One London agent is currently earning over £150,000 per employee, says an accountancy firm which specialises in the sector.
Accounts and Legal regularly benchmarks central London agents against each other and says that its most recent survey – using information in the public domain – shows that Goldschmidt and Howland are the top performers.
The figure is per employee, including back-office staff as well as fee earners.
Foxtons lags Goldschmidt and Howland at £110,000 per employee.
Most London independents come in with earnings of around £70,000 per employee, but a number are not achieving that.
Despite London’s property boom, trading conditions are proving tough for many estate agents, says Accounts and Legal.
Duncan Green, managing director, said many small independents are “going backwards”.
He said: “Sales volumes are not improving very quickly and rents aren’t increasing, so agents can’t rely on the market to help them grow their business.
“The only way to grow is to take market share from others, which is difficult unless you have a unique proposition and a good marketing plan.
“As property prices have gone up, volumes have decreased, so a number of agents haven’t done particularly well out of the market over the past few years.”
Green says that about a quarter of his firm’s clients are London estate agents. As well as doing their accounts, his firm also helps them write their annual business plans, including an analysis of their competitors.
He also says that agents are generally not particularly good at cost control. They spend too much on the wrong sort of marketing, and could often make other cost savings, perhaps by renegotiating key supplier contacts.
He said: “Marketing is really important, but very few agents calculate their return on investment for each of their different types of advertising, so a lot of what they do is actually value destructive – i.e. they spend more on marketing than it generates in new business.”
Conversely, said Green, a well-designed customer relationship management campaign can be a cost-effective strategy for steady growth.
Comments (14)
What great PR, everyone knows that Goldschmidts are trying to sell out!!!
I bet they prefer this method of self publicity than dare I say paying a COMMISSION for someone to find them a buyer.
Hello Eric, I ought to be asking your advice on time management. I am at the desk by the time the early shipping forecast comes on and still don't get time watch the telly.
Interesting – but I raise you Beauchamp Estates…
Sorry Eric, you have lost me (probablty others too) who are they, what do they do and how does it relate to this story?
Those who watch Under Offer will know that Beauchamp Estates in Mayfair sell properties for the super rich – many in the tens of millions. Even at 1%, Gary would do more than this each month.
How come you have got time to watch the telly, post on here and run a business Eric?
Gary is obviously a very lucky chap, good luck to him… back in my world this story is one that less fortunate Agents need to read and understand, obviously it is intended that every one runs to the door of Accounts and Legal and pays good money to buy their sagely advice , that is the point of the story. However what they will do is ask to see an agent's stats, accounts and KPI's and then tell the agent what the agent knows already. They are not selling enough and what they are selling is barely enough to cover costs.
Here is a fact that will have many on here scratching their heads. The average agency reading this is only earning 60% of what they were selling 7 years ago not because prices have gone down we are back where we were in Spring 2007 but the removal of properties from the selling chain means that transaction levels have fallen. Additionally given that many agents laid off in the depth of recession are now opened as Agents themselves or (hush my mouth) passive intermediaries or that other breed that spent last autumn destroying EAT there is a pressure on commission levels.
Paul wanted to know where I got my stomach churning figures from, there is the answer. Reduced transactions and reduced levels of commission mean the average agency is about £100,000 down on where they were 7 years ago. That might well be a figure disguised in London and the south East but everyone ought to understand that a market exists well away from Gary’s world.
Ampersat – if you need tips on time management, let me know. Starting at 7am helps, that way you can watch the odd TV program and enjoy dinner with the kids. 😉
EW
Indeed, one deal that was featured on said programme was quoted as likely to earn Mr Hershey's company over half a million quid in commission.
Dare say you don't need to sell many a year at that rate. Here 'oop North, I've got competitors prepared to agree a fee amounting to UNDER ONE FIFTH OF ONE PERCENT of that figure – INCLUDING VAT!!
(and I'll throw something else into the pot for discussion – we probably work harder up here to earn our mouldy by comparison crusts…)
How the other half live, methinks…
Agreed PeeBee – I think Under Offer made that point rather well.
You wouldn't like it. Think of the overheads 😉
Offside Ref! there is no such thing as a Surrey1 If I remember well enough back in the days of the great pink portal debate if you had 1 from Surrey you got them all.
Morning Paul, You might remember on of the other threads I threw in some figures, they are directly related to Duncan Green's comments that, many small independents are “going backwards”; I have gone one stage further and can estimate (fairly accurately) by much they are going backwards.
When the Managing Director of a respected firm like Accounts and Legal makes such a statement it is obviously going to carry more weight than some anonymous poster on the internet but you have to look at the thing I have been saying to you and start to notice other similarities. If you re-read this article carefully and recall some of the things I have posted you will start to realise that as well as understanding the issues being raised in this story I might very well know what people like you ought to be doing about it.
This isn't me prostituting a solution as Peebee would have it in his micro discussion with Wilko at the bottom of one of the archive threads, I don't have a product and a prostitute that hides; Herself/Himself/not decided [to resurrect an old Peebee put down] away is missing the point. I am trying to get you lot to understand what you ought to be doing so you can offer a “unique proposition"
For the record it is great to look at these figure and think aren't they doing well, £150k/employee wow! That is actually completely random and meaningless without knowing how much those employees are earning in wages. If they are earning £37,500 that is an average performance, if they are on £50k it is a tad disappointing, it is only if the average wage bill is sub £30,000 can one start to be impressed. It is more likely that the Foxton’s £108k is actually the more impressive performance but without the detail this is a bit of puffery.
"…Herself/Himself/not decided [to resurrect an old Peebee put down]…"
The phrase is "he/she/not-prepared-to-divulge".
It GENUINELY isn't a put-down, ampersat – I simply don't want to offend a poster by placing them in the wrong pigeon-hole, gender wise.
Matey – you know that my put-downs are NOWHERE near as subtle as that… 😉
Otherwise, your post is bang on the money (no pun intended…).
Ampersat. I've seen more and more agents open up in my area this year and it's been tougher to win instructions but I'm up on revenue/profits by 50% so far in the last 6 months.
If I'm honest I could not care less about how much I'm making per employee, there's not enough hours in the day as stated ready by Mr Walker!