Research

Facebook Advertising for Real Estate

We recently ran a small advertising campaign on Facebook for one of our listings. The objective of this campaign was to drive foot traffic to weekend open houses so we were very specific about our targeting criteria (location, age, interests, etc) and the results were somewhat interesting that I would like to share with our readers.

As many of you know, social media advertising landscaping is constantly changing. New platforms and technologies have made it easy for small businesses to run effective campaigns with small budgets and without needing much help. Advertising costs are typically impacted by competition, industry, audience and a long list of factors so it is important to analyze each campaign and understand results. It is also very easy to get frustrated with these type of campaigns given there are many industry terms (reach, viewers, etc). In the end, the only metric that I consider to be important is "Cost Per Desired Action". The desired action in our use case was for ad viewers to be redirected to our listing on Redfin. Many real estate agents agree that Redfin has become a favorite with many home buyers so we intentionally wanted to send traffic to Redfin to make it easy for people to schedule for the open house. 

Placement: 

We decided to budget $300 and run these ads every Thursday-Sunday for the weekend open house until the listing went under contract. Luckily, the listing was only on the market for 25 days so we spent less than $250 in Facebook ads but still produced a decent amount of data for analysis.  For a short time (3 days), we also experimented with ads on Instagram so I've combined these results together.  Following is our total ad spend by placement: 

Costs Per Placement

*Desktop was so small that it doesn't even show up on the chart.
  • Mobile News Feed: $207
  • Desktop News Feed: $0.11
  • Instagram Feed: $40

As you can see, 84% of our ad budget was spent on mobile feeds which is really not that surprising given how most people consume Facebook on their mobile devices these days. The Instagram campaign was only active for two weekends so these results are slightly skewed but I do expect Instagram to perform as good as Mobile if not better in future campaigns (more on that later below).  

Clicks:

Next, let's look at the number of clicks that we received from each placement: 

Website Clicks Per Placement

  • Mobile News Feed: 668
  • Desktop News Feed: 2
  • Instagram Feed: 46

Again, not surprisingly mobile dominated the number of clicks that we received but I wonder what our final results would've been had we ran the Instagram ads for the entire campaign. 

Costs Per Action:

Here is where things get interesting. Those two measly clicks that we received from desktop cost us about 5 cents in average each which is relatively cheap. Instagram on the other hand is super expensive in comparison. 

Average Cost Per Action

  • Mobile News Feed: $.31
  • Desktop News Feed: $0.055
  • Instagram Feed: $0.87

The median cost is a bit misleading given the way costs trend throughout the campaign but $1.15 for each Instagram click might not be the best use of of our budget.  My theory is that since Instagram advertising is new and there is a significant interest from advertisers to place ads in this platform, prices are going to stay high for a while until ad inventories level with demand.

As of now, Mobile seems to be the most affordable placement for us at $0.31 per click and we will probably only ran ads exclusively on mobile from now on and not bother with desktop since fewer users are accessing Facebook via desktop than ever before. 

A Word of Caution

Once again, these results are based on our advertising only. This is not meant to be a universal report on the state of Facebook advertising and results are going to be certainly different for each campaign.  The bottom line is that the landscape is constantly changing and you must study each campaign performance reports to determine the best possible placement for your ads. 

What results are you seeing? Is mobile becoming a preferred placement for you, too? Have you experimented with other social media platforms? 

DC Real Estate Market Trends

I've been spending a lot of time in recent days on Redfin to not only find deals and listings that meet our buying criteria but also to identify DC real estate market trends that we could share with our private investors. Our investors love pie charts so I decided to do a quick analysis of homes that were sold over a 90 day period in a specific zip code in DC using Redfin's selling tool.  Keep in mind that Redfin only shows those homes that hit the MLS so this may not be 100% accurate but it gives a realistic view of what is happening in DC's real estate market. Here is the criteria that I picked:

  • Zip Code: 20010
  • 90 days Period From June 30th to September 30th
  • House, Town-House & Multifamily (No Condos)
  • Maximum Sell Value of $600k

According to Redfin, there were 21 homes that matched this criteria. Out of these 21 homes sold, only 5 (23.8%) were sold at the original listed price with 12 (57.1%) selling under the listed price and 4 (19%) selling higher than the listed price.

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What this pie chart tells us is that many of the sellers (investors or individual sellers) are listing their properties at the higher end of the market value for this neighborhood and hoping that they'll get lucky given the booming state of DC's real estate market. Obviously this isn't necessarily happening and according to Redfin only 4 out of 21 homes listed officially had price reductions so many of the sellers took lower offers.

Another thing that I wanted to look at was the median list price per square foot which came up to $387. In comparison and according to Redin; the overall median list per Sqft in Washington DC over the course of the 90 days was $489 so this zip code (20010) has some catching up to do which is not really that surprising given the fact that many of the homes sold in this area are rehabs and condo conversions.

As the chart below shows the median sales price was $500k with majority of the homes selling between $500-$600k.

image (1)

The one thing that I wish Redfin would show is the number of days that each property sits on the market before it is sold.  My guess is that many of these 21 homes did not sit on the market for too long but correlating this information with the sale price could identify additional trends.

This quick study gave us some data points that we'll use to evaluate deals and share with our network but hopefully it will also help others to sell their properties faster and for more money.