Are all Estate Agents the same? … Yes!
You all go on Rightmoving / Zoopsdeloops / OnThe Meerkat, you all put a board up, you all take a few pictures, you all (well those with High St offices) pop a window card in the window, you all pop it in the newspaper, you all print a few brochures off and sit on your backsides waiting for punters (tenants for our lettings readers and buyers for our estate agency readers) to trip along in… even the cheap boy agent down the road.
Both of you have similar costs, but your fee is 1.5% of sale fee, and your competitor’s is 1%. (or in the case of lettings agents, you charge 10% whilst ‘mateyboy’ charges 6%). Your higher fee is enough to cause some potential vendors (and landlords in the lettings agency) to use your competitor. All things being equal, they’re right to pay the lower fee.
However, all things are not equal. The service that you sell is superior to your competitor’s. You invest more money, more time and more effort to develop the very best agency service. Your agency is of far superior quality, you go the extra two miles and your vendors (landlords) love you for it because you get them more .. more money for their property and you will get it quicker, for our letting agents, more tenants, better tenants, better tenants that are less likely to trash the palce and pay their rent. More still, your Negs and Valuers are out teaching your vendors how to get even more out of your agency service, but doing accompanied viewings, by doing them in the evenings and weekends, showing them the best tips on how to present a property, which order to do the viewing in, going back at different times of day to ensure the pictures have the sun in the right place.
Your competitor has a lower fee, but you are better value for money. Better Value for Money Watkin, how can you be better value for money when your fees are higher? You been taking the happy pills again? No, but let me explain Mr(s) Agent, you are better value for money because you create greater value to the landlord/vendor. Still not got it , ok here we go. If you remember what I said about this last Thursday ….
Value isn’t what something costs (ie Value is not the fee you charge) . Value is what that something is WORTH to the person buying that product or service.(Read it here BLOG LINK).
But if are you losing a ‘not so insignificant’ number of listings (be they sales or lettings) to your competitor agents, all this stuff about ‘value ,cost and worth murlarkey’ won’t mean a thing. However, if you are interested to know how to turn this around, genuinely, then read on … You see some prospective landlords and vendors don’t understand how paying more can cost them less… let me explain..
For the estate agents amongst you, you might be charging 1.5% sale fee, but if you know you can get an extra £10,000 in sale price. Yes, the vendor pays you an extra half of one percent but gets far more in return. For the letting agents, yes, the landlord pays you 10% instead of 6% managed fee, but as your arrears are 0.0001% compared to matey boy whose rent roll is as leaky as a colander, your landlords are more likely to see their rent from you instead of the other letting agent (because 90% [the rent less your fee] is a lot more than 94% of nothing with the other letting agent.So, you are faced with a choice, fellow agents. You can either more effectively sell the value you create with your agency, or you can eliminate fee as an objection.
It’s easier to lower your fee than it is to sell better.
By dropping your sales fee to 1% or managed fee to 6%, now you have less profit to support your way of doing business and you can no longer spend time going the extra mile. You also have less money to develop the agency service the way you had been, and so you and your competitor agents are now equal.
But every action has an opposite reaction. Your competitor was selling lowest fee. That was their business strategy. So they lower their sales fee to 0.75% or managed fee to 3%, taking back the fee advantage on which they were competing. Your landlords and vendors still demand the same level of service and support, and you don’t understand how your competitor can deliver anything of value at that fee. But now, Mr and Mrs Letting/Estate Agent, you have given up competing on the greater value you create, so you match the 0.75% sale fee or 3% managed fee, thinking there is no way your competitor can lower their fee again. But you are wrong. They lower their fee to 0.5% sales fee or 2% managed.
This is how estate agents, valuers, listers and whole industries are commoditised. (Commoditised is when one offering is nearly indistinguishable from another – all uniform, all the same, all vanilla ice cream). If you Mr/s Agent have decided that having low fee’s is your strategy, then you need to compete by eliminating costs and providing the lowest fee in all cases. However, if you have decided to sell the additional value you create for landlords and vendors, the value that makes you different, then you need to focus on selling it a lot more successfully.
Like I said earlier .. you have a choice …lower your fee or sell better.
Lowering your fee can sometimes be a good way to increase your revenue.. but there can only be ONE cheapest agent in town. With cheap fees comes with reduced margins, and yes you will increase your sales stock .. but then you might not (Remember the story of the letting agent who spent £13,000 in marketing his cheap fee deal of £35pm managed fee with no catches, only to get four new landlords in four months) ARTICLE HERE ….. and there are you estate agents who have done cheap 0.5% or half price or sell your house for £500 fee deals, you all know, when you have done these things in the past, they don’t bring in the properties like they should. But you might be lucky, you may indeed end up increasing your sales and selling more while building a far less profitable agency .. more work for less money .. sounds good doesn’t it ?
But what if you could sell better? Charge a decent fee ..and still get the listing .. where fee is not the issue? Sound fanciful? No, it isn’t ..there is another way .. a system that ensures you get the fee you deserve … let me tell you what other agents have said about it ..
Paul , a letting agent from Essex, said this a few days ago “Since doing both, my sales valuations have increased on the same time as last year by 30%. Landlords added to our business has increased by 20%.” He only started the system in late Summer 2014. A few months ago, he said “I have had four new client/landlords contact me as they were impressed by the property blog and that they want us to source new investment properties for them”.
Daren, a letting agent from Derbyshire, sent me an email from one of his colleagues “Wow – Just took another call from a newsletter. Very impressed. Currently very disillusioned with the service level from *********. Here is the best bit – Has at least 24 properties “ ..he has been doing the system since March 2014.
Daniel from Cambridgeshire said this last month, “Oh, and by the way – listings (rental) have shot up, I have put 16 on in the last four weeks (new business, not re-lets),” (a cold start letting agent who only started the system in October in 2014)
All you have to do is become the local property guru … You become the No.1 Property Guru in your local town by writing articles about your property town, writing research documents on your local property market (research document is posh word for newsletter), get yourself to the Rotary Club with a talk about the local property market, do workshops on the local property market. Make sure the Editor of the local newspaper calls YOU when they need information on the local property market…
If you need help writing the articles, there are courses on writing them and there are people who can ghost write them for you … otherwise, just do it … Do it right and it works everytime .. I guarantee it.
Author of the Landlord Farming Blog – the blog that shows agents how to get landlords to swap agents and increase stock for resi sales agents www.landlordfarming.com
07950 147 572