What is vendor-funded marketing in New Zealand real estate?

What Is a Vendor-Funded Marketing Campaign?
Vendor-funded marketing is standard practice in New Zealand residential real estate. Here is what it means and what you should expect for your investment.

What vendor-funded marketing is
Vendor-funded marketing or Vendor paid marketing ( VPM or Vendor Funding Contribution, VFM) refers to the arrangement where the vendor contributes directly to the cost of marketing their property, in addition to the commission paid upon sale. These marketing costs are incurred regardless of whether the property sells, unlike commission, which is only payable on a successful sale.

What the VPM covers
VPM typically covers: professional photography and videography, TradeMe Property premium listing placement (featured or top of search), realestate.co.nz listing, floor plan preparation, 3D virtual tour, signage, and in some campaigns, print advertising in local newspapers or property supplements. The specific items included depend on the agreed marketing plan.

Typical VPM amounts in Northland
For a standard Whangarei residential property, VPM typically ranges from $1,500 to $4,000 depending on the scope of the campaign. A comprehensive campaign for a higher-value property might be higher. The VPM is negotiable and should be clearly itemised in the agency agreement before signing. A good rule of thumb is to allow approx 0.5-1% or the sale price of the property. 

Is it worth paying?
The marketing investment is worth making when the quality of the campaign directly affects the number and quality of buyers who see and respond to your property. Premium TradeMe placement generates significantly more views than standard placement. Professional photography generates more enquiry than phone photography. The question is not whether to market professionally, but how much to spend relative to the property value and buyer pool size.

Who carries the risk if the property doesn’t sell
Under a VPM arrangement, the vendor bears the marketing costs even if the property does not sell within the agency period.
The agent’s commission is only payable on a successful sale, but the marketing costs are not contingent on a sale. This is why understanding and agreeing the marketing budget upfront, before signing the agency agreement, is important.

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Paul Sumich is a Whangarei-based real estate professional with local Northland expertise. Find more at paulsumich.co.nz/blog