Real Estate Marketing Expenses
We hired an independent market research company to survey 300 active real estate agents across the United States and Canada. These agents were asked questions on a wide variety of topics, including their marketing budget and spending habits.
In this blog, we'll walk through the results and reveal the intriguing insights we saw about top-performing real estate agents. (Hint: if you think they spend differently, you're right!)
How much do real estate agents make in a year?
First, let's take a look at what the average agent actually makes in a year:
We simplified the categories so we could better analyze their marketing and spend habits, and observe behaviour trends that emerged within different levels of success. These were the three GCI groups we reviewed:
- under $100,000
- between $100,001 - $300,000
- $300,001 and higher
What is GCI? GCI stands for "Gross Commission Income." It refers to the total amount of money earned by a real estate agent or brokerage from real estate transactions, before any deductions are taken into account.
One of the most apparent facts revealed by the data is that agents with a higher GCI also completed more transactions each year.
In fact, 78% of agents with a GCI below $100k had fewer than 10 transactions, while 63% of agents who made over $300k completed more than 25 transactions.
The correlation is simple: More transactions = more GCI
This was interesting and it reinforces the data we see in sources like REALTrends 500, where the number of transaction sides is considered a primary indicator of agent success.
How much do real estate agents spend on marketing?
We also wanted to see how much real estate agents are spending on their marketing each year, and where they put those dollars. As it turns out, 53% of Realtors actually spend less than $5,000 on their marketing.
But when we broke it down by GCI, we saw another clear trend: top producing agents were spending significantly more on their marketing efforts.
In fact, 52% of agents with a GCI over $300,000 spent over $20,000 per year, with 20% of these top producers spending more than $80,000 on their marketing each year.
Of course, as a technology company in the business of providing real estate websites, CRM, and other digital marketing services, we were interested in seeing how much of those budgets were going to web platforms specifically.
The trend was almost identical to generic marketing spends, with investments increasing significantly alongside GCI.
Real estate agents making less than $100k were most likely to spend under $2,000 per year, while the majority of Realtors in the $300k+ group invested at least $5,000 and 32% had spent over $10,000 on their platform.
How much should a real estate agent spend on marketing?
Obviously, top producing agents spend more on advertising partly because they can spend more on marketing. But it's also unlikely that they'd do so if it didn't produce results. So, it seems probable that marketing spend is driving some significant portion of their revenue, at least enough to generate a positive ROI.
All in all, the market research was intriguing. We learned that top-performing agents had a higher volume of transactions and also invested significantly more marketing dollars into their business. When it comes to real estate, the old phrase "you have to spend money to make money" very well may be true.