Common VPA Misunderstandings.
Clear up the most frequent Vendor Paid Advertising misunderstandings with vendors and agents, including confusion around finance, commission, guarantees and pay-later options.
Vendor Paid Advertising is widely used in real estate, but it is still misunderstood by many vendors and some agents.
Most confusion comes from mixing up the marketing campaign, the payment method and the agent’s commission.
Here are some of the most common misunderstandings.
“VPA means I have to borrow money”.
No.
VPA simply means the vendor is responsible for the agreed marketing costs.
The vendor may:
- Pay upfront
- Pay as invoices are issued
- Use an approved payment method
- Apply for a pay-later option
Finance is one possible payment method. It is not VPA itself.
“The agent should pay for the advertising”.
Some vendors assume advertising should be included in the agent’s commission.
They are usually separate costs.
The marketing budget pays for items such as:
- Photography
- Floorplans
- Portal advertising
- Signboards
- Video
- Social media advertising
- Brochures
- Styling
The commission pays the agency for its sales service under the agency agreement.
“If the property does not sell, I do not have to pay”.
This should never be assumed.
Marketing suppliers have still provided their services.
The photographer has completed the photography. The portal advertising has run. The signboard has been installed.
What happens to outstanding costs will depend on:
- The agency agreement
- The payment method
- The funding provider’s terms
- Whether the property is withdrawn
- How long the campaign runs
These details should be clear before the campaign begins.
“More advertising guarantees a better price”.
No marketing campaign can guarantee a sale price.
Marketing is designed to help:
- Present the property well
- Reach potential buyers
- Generate enquiry
- Encourage inspections
- Create awareness of the sale
The final result will also depend on price, property condition, location, buyer demand, competition and negotiation.
A bigger budget is not automatically a better campaign.
“Every property needs the same marketing package”.
Different properties attract different buyers.
A marketing campaign should consider:
- Property type
- Price range
- Location
- Likely buyer
- Method of sale
- Local competition
- Market conditions
A one-bedroom apartment may require a different campaign from a prestige family home.
“Pay at settlement means the marketing is free”.
It does not.
A pay-at-settlement option changes when the marketing costs are paid.
The vendor still has to repay the funded amount.
Depending on the provider, there may also be:
- Fees
- Eligibility requirements
- Maximum funding periods
- Repayment conditions
These should be explained before the vendor applies.
“The agent makes money from every advertising item”.
Vendors sometimes assume the agent is recommending marketing because the agency earns a profit from it.
Agency arrangements vary.
The simplest way to avoid confusion is to be transparent.
Explain:
- What is being recommended
- What it costs
- Why it is being recommended
- Who supplies the service
- Any relevant agency arrangements
If the agency receives any rebate, margin or other benefit, it should be handled in line with the agency’s legal and disclosure obligations.
“Premium portal advertising means the property will sell”.
Premium placement can increase visibility on property portals.
It cannot guarantee:
- More offers
- A higher price
- A faster sale
- A successful auction
The agent should explain what the upgrade is designed to do and why it is being recommended for that property.
“We can start small and add marketing later if we need it”.
Sometimes this is possible.
But there can be a downside.
The first days and weeks of a campaign often attract strong attention from active buyers.
Launching with limited marketing and upgrading later may mean some buyers never see the property during that initial period.
The agent should explain the advantages and disadvantages before the vendor decides.
“Social media means we do not need the major property portals”.
Social media can be useful, but it serves a different purpose.
Major property portals are used by people actively searching for property.
Social media can help:
- Build extra awareness
- Reach local audiences
- Promote video
- Retarget interested buyers
- Extend the campaign
For many properties, the strongest campaign uses several channels rather than relying on one.
“The cheapest campaign is the safest choice”.
Saving money is not always the same as getting better value.
Removing an important part of the campaign may reduce the property’s exposure or presentation.
Agents should explain:
- What each item does
- What could be removed
- What may be lost by removing it
- Where the budget could be better spent
The vendor can then make an informed choice.
“The most expensive campaign must be the best”.
This is also incorrect.
A campaign should not include marketing simply because it is available.
Every item should have a purpose.
Ask:
- Does it suit the property?
- Will it reach the right buyers?
- Is the cost justified?
- Does it support the sales strategy?
If the answer is no, it may not belong in the campaign.
A quick guide.
| Misunderstanding | What VPA actually means |
|---|---|
| VPA means finance | VPA means the vendor pays the agreed marketing costs |
| The agent should pay | Marketing and commission are generally separate |
| No sale means no payment | Marketing costs may still be payable |
| More advertising guarantees a better result | Marketing creates exposure, not guarantees |
| Every property needs the same package | Campaigns should suit the individual property |
| Pay later means free | The cost is deferred, not removed |
| Cheapest is always best | The campaign should be based on value and purpose |
| Most expensive is always best | Unnecessary marketing is still unnecessary |
Clear explanations prevent most problems.
Most VPA misunderstandings can be avoided before the campaign starts.
The vendor should know:
- What they are paying for
- Why each item is recommended
- The total cost
- How payment works
- What happens if the property does not sell
- What happens if the property is withdrawn
A clear conversation at the start is much easier than trying to resolve confusion later.