The Reality of Real Estate, Part 5: Marketing Misunderstandings, Mistakes, and Malpractice
Expectations vs. Reality: An Insider Exposé
In case you missed it, click here for “The Reality of Real Estate, Part 4: The Politics”.
This is a multi-part insider exposé series on the real estate industry. My objectives are to candidly share with you the behind-the-scenes of the real estate world — from the good, bad, ugly, and controversial — in order to educate and empower those of you looking to make a complete life change and enter into real estate, that you may be fully set up for success. I promise you, no nonsense.
Marketing is a major facet of real estate. In fact, it is a crucial business operation. Shockingly, many, many real estate agents understand very little about marketing. They talk about it a lot and throw around the subject like candy, but much of the knowledge of marketing in the real estate industry is derived from personal anecdotes, self-help books, and Tony Robbins. I attended graduate school for business, so I have the background of studying marketing at a higher educational level. I also started my own marketing company and applied what I learned from school — and learned the differences between what works in theory vs. how it translates in the real world that comes with ever-evolving challenges, such as a global pandemic. Thus, I can confidently report that, there is a serious knowledge gap in the real estate industry pertaining to marketing that causes many misunderstandings, mistakes, and even malpractice, which can cost you thousands of dollars in the long run. Beware of what you buy into in real estate.
The sad truth is the real estate industry is littered with cheap marketing. It appears that many marketers also exploit the knowledge gap of unaware real estate agents by selling them cheap services that only create clutter and serve no strategic business purpose. Knowledge is power in the real estate industry, and ignorance will cost you dearly. My aim in this article is to break down common marketing blunders and provide a broad understanding of marketing that you may build upon, as you grow in your career. To promise that you will be a marketing expert by the end of this article would be a false claim — expertise does require a lot more study and real-world experience. The purpose of this article is to give you a solid starting point, however, that you are able to make informed business decisions.
Marketing Misunderstandings
The common misconception about marketing in real estate is that it is simply a matter of posting on social media, emailing your contacts, and distributing print media. While the actions of posting, emailing, and distributing are marketing motions, this says nothing about the effectiveness of the actions. Many agents will go through the motions of marketing without any real understanding of how to make it effective and count toward business growth. Thus, they will post a lot of trash content on social media that overwhelm the platforms and turn the social media algorithms against them; they will blast their contacts with junk newsletters and impersonal email messages that people just delete; and they will blindly print and distribute wasteful brochures and flyers, that become litter. This is not marketing; this is spam.
It gets worse. Because of the lack of quality control in real estate marketing due to the misunderstanding about it, many small marketing firms leverage this to sell services to real estate agents that promise to take care of this work and increase their business with their “special magic formulas” for business growth. You also have real estate agents hiring “marketing interns” at cheap hourly rates, to take care of the marketing motions of posting, emailing, and distributing. The problem with hiring an external marketing firm is that there is no “special magic formula” to increase business. So, if you hire an external marketing firm that promises you this, you are buying into a lie. The problem with hiring a marketing intern is that real marketing is an advanced business strategy skill with technical components. So, if you hire a marketing intern at such a cheap rate, you are likely buying into an unqualified candidate. A truly qualified marketing candidate would not accept a cheap rate. Furthermore, real estate marketing is in its own special category of marketing, due to fair housing laws that govern the practice of real estate. The marketing in real estate is a lot less specific than standard business marketing, so if you seek marketing support, the support must have an understanding of real estate fair housing laws and the overall industry, as well as a strong knowledge of marketing to be able to work around real estate marketing limitations.
I will not get into the weeds with marketing terminology in this article. I will save the in-depth material for a future time. The key concept to understand here is that “marketing motions” do not equate with “marketing strategy”.
This is akin to the difference between playing checkers vs. chess. Or, mindlessly moving your body at the gym vs. intentionally training according to your fitness goals, activating specific muscle groups, and eating nutritiously.
Most people can play checkers and do well. It is a simple game. But few can play chess well. Chess is a more intricate and advanced game that requires greater skill. Most people can say they go to the gym. But not everyone who goes to the gym is actually fit though. This is the same with marketing. Many people know how to use social media, but not many know how to leverage the strategy aspect of social media. Many people know how to send emails, but not many understand drip campaigns. Many people know how to print stuff, but not many understand the appropriate context for print marketing. The knowledge gap in marketing causes many mistakes that have detrimental financial and business impact.
Marketing Mistakes
The common mistake in real estate marketing is forgetting the cardinal rule that business success is about relationships, not transactions. Far too often real estate agents set their goals around increasing sales. While profit is absolutely important in business, setting sales goals as the primary focus is the wrong order. The primary focus should be to increase service value to your clients, and then from there, you determine sales strategies to meet the goal of increasing service value. Let me explain this another way: If all you are focused on is the money, that affects the way you speak and convey to others around you — as transactions. Transaction-focused real estate agents treat other people more like objects than humans, so empathy and relational connectivity are often lost in these business engagements, especially in their marketing. Transaction-focused agents typically miss the mark in connecting with their audience because they tend to neglect the needs, cares, and concerns of their audience. In a world that is increasingly digital with endless options and personalization, it is crucial to make your audience feel heard, seen, and engaged. Otherwise, they will take their business elsewhere, to someone else who makes them feel cared for. In contrast, when you are focused on your value contribution, you care about your audience. You are attentive to their needs, their cares, their concerns, and their overall wellbeing. Your marketing efforts then become an extension of your genuine care, and your audience will be receptive to that. This then builds rapport, which then builds trust, that then builds your business. The order is important because it drives how you will primarily engage with your audience — either in a sterile manner or a relational manner. Psychologically, most people engage more readily and positively to relational people than sterile people.
Another common mistake in real estate marketing is pushing forward with marketing efforts before having any understanding of how it contributes to the business. Many real estate agents will go through the marketing motions because they feel the social pressure to do as everyone else, without taking a moment to think through what is actually going on. This is a very costly mistake and may cause you to expend capital that you could have invested in other, more strategic, areas of your business. The key insight to note here is that you should have at least a general understanding of what the desired outcome is of each specific marketing strategy, have a general understanding of how to measure progress toward the desired outcome, and have plans for strategy reevaluation and modifications. Do not blindly invest in marketing efforts without understanding what it is you are getting into. Do not fall prey to the predators that bank, literally, on your ignorance. Take some time to research, inquire, and learn. It will be well worth it to be informed.
Other mistakes that occur in real estate marketing result from the misuse of marketing terminology. Three common terms that you will hear frequently in real estate are: “lead gen”, “prospecting”, and “marketing”. “Lead gen” is short for “lead generation” — and it is simply a process of acquiring potential business clients and moving them along from the stages of inception (i.e., building rapport) to conversion (i.e., buying or listing through you). “Prospecting” is similar to lead generation, but it is a much more rapid process. Lead generation is a more steady and “soft” approach to gaining business, whereas prospecting is a “harder” approach. Lead generation methods include social media strategies to gain exposure, likability, credibility, and trust, to then ultimately persuade people to buy or list with you as their agent, sometime down the road. Prospecting methods include cold calling or door knocking (and yes, real estate agents still do door knocking) to find immediate clients. Both lead generation and prospecting are marketing activities; as a real estate agent, you will likely be doing both activities concurrently.
The confusion originates when you have real estate agents saying that these are three separate functions. This is false. Marketing is the broad umbrella, and lead generation and prospecting both fall under it. Lead generation is marketing. Prospecting is marketing. Marketing is about gaining business — i.e., building relationships — and both lead generation and prospecting are actions to build business relationships — i.e., your client base.
Marketing Malpractice
The consequences of real estate marketing misunderstandings and mistakes are fairly innocuous. The repercussions are mainly cost, lost opportunities, ineffectiveness, and inconvenience. However, there is a level of severe marketing misuse that also occurs in real estate. I warned in Part 2 of the series, “The Reality of Real Estate, Part 2: The Wait and Bait”, that “brokers and brokerage firms profit by getting you signed on”, and that “many will take advantage of you as a “newbie” to get your signature” (“Part 2: The Wait and Bait”). I have personally sat in meetings and heard conversations, where established agents and organizational leaders have discussed strategies for recruiting people into real estate, solely so that they can earn a commission through a percentage of the brokerage firm’s annual profit, off of the new, secondary, recruit. When the secondary recruit then brings on another new, tertiary, recruit, the primary agent in that profit chain, also receives a portion of the secondary recruit’s commission off of the tertiary recruit. And on and on it goes. The horror is that they speak of the ignorance that aspiring real estate agents and new agents have, and how easy it is to get them signed on. This is a pyramid scheme in disguise.
While brokerages are legitimate businesses, many established agents will bring people on board into real estate by selling them on a dream of a lucrative and easy money business opportunity, financial freedom, a leisurely and luxury lifestyle, and an awesome team of colleagues. They will conveniently neglect the part where there is a large upfront cost to pay to enter into real estate (see: “The Reality of Real Estate, Part 1: The Beginning (and the Easy Part)”) and that you will likely need about six months to one year’s worth of savings, depending on your jurisdiction’s market, to comfortably get started in real estate. Not only that, but it is not true that real estate is easy money. There is a significant learning curve in real estate, and it requires much dedication and hard work to succeed in the industry — real estate will consume your life. An awesome team of colleagues is also not guaranteed. You must network and build those relationships the usual way through engaging in shared experiences over time. Most real estate agents are so busy trying to run after every business opportunity and compete with other agents, that it is difficult to build friendships. It is a cutthroat environment.
The main point is to educate yourself as much as possible about the real estate industry before you make any big, life-changing, and expensive decisions to jump in. The more you can prepare in advance, the better off you will be in real estate. These articles are not to discourage entry into real estate, but to convey that there is a lot more to consider about making the career change into real estate than meets the eye.
I hope this helped give an insider’s view on the reality of real estate. Stay tuned for future articles on real estate study and business strategies. Subscribe so you can receive an alert when the articles are published. Comment below if you have any questions about the real estate world, or just to give feedback. I welcome discussion and other perspective. I will address answers to your questions in future articles. Please share my articles with anyone you think this may help.
Click here for: “The Reality of Real Estate, Part 1: The Beginning (and the Easy Part)”.
Click here for: “The Reality of Real Estate, Part 2: The Wait and Bait”.
Click here for: “The Reality of Real Estate, Part 3: The Kool-Aid”.
Click here for: “The Reality of Real Estate, Part 4: The Politics”.
Disclaimer: The specific nuances of the entry process into the real estate industry may differ per state; however, the general principles I write about will still apply. Also, the articles I write are not legal advice, are written in the perspective of an American, and are solely for candor, educational, and empowerment purposes.
