Inspiration

Don't Get Caught Short

Urgent preparation for a changing market.

Preparing for a tougher market is essential if you are to prosper this year

The press has always had a tremendous influence on sentiments in the property market. Newspaper editors know that the public will always buy a paper that carries a headline that predicts what will happen to our greatest asset, especially as the British way of life is now almost inextricably linked to house prices.

Eddie George, the Governor of The Bank of England has made it known that house price inflation must be controlled, and his successor is an economist who is regarded by some as being particularly anti-property, suggesting that interest rates could rise this year, despite the recent fall.

In theory, if a small rise in interest rates were to be announced, the rate of increase in house prices should ease, introducing a healthy element of stability. The problem is, the press will not take any prisoners, and will continue to proclaim a house price crash, which could then becomes a self-fulfilling prophecy, fuelled by them.

As estate agents, it is our job to interpret in detail what the effect of such a decline would be on our industry, and smart agents should be considering their current methodologies now if they are to continue to prosper. They should even be able to improve their market share during leaner times. That is when market share really counts!

The first thing to recognise is a potential downward spiral effect. As the press ramps up its assault, buyers become nervous. They will be understandably reluctant to buy quickly if they feel property could be cheaper in the future, so any offer they do make is likely to be further away from the asking price. This slowing of buyer activity, combined with lower sale prices, means fewer sales actually happen. The economics of supply and demand kick in and prices fall. The press highlight this and the cycle repeats itself.

Of course, wishful thinking means that vendors will be slow to accept that any downward adjustment to prices actually applies to their own property! So one of the first things we as agents must consider is how we can best persuade a vendor to accept our valuation at the time of instruction. This timing element is critical. There is no point taking on a house that does not sell and eventually comes down in price to a level at which it still fails to sell because the market has dropped further in the meantime.

It follows that if properties are taking longer to sell, then sellers are likely to become more anxious, frustrated and impatient. Do we currently have the skills to deal with this? In practical terms it means that vendors are going to be reluctant to instruct a sole agency, preferring to spread the risk of their property remaining unsold by giving the instruction to several agencies. Do we currently have the skills to persuade a vendor still to choose the sole agency route?

When vendors choose multiple agencies, they usually decline “For Sale” boards, as they would not want all their agencies’ boards cluttering up the outside of their house. Do we currently have the skills to persuade a vendor to allow you a sole “For Sale” board in a multiple agency situation?

As I travel the UK meeting estate agents, I observe that the relatively easy market of recent years has fostered a degree of complacency. Agency Principals often admit they have neglected their service levels; they have been lax in promoting themselves and training their staff.

Some agencies do not even register buyers because all they have to do is arrange viewings directly from ad enquiries. Estate agents have effectively become commodity brokers, and then we wonder why our commission levels have fallen to derisory levels.

New employees have been recruited to cope with the booming trade, but there appears to have been little reason to train them in some of the basic, let alone advanced estate agency skills. This potentially leaves agencies highly exposed, and those with well-prepared staff are likely to steal market share from under their competitors’ noses.

During these good times, despite the fact that money has been made, very little of this appears to have been re-invested into the proactive development of an agent’s brand locally. We claim we want more instructions, yet we continue to advertise for buyers. Yet when we do get buyers, we treat them appallingly.

In the future, the way we handle buyers will be directly proportional to our profitability. I’m not just talking about courtesy levels, but about the actual skills required in order to get a buyer to buy from you, quickly, in a tough market, and preferably without them talking to your competitors.

Such “captured” buyers will be pivotal in developing your reputation among prospective vendors, as, in a tighter market, bragging about buyer Internet hits will be irrelevant. Vendors will list their properties with the agent that can convert buyers into sales.

In the recent past, clients have seen little value in the service estate agents have offered. The real value demonstrated by talented estate agents will become increasingly apparent, and vendors will crave a level of service that inspires them to put their trust in you to deliver the results they need.

Hence the need to train your staff as your finest ambassadors, able to overcome any hurdle the client may throw at them, in keeping with your marketing and publicity efforts,

The good news; in fact the great news, is that as this value becomes apparent - commission levels will rise. The cheapie agents will disappear, not knowing what hit them. Ha! Sellers, worried about whether or not they will actually be able to sell, will focus more on who has the ability to deliver, than on the fees charged. Most will, I guarantee, be happy to pay a higher commission percentage in return for an agent who has the skills to do the job that others can’t in a tougher market.

And that is what will sort out the panel beaters from the embroiderers in 2003.

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© Richard Rawlings 2012
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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