£83,500 = The Value of each Lettings Market Appraisal?
You have a market appraisal booked in at 2.30pm. You were meaning to get everything sorted this morning for the appraisal , but you needed to sort that deposit dispute this morning. You have done market appraisals hundreds of times before .. you can do them with your eyes closed. As you are going to meet the landlord at his property, you might do a bit of homework (quick 30 second scan on Rightmove Plus), grab your landlord brochures and a couple of business cards. No need to look at the Comps, you know your prices. If you get it, it will earn you £1,250 a year in fees in a year (obviously the further South you go, this figure goes up and drops as you go up North). So if you bag it, that property will earn you £1,250. For you and your lettings agency, that’s not a huge deal, and it isn’t a small deal either. It’s just slightly larger than your average deal with a landlord. So you treat this £1,250 deal like it is no big deal.
But what if you looked at the deal through another pair of eyes? What if you viewed this £1,200 landlord based on the lifetime value of that landlord? What if you looked at the value to your lettings agency, based on what that property will bring in over the next 10, 15 even 20 years? Landlords don’t swap letting agents, so once you have them, if you do a decent job, you will probably have them in 10, 15 even 20 years…. then they might buy more properties and recommend you to their landlord friends.
Even if you keep your landlord for only 8 years, the deal you are competing for is really worth £9,600 Mr Letting Agent. Would you treat a £9,600 deal differently than a £1,200 deal? In fact, I said a few weeks ago, most landlords have (but they never tell you) on average 3.34 properties and keep their property long term (20+ years). Now, the life time value of a landlord could be worth £1,250 x 3.34 (properties) x 20 years = £83,500.
So, I ask again, if the deal you are competing for is really £83,500 Mr Letting Agent, would you treat an £83,500 deal differently to a £1,250 deal?
Let us be honest with each other, you prepare differently for big deals than you do for small deals. You find out more about your landlord (is he a business owner, what kind of business is he in, has he posted on Linkedin or what Linkedin groups is he in (that tells you volumes, what his interests are etc etc , even look at his Facebook page). You do your home work on the local market. You prepare a report, even get the census figures for the locality. You prepare collateral material to support your efforts, by printing off lots of comps. You drive by the property the day before to check there will be no nasty surprises… You leave nothing to chance.
For the appraisal, you will have ruled out a decent chunk of time in your diary. You wouldn’t dream of slipping in a viewing 45 minutes after the start time of the appraisal on the other side of town. You invest more time with the landlord, discovering what exactly they wanted from their letting agent and then selling to those needs and wants. You look at the time for the appraisal (and preparation before) as an investment (not a chore like a lot of people act like it is), because you know it is what it will take to win a deal.
Also, as in any part of working life, you try a lot harder to win the big deals…. don’t you? You work to do everything in your power to bag that landlord. You engage more people inside your agency and you ensure that your property management and Negs teams are involved, so that they feel some ownership of the deal. You work harder to get your dream landlord exactly what they need.
The letting agency services that you are selling are now bigger than you believe. The opportunities that you are working right now are worth 20, 30, or 40 times as much as what the fees are worth over the course of the first year. By looking at only a landlord’s potential first year’s revenue, you aren’t selling as well as you might be. Mr/s Letting Agent, were you to take a longer view of what that landlord could be worth to you, you might do things differently? … you might get more properties on your books?