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Selling to Russians News: Marketing Budget to Find Russian Buyers
May 01, 2013
Often people do not know how much they want/can/should spend on marketing their properties to Russian Buyers (here we do not talk about sellers and agents who try to sell a mansion through a free ad in The Penny Saver newspaper... this is for people who are serious about selling their international real estate properties). Let's look at some relevant data that I retrieved from the internet searches.
The US Small Business Administration puts marketing budget numbers from 2% to 10% of sales. Some other reliable sources say that marketing budgets of small to medium companies are usually from 1% to 12% of sales which is in full compliance with the SBA recommendation. All sources mention that if you are just entering the market your marketing budget may be higher.
The marketing budget may depend on the industry, that's why we should go deeper and look at real estate sales in particular (most numbers found are from the US based sources, but can be used as an estimate for other countries too, perhaps).
For realtors: a good rule of thumb is that marketing budgets should equal about 10% of their commission income, as a realtor's magazine states.
For developers: the standard real estate sales commission is 7% and can be negotiated down or offered higher than that depending on the market, types of homes/condos built, prices and desired volume and speed of sales; other marketing costs vary from 0.5% to 4.0%, depending on the volume of units and whether you include staff salary costs; which brings us to approximately 10% of the unit price.
For owners: the standard real estate commission while using a realtor to list and sell your home/condo is 6%; in case you do not use a listing realtor, but want buyer's realtors to bring you buyers, you have to offer them at least 3% of the selling price of your property to stimulate them not to ignore your property (or maybe more if you want to sell fast or are under the pressure of the current market or other circumstances), plus all advertising costs are on you (buyer's realtors do not promote your property for sale, they just serve their buyers showing your home if they can find it advertised and are sure you pay them a commission), which brings us to perhaps 4% to 6% of the selling price.
Now, this was an estimate for a total marketing budget for selling your property while targeting potential buyers in your own language (if other than English), in English (as international business language) and in Russian (if you want to find Russian Buyers who usually search internet in Russian, read Russian print media and in any way are as comfortable with Russian as Americans are with English).
How to cut the budget pie into pieces to share it between languages, online and offline media, etc.? This is your own marketing decision... How can I help?
The major decision whether you really want to market your international property to Russian Buyers is up to you of course. What to take into consideration?
Do you already know from local sources that Russian Buyers are attracted to your area and type of property? Then it is easier to say yes to this option.
Do you still want to know whether Russian Buyers might be interested in your property? I can help with this research in Russian internet looking at the stats of Russian real estate portals, Russian realtors’ interviews about interest for your country among Russian Buyers and any other recent material available on the topic in Russia. Then you can make your yes or no decision based on solid data.
Ok, let's proceed with some examples if you decide that marketing to find Russian Buyers is worthwhile for your properties.
Case #1. You are a realtor and see that Russian Buyers come and acquire properties around your country/area. You already have a website with your listings which is probably bilingual (your country's language and English). You hope to sell to Russian Buyers 2 or 3 of your listings with the total price of $1,000,000 and thus make $60,000 in commissions on sales before the end of the year. Let's assume that you found a Russian Realtor to send you Russian clients over and have to share with him/her 50:50, so your commission will be $30,000 and to earn it you should spend 10% or $3,000 on marketing in Russia (well, entering the market is the most expensive, later your happy clients will refer their friends to you and it is absolutely free...)
What would be the wisest thing to do with your marketing money? Of course, your Russian website has to come as the priority – with property descriptions, photos, details on the legal process for a foreigner buying a property in your jurisdiction, visas or waivers for Russians, etc., etc. It can be a separate Russian website or a switch to Russian from your existing website (never a machine translation, it’s toxic for marketing!). You'll use this Russian website as a tool to show your potential Russian business partners your capabilities and properties. To find a solid partner(s) in Russia will take some rigorous emailing campaign in Russian, translating business correspondence and partnership agreements before you are all set to start selling.
If you decide to go without a partner in Russia, but want to find Russian Buyers directly, then you do not share commission, but have to promote your Russian website so that direct visitors can come not to your partner, but to you instead. It takes some online and offline marketing and advertising to do and would cost you more upfront, but it is doable as well.
Case #2. You are a developer and want to sell to Russian Buyers your condos/homes at various stages of completion. You already have a bilingual (your country language and English) website about your project. You hope to sell to Russian Buyers several units with the total price of $1,000,000 before the end of the year. 10% to spend on marketing in Russia will be $100,000. Let's assume you work through a partner(s) in Russia whom you promised a rather high commission to make sure that he is really interested to sell your project. You can't afford to pay him the whole 10% commission as it'd leave you with no money to cover other marketing expenses. So, you might want to offer him less so that you still have the money to develop all your Russian online and offline marketing materials, pay for online and print advertising, maybe participate in a real estate exhibition in Russia, maybe offer free trips to potential buyers to see your project and model units, etc., etc. (If you think for a moment that a Russian Realtor would do it all for you for free now hoping for some future earnings later, then think again...)
If you decide to go without a partner in Russia, but want to find Russian Buyers directly, then you do not pay commission, but you have to be really aggressive in your marketing campaign in Russia as homes/condos that are not built yet are not so popular after the crisis during which so many developers failed on their promises to deliver... It does not mean that it is impossible to sell pre-construction all together, but the cost of highly impressive marketing might be rather high...
Case #3. You are an owner of a villa somewhere on the warm sea shore priced at $1,000.000 and you are aware of the fact that many Russians bought properties around. You do not want to hire a local realtor, but want to find Russian Buyers on your own, so your marketing budget is 4% to 6% or approximately let's say $50,000. Again there are two options – going through a Russian Realtor (reserve at least 3% to 5% of the sale price or $30,000 to $50,000 for him – to pay later of course) or marketing directly to Russians (no commission on sale, but more work and money upfront to promote your for-sale-by-owner property in Russia).
Want to find a realtor or perhaps several realtors in Russia? They are not exclusive, first of all, and second – one might have an office in Moscow and another one in St. Petersburg, etc. and they all have completely different buyers coming through the doors of their offices in search of a villa exactly as yours. It is not enough in today's buyer's market to blast emails in English around Russia: "Hey, I have a beautiful villa for sale, send me a buyer over" (this is not a fantasy as I receive such emails every day – I guess some people confuse me with a real estate agent in Russia?... but I always wonder – how can they really think that it might work???)
Ok, what should you really show to Russian Realtors to entice them into selling your private property to Russian Buyers? (Here we are talking about online presentation of course as the most economically effective)
Plenty of good photos (and video if possible) of your property and detailed description of the property and area in Russian are a must. Keep in mind that you are competing for a Russian Realtor's attention with many other properties in the world that he/she receives every day. Guess – which property they would put on their websites and show to their clients: one that is all ready for promotion in Russian and only requires copying the material for their own marketing needs or another one which they have to translate? Do not forget for a moment about their earning potential with selling your property...
If you'd prefer not to involve a Russian Realtor, but find Russian Buyers directly, then on top of the photos/video and property and area description you'd better have more info on your Russian website dedicated to selling your property: What is the legal process for foreigners to buy real estate in your country? Do Russians need a visa? For how long can foreigners stay in their newly bought property? Etc., etc. – try to make your presentation so all inclusive that no visitor would go away from your site to search for any additional info (then they forget where they started... and leave you for good...)
Ok, now you have a well developed Russian website with all the info on your property for sale and the most important question comes – who will see it to become your buyer?
In case with a Russian Realtor involved you hope that you provide all the info for him/her and they would show the info to their clients (well, having said that you do not put too much hope on them to really spend time and money on your promotion – they would come back to you if and when they have a client for a property like yours as they are buyer's agents...)
Now, if you do not just email the link to your new website to Russian Realtors, then you have to promote your website in Russian search engines, directories and topical forums, through other third parties websites, pay-per-click advertising and advertising in print media and so on and so forth. You have to bring visitors and only then one of them will turn into a buyer! The attitude that "if you built it, they will come" has been not working for a long-long time... so many competing sites... you have to be on top to be found!
So, you see that to save on realtor's commissions at the end of the day you have to do a lot of marketing on your own upfront... otherwise you can't really sell your property... if nobody knows that it is for sale, who will buy?
Resume: properties and locations are unique, marketing principles are general.
To your best business success,
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