Inspiration

Anticipating Transformational Change

Harnessing the revolutions in contemporary estate agency.

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It certainly looks like 2004 will have a different flavour to recent years. A market of higher interest rates and lower certainties, greater caution and potentially slower sales mean that we will need to take a hard look at how our business operates if we are to recognise the massive opportunity before us and harness the profit to be found in change. Transformational change.

The sellers’ market has of course provided great opportunity for agents to profit from the impressive imbalance of demand over supply. The self-fulfilling prophesy of price hikes, prompted as always by a mercenary media, has been fuelled by record low interest rates and business confidence. However, this could be described as a passing bandwagon rather than a sustainable business opportunity. The temptation has been simply for agents to spot the chance for a quick buck (no problem with that) and move on to the next one.

The trouble is that anyone could, and did, do this. It doesn’t take Stephen Hawking to work out that if you advertise a property to an enthusiastic market in an inflationary environment you are likely to achieve a quick sale. Yet few agents have used the market of recent years as a stepping-stone to greater things. For example, why was is it that, at a time when buyers were two a penny and a good supply of new instructions were desperately needed, agents continued to fill their advertising pages with adverts aiming to attract buyers?

Whatever the market, it is historically the size and quality of your instruction base that determines your market share, turnover, profitability and growth. Yet, whilst I believe this will remain a high priority area, smart agents will intuitively know that that a change in market focus warrants a significant shift of emphasis within the agency. This brings with it serious time-critical training implications.

I foresee the following happening: A media over-reaction to miniscule corrections (ok, rises) in interest rates will reduce impulse purchases, prompt lower offers, and generally spread caution amongst buyers. Sellers conversely will not immediately accept that a shrinking buyer base means a lower price and will hold out longer for “what is rightfully theirs”.

The effect of this is that stock that would otherwise have sold quickly will start to accumulate on agents’ books and be compounded by the new instructions that come on as other homeowners nervously attempt to “cash-in before the market drops”. Many of these sellers will have taken advantage of low interest rates and increased their mortgage recently, and will be reluctant to allow the value of their home to drop.

So agents will be frantically busy taking on and servicing increasing numbers of sellers who will have become more demanding as the chance of not selling looks to be a distinct possibility. Who gets the blame? The agent! (Oh by the way, just a quick reminder – we are not employed to market a property – only to sell it).

In the meantime, the occasional buyer will of course register with you. Problem is, if you continue to handle them as many in the industry have in recent years, they won’t be particularly bothered whether they buy from us or not. They know, or think they know, that the best way to find a property is to register with enough agents until one of them offers them the “right” house.

And this is where the opportunity arises. If your stock of available property increases, buyers should be able to find the right house through you without the need to register with anyone else. All you have to do is welcome the buyer in as in indispensable asset to your business, look after them in unexpectedly impressive ways, and stick with them until they buy. Not rocket science, but this is what overseas agents have been doing for years, and we wonder how they can charge 7-10%.

Of course, many of you will be wondering how you could afford the time to give amazingly impressive service to buyers with such an increase in vendor clients to keep happy. Well that’s a matter of how you manage you clients’ expectations. Tell them how you work. That you will not be wasting their time with ineffective buyers. That you will be assigning a client manager to their case, as your key negotiators are presently spending more time with the hottest buyers (it takes time to collect a buyer from work during their lunch hour, have a quick sandwich with them and show them three houses before returning them back to the office an hour later).

Additionally, Buyer Representation (see last month’s article) and MLS mean that the buyer simply has no need to register with anyone else. So if they are going to buy, it can almost certainly be through you, if you want them to.

As for the advertising implications, there will be more pressure on you from clients to advertise their properties until sold. Expensive! So you might consider advising your sellers not to risk overexposing their property by advertising it each week. But don’t try too hard to impress your prospective sellers with the properties you do advertise. Flowery language and unnecessary superlatives should be avoided. Let your ads attract buyers with bulleted facts. An ad is unlikely to sell the house on its own, but it should make the phone ring.

However, do set aside enough space on your page with something of real interest for the benefit of your seller prospects – the lifeblood of sustainability. An advisory article, market comment, or professional opinion can make your pages far more distinctive than the boring pictures of properties provided by your competitors (nb. I have written over 100 articles for this type of content if you’re interested).

In summary, agents who, through training and effective publicity, embrace possible changes in the market are likely to expand their market share, whilst their competitors will be left blaming the market for their sad demise. Happy New Year!

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© Richard Rawlings 2010
Richard Rawlings is the founding director of Estate Agency Insight, which specialises in helping estate agencies harness opportunity through innovative method, marketing, publicity, and training. He can be contacted at or on 0845 838 1354.

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