does the 10% formula come into play? When your production begins to grow, your GCI will go up. And when your GCI increases, you may begin to take 10% and put it toward real estate marketing. As you begin to see this shift, you will see your marketing take over some of your lead generation activities. Your hard work early on is paying off! You will now have to put in less sweat and tears into your lead generation.
Of course, there are the few agents that start off with a healthy savings account and want to jump right into marketing. Or, perhaps, a new agent has business experience and wants to take a measured risk by spending money before generating income. These are exceptions, not the rule!
These real estate agents may begin marketing right away, though in this case it is a good idea to get a mentor or a coach. In these special cases, the agent doesn’t have experience in the real estate industry yet to know what works and what doesn’t. Generally speaking, we do try to avoid spending money before making money, and we advise our clients accordingly.
This is something that happens often with seasoned agents. Perhaps you have a healthy GCI, but you are overly protective of your profit. You may be fearful of spending 10% of your GCI on marketing. This mindset can stunt your growth as an agent or a team.
Perhaps you are experiencing the opposite problem. Maybe you are spending more than 10% of your GCI and not seeing the results you need to see. Perhaps your conversion rate is low and your dollars are not being spent wisely. Or, maybe you are getting plenty of leads, but your follow up is no good. These are all things that can be tackled with the help of a coach in your corner to guide you.