Agents’ Mutual has told Eye that it will not allow cut-price online agents or similar business models when it launches next January.
Chief executive Ian Springett additionally confirmed that developers, selling their properties directly and not through agents, will also be banned.
He said the issues had been raised by several agents, and he released an email conversation of earlier this week.
The agent concerned wrote as follows to Springett [note: we have slightly abridged the original]:
“Would you please let me know what the Agents’ Mutual view is of so-called online agents and developers being able to gain access to our website?
“In respect of the first group, all traditional agents are coming under increasing pressure from a variety of faceless people who are starting online agencies to sell houses for ‘peanuts’ and find tenants for properties to let for even less ‘peanuts’.
“On page 3 of today’s Daily Mail we read that the Poundland tycoon will sell any house for £390 AND find a tenant for a property, check their credentials and produce a tenancy agreement for £45! The sub-editorial on that page is headed: ‘Cut out Estate Agent to save thousands’.
“The absolutely galling thing is that the tycoon’s EstatesDirect company is permitted to advertise on Zoopla and Rightmove, as can so many similar companies.
“About 3/4 years ago I and dozens of other local agents railed against Rightmove for doing this, but to no avail. We also railed against Rightmove for allowing developers to advertise on their sites, again to no avail.
“Agents’ Mutual is now embarking on appointing people to build the network for next January, and how we deal with these issues could have a massive impact on the decision of the traditional estate agents to join or not.
“So that I can advise others who are not yet members, please would you advise me as to Agents’ Mutual philosophy / policy on these two issues.”
Springett’s reply reads: “Our proposition is based on a belief in the future of full service estate and lettings agency.
“We believe it is what consumers need, be they owners or applicants. We further believe that the new internet-only models only exist because RM and Zoopla, interested only in their own short-term profitability, allow them to list on their portals and to piggyback their core customer base.
“Agents’ Mutual will (a) provide a sustainably lower cost alternative to RM and Z; and (b) not allow models geared to undermining full service agency to access their portal.
“It will exclude new homes developers as their inclusion by RM and Z is just another form of ‘vendor direct’ advertising which disadvantages agents.
“It is hard to think of a more competitive, locally-based industry than estate and lettings agency. A move to large portals handling the majority of sales and lettings direct by owners would ultimately lead to the same issues in other centralised, monopolistic industries like energy utilities and banking.
“Properties are not commodities to be traded and nor are the people buying, selling, renting or letting them. These are homes, and those moving deserve personal service to support them.
“Agents’ Mutual is an organisation of, by and for agents designed to defend their industry and ALL independents should be joining up to make sure it does so in the most powerful manner possible.”
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Hound,
I agree that that the quality of the service will depend on the individual, but however you cut it, if that individual has to deal with a higher workload then the quality of work will deteriorate.
If you see up the page, I meant that I will save £10k per year by moving from my high street location to a comparable sized serviced office down the road, this includes rent and service charge.
On another note, will all these online agents agree to pay a fee for each area covered or just for the one serviced office, we don’t want to breach competition rules?!
Paul, you said that there is no proof that online agencies offer a better service to high street agents, equally, there is no proof that they offer any worse service, (with the possible exception of not being able to accompany viewings, although as I pointed out earlier in this discussion, for various reasons, probably the majority of high street agents countrywide don’t accompany all viewings)
The quality of service depends, as I’m sure you will agree, both in this and any service industry on the quality of the individual providing that service. The big difference is that online does provide an option where they can provide a comparable service at a lower cost, because, how ever you dress it up, the high street is expensive! Obviously, I don’t know where you are based, but if your office only costs you £10k PA you are very lucky and have an incredibly cheap office. Rent alone in my part of the world for a small high street unit is £15-20k and that’s a rural area. You’ve then got business rates, etc etc, I’m guessing from your average fee quoted above that you’re not in the back of beyond, so unless your office only has room for one desk, you might need to check your figure of £10k
On the point of Online agencies ‘piggy backing’ on the high street, and only existing because the high street charges more, there is of course a case to argue that the traditional agents don’t provide value for money for their clients that do sell, as they also pick up the bill for all the abortive work we do. Right now, most properties are flying out the door, and it’s easy to forget the bigger picture, that over a period of years, an agent only sells 50% ish of what they list.
Interestingly, we all keep referring to high street and no sale no fee as the ‘traditional’ model. Look back 40 years, and you will find that agents agreed a marketing fee up front, and a commission on completion, I’m just old enough to remember when I started in the industry 30 years ago that there were still one or two agents in this area operating that way, and we all thought they were so old fashioned! I’m guessing that the other agents in the area when someone first offered no sale no fee all thought that agent was mad, but it does illustrate the point that things change, as of course, that spread like wildfire and became the norm. Perhaps the online agents charging up front are actually more ‘traditional’ in some respects!
This, I believe, has been an excellent, informative, exploratory and polite debate of great interest to many involved in EA. My main concern, having been an estate agency owner from 2004 to 2012 and re-entering the market on 1 Jan 2015, is this:
1. I was an advocate of AM when it first came out but it has become clear that are many restrictive practices associated with it. The insistence on advertising on just one major portal offers competitor agencies a competitive advantage during market appraisals.
2. Banning those who offer ‘full service estate agency’ but using a model that is far more cost efficient than the ‘traditional’ agency with a High St office gives the impression of protecting the ‘old guard’ way of doing things and barring those who are progressive.
3. I was an associate of the NAEA from 2004 – 2006 and a full member from 2007 – 2012. My new business will require ALL of those dealing with sales within my new company to be qualified via the Technical Award in Residential Sales and to be an associate (if they have less than 2 years experience) or full Memebr of the NAEA. Yet, because I will not have a High Street office, this model will barr me and all of my MNAEA colleagues from being part of a mutual organisation set up to look out for the small independent agent. Is the NAEA ok with this?
4. Mr Springett is reported in the headline of this original article as stating, “We will ban cut-price online agent”. Yet, on this website’s Home Page, the AM advert states in the second bullet point: “A powerful, LOW_COST alternative” and in the last para it states: “Take control of your costs”. Those who have taken control of their costs and offer the Vendors a low-cost alternative, will be barred from being a member of AM.
Sorry, but it is all over the place. And when the AM anti-competitive issue is legally challenged, who pays the legal costs for AM? One member, one vote and some of the £3000 members pay will go towards supporting this model.
All that needs to change is allow members to advertise where they wish and allow those agencies, under whichever model the operate, who operate as estate agents and provide estate agency services, to be members.
Then, the market will decide the future, will it not?
Regards
John
Jam01
Me moving to a serviced office will mean that I need to deal with more properties and employ more staff, but for the same/less profit.
We are going round in circles.
They should be banned because they only exist because traditional agencies are charging more, take away the higher price their USP has gone.
Paul
You are a gent and I hope one day to meet you. We must politely agree to disagree.
JM
Paul
The way I feel this has to be looked at is putting the customer first and seeing it from their eyes. It is not simply a case of offering lower fees – it is about offering better value for money and when customers seek a ‘cheaper’ alternative, the way to do it without just reducing fees and having to take on more stock, which means more staff, which means more cost, which means less or no profit, is to reduce costs but NOT service levels. That is what the good online agents do. They are not simply advertising portals – they still have ‘face to face’ engagement. But because they are not paying vast sums out on expensive offices with all the trimmings, services can be offered at a much reduced cost.
It is the cost of running an expensive High Street office that is keeping the fees high, under the mis-apprehension that this is needed to offer the client a great service. it isn’t. If I correctly qualify my applicants, have a ‘top 10 hot buyers board’, call my applicant database before placing a property in a portal, arrange viewings, accompany viewings, the vendor sees the applicants are ready, willing and able to purchase, they applicants are a good match for the property, all offers are qualified and we progress the sale to completion, having completed a comprehensive ‘chain check’ and routinely progress the sale via conveyancers and the IFA, THIS is what ‘traditional’ should mean – not the fact it is operating out of a High Street shop.
Online agents can, and some do, do this. Customer service and efficient sales is what it is all about and this can now be done at much lower cost levels than the High St option. So, fees come down, businesses are in profit far earlier than they otherwise would be, they are profitable when sales volumes are lower, but they will not be members of AM as they don’t fit the criteria.
Services provided should be the criteria – not having a shop.
John
I am yet to see any proof that the Cheaper online model offers any more of a better service to the consumer.
You also keep referring to cutting costs by losing a high street location but completely ignore that the loss in fees are far higher than any savings made. Hence a higher workload for staff.
Take conveyancing for example, you can pay in some cases a fixed fee of £400+ disbursements to a company but you’ll never speak to the conveyancer as they’ve never got a second to breathe. Or you can pay £650+ and get a much better and more personal service from a conveyancer taking more time on your transaction. When asked I always recommend the £650+ because of the better service received.
Price it low stack em high usually always means a worse service provided. It’s the same in any industry.
My point consistently has been Paul….there are no loss in fees, moving from a High St agency to one operating out of a serviced office. It is only those who think they need a High St office to charge higher fees that they will have to take a hit in moving. They don’t – their costs come down but they do not have to lower fees, if they do not want to.
A High St office does not equal high fees – many of those who struggle have to offer 1% fees – because their services are poor!
My average sales fees are currently £6500+vat
Online are charging £395-£595+vat
I save £10k per year by moving to a serviced office.
You do the math.
There is no saving!
I am not advocating you charging £395 Paul. But if an agent is able to secure a profit at £995 plus VAT, becasue he/she is not operating in a High St office with all of the costs (and additional staff required), why should they be banned from being part of AM?
And if you move out of your office, with no rent, business rates, reduced number of staff, utilities etc – if you are only paying £10K for that, including the extra staff salaries you have by having a High St office, your staff must be working for £3.50 per week.
Not sure it’s all about having your head buried in the sand Hound.
I was one of the first agents to do virtual tours of properties in my area, first to try out 3d floor plans as well as other ‘online’ ideas.
I’ve always tried to stay one step ahead of the comp.
But the online models are not about that…it’s about under cutting traditional agents by selling in bulk at low prices. But that is not a model that can be carried out by the whole industry, as it can only work for as long as they can say that they are cheaper than typical agents but once those high street agents have gone they just become a website along with the thousand others offering exactly the same service all claiming to have “local” agents.
In other words these online agents cannot exist without traditional high street agencies to piggy back on.
An online agencies USP is cheaper fees, that, in any industry is never a long term solution and so whilst I agree that the industry is changing and should adapt that does not necessarily mean that selling your product for less or having a race to the bottom is the solution?
I think, probably inadvertently, Trevor Mealham has hit the nail on the head, what it’s all really about is the fear that these nasty upstarts who operate online might just get instructions that otherwise would have gone to high street agents. That’s why online agents will be banned from AM!
It continually amazes me that there is a huge number of people in this industry who have their heads buried firmly in the sand, and refuse to acknowledge that agency could ever operate in any way other than the traditional high street model.
Whether we like it or not, more and more business is moving away from the high street, in successive years, according to the British Retail Consortium high street footfall figures have dropped consistently, as online sales have increased. Remember the time when there were as many travel agents as estate agents on your high street? Anyone see the ‘Next’ figures recently?
I understand all the old arguments about personal service etc, but it is quite possible to provide a personal service without face to face contact. When I look at the sales we have ongoing, with the majority, I’ve met the vendors face to face on two occasions, valuation and take on, and probably will not see them again until they drop the keys in on completion. In most of them, I’ve not seen the purchaser at all, and probably will not until they collect keys, yet I can assure you, I have an excellent rapport with all of them, and am providing them a personal service.
We, as an industry brag about moving with the times and using all the latest technology and then steadfastly refuse to acknowledge that there is any possibility of change!
Moving with the times Hound?
You may want to get out and accompany some viewings, more chance of actually meeting people that way.
Ah, the one thing those pesky online agents can’t do. The norm in my part of the word (for the last 30 years) is that we accompany viewings if required, or necessary with an empty property.
There is of course a school of thought that says that the vendor knows the property far better than we do, and is therefore better placed to conduct the viewings, and another school of thought that accompanied viewings are actually a waste of time and resources, as at the end of the day, the buyer will either like the property or not, regardless of who shows them round. But that of course is a different argument altogether 😉
Hound
Why I liked taking the accompanied viewings though was as the next stage of the applicant ‘qualification’ period. Meeting the applicant at the property, taking them around, gave a great insight to what they REALLY liked and disliked. I was then able to offer these ‘hot buyers’ a viewing on other properties that really fitted the bill, and the secondary viewings often resulted in sales, as they more closely matched the applicant’s requirements.
Yes we did qualify them over the phone – much better in person though in addition to this. Vendors taking their own viewings means agents miss such valuable face time.
John
Understand where you are coming from John, the agents own location is another factor to take into account, I’m in a rural area, covering a 15-20 mile radius of the town where the office is located. If we were to accompany all viewings I would spend all my time driving from one end of our patch to another, which I would see as a waste of my time.
Budget agents shouldnt be allowed in. Some show 100′s of listings that traditional (be they office based or online) agents miss out on for the enticer of sell for £295
I spoke to one agent earlier today who said that a landlord was now advertising on RM and Z so would he stop advertising on the big 2. RM and Z are killing the good agents in favour of budgets.
Alex Chesterman its reported also put a contribution towards £700k funds into a landlords website to market student lets. The site shows let from £0 zero. Its wrong
If a budget agent shows 100-200 listings on RM or Z then enquiries in will go to the budget agency. They’ll then offer £295 fees to more sellers that traditional agents may not get to take on.
If a fixed fee of £295 doesnt sell a home then its much costlier than a no sale no fee traditional approach.
I also say there is more to selling homes than sticking them on RM or Z. A agent providing more service and even B2B network broking a listing out can often with sub agents achieve more buyers through the door and gain a client a getter STC price.
Hi Trevor
Good to ‘connect’ again – hope INEA is going well!
Should entry criteria be based upon terms such as ‘budget’, ‘on-line’, ‘traditional’ and if so, how can they be defined. Entry should be based upon agreed levels of standard service – not their cost of provision.
At the end of the day, it is the interests of the Vendors that should come first.
(Back in Ashford on 20 Apr for 30 days if you fancy a coffee – I will buy! 🙂 )
John
Hi John, yes drop me an email and we’ll have a coffee.
As for budget, agents should first sell on service and higher fees simply become a by product.
My view is that an agent still needs at least 1% to do a proper job and commission above helps your P on the P&L sheet.
In my view RM and Z should look after proper agents and ban agents offering selling fees anything below £1,000
Fixed fee agents of £295 don’t save people anything if they charge regardless of sale. One of the biggest agent tools has been B2B subbing andbudget fees doesnt allow enough in the pot to sub and provide clients with greater exposure
So if RM and Z allow cut cost agency, shouldnt they reflect this in their own membership subscriptions being dropped. Why should they expect £1,000’s from agents when they aloow agents on who’ll sweep the decks for £295.
Worse is the fact that they allow low or no cost letting agents in in England and Wales, where budget models take a low or no fee in return for taking application fees.
Look fwd to the coffee!
What I don’t understand thought Trevor is your (rightly in my view) concentration on services offers, yet the qualification for ‘entry’ is a fee above £1000?
If an agent offers and provides the minimum level of services required to be a ‘proper’ agent, if their business model enables them to operate profitably at a level lower than £1000 entry point you propose, why should they be penalised?
Will PM you re: coffee!
John
Ladies and gents,
I may be missing something here, but when the AM TV adverts begin, in order to attract Vendors, how will said Vendors be attracted to an Agent’s Mutual Agency when:
1. The property can only be advertised on one of the main national portals.
2. Agents that are ‘online’, and who offer the Vendor a competitive fee service are banned?
The major flaw that is now being exposed I am afraid is that AM has been set up with the interests of the Agents at the core, rather than the interests of the Vendors (those that pay the fees) at the core.
Why would a Vendor sell with an AM agent in this current format when their property is going to have limited exposure and the model ensures fees are kept high?
JM
I’m only a letting agent, but I always thought that a vendor/landlord selects his agent based on things like reputation, not “where he advertises”.
MF
If you were selling your property, would you wish to sell with an agent with a great reputation that has maximum market exposure when advertising the property, the aim being to secure the best sale price possible for the Vendor, or one with a great reputation and has less market exposure coverage due to ‘mutual’ status and therefore a reduced number of potential qualified ready, willing and able applicants? Works the same on lettings too, in order to maximise coverage to secure the best possible tenant for the landlord.
John
You do seem to be trying to scare people Jam01! Do we have our first Zoopla troll 😉
To be honest no. I am no troll I assure you, hence why I place my name on here, John A Murray.
This is an excellent place to have a great, honest, open and polite debate where models can be thrashed out and it is the place to do so.
It will help many and save others lots of money in the future as well.
John
Hi John,
I can honestly say that I wouldn’t look at where the agent advertises. I’m only interested in results, not how they are achieved. I’m interested in the “overall service and the results”.
I have only been advertising with one of the big two portals for around the last five years, and that was after monitoring the performance of all advertising sources for over two years.
The way I see it, if the majority of agents are on AM and one other, then AM is going to be the best place for house hunters to go to.
I agree for the sake of the extra 20% enquiries we can achieve being on the other of the current big two, we would be “maximising coverage”, but, being a small agency, I just can’t justify the extra circa £5k per year. It is a ridiculous situation we agents have got ourselves in to that we are dependant on the duopoly to be able to have an agency business at all.
Hi MF
I am totally with you regarding the level of costs of the major portals – it is extortionate. But penalising agents by not allowing them to be members of AM, who ‘offer the full range of estate agency services’, just because their business model maximises the emerging technologies is not right.
In this way, it has moved from the original position of offering small agents like you (and I once more in the near future) an alternative to the big three portals to one where it is also protectionism for a certain brand of agent – the ‘traditional’ agent meaning they have a High Street presence.
‘Traditional’ should refer to values and service (which online agents can and do provide), rather than just the ‘traditional’ outmoded and very expensive model of the High St agent.
Fees are high in order to pay the high rent, staff rates, business rates, insurance rates, utility rates and cost of fall throughs.
Take a number of these out and the level of service can be the same, but offered at a lower cost, but then NOT at the expense of profit.
John
I can’t find the ‘Reply’ link below your last post, John – so hope this comes out in the right place.
I agree with what you say. And I agree with what Ian Springett says about “full service” agency. I don’t see that it matters where you are based so long as you are providing “full agency” service.
An agent does so much more than just find a buyer or tenant, and there will always be those who chose to try to do it themselves. Likewise there are many who want the service an agent provides. Perhaps one day AM can cater for all of the different market types. Back in the days when the only option was to advertise in the papers, so far as I know no paper told anyone they couldn’t advertise… they just said “give me your money”.
A really positive and bold statement from AM. Well said Mr S
I have owned and run a small family lettings business for the last 26 years. All I want is reasonable cost advertising. That’s all. I don’t even care who else can advertise on it – my clients want the entire service we offer, not just access to a property portal. Rightmove and Zoopla are great, successful portals. But they are way too expensive. If they weren’t, Agents’ Mutual would not exist.
It is not often that I agree with Russell Quirk but on this occasion I feel he has a good point.
This is the first time that I have ever felt uncomfortable about the AM proposition (I have backed it strongly) as it potentially, by banning the likes of e moov and other bona – fide “online agents” will dramatically cut down the content for users.
It has always been accepted that content and marketing makes a property portal suceed or fail and as there is clearly a big move in the industry to have larger areas and less high street presence. I imagine AM listing property without add ons so all property ads should look “the same” It therefore shouldn’t matter at all if the likes of e moov list alongside other traditional agents.
As long as an “online agent” is physically attending the property and signing up the customer I don’t see any issue with it.
I would urge Ian Springett to re assess this and accept “online” propositions that are following a minimum standard service, otherwise it is not only playing into their hands, but also leaving significant ammounts of stock on the 2 major portals, playing into their hands as well! Ian Springett is not King Canute (unfortunately) and can’t stop the wave of “online agencies”….It would, in my opinion, be the start of a recipe for eventual failure.
Also, just another quick point…If it is a Mutual organisation why is Ian Springett “vowing” to do anything…..surely he has to let the membership decide….and I don’t remember being even asked about this?
Wilko
You have hit the nail on the head. I too registered an interest with AM when it came out. I honestly thought it was going to open up the market and make it such that a smaller agency can have a larger voice – greater influence – but the restrictions on advertising properties plays into the hands of those who do not join. It is giving them competitive advantage.
And where ‘online’ models are not ‘faceless’, but have a far more profitable business model with one main office and 100 field agents, compared to a business with 10 x High St offices, is taking the original concept down a path that the NAEA should begin to consider its association with AM.
An ‘online’ model with a single Head Office and 100 x MNAEA-qualified ‘field Agent’ personnel will be barred from being a member of AM. Really? Just because they operate a 2014 model rather than 1980s?
JM
Just imagine if everyone ran their business online, in 5 years we will hear Emoov and House network complaining about all these ‘new’ agencies listing their properties at half the price that they do.
In truth Emoov and House network want to keep the status quo, if everyone ran their business online then they would not have a business as they only really thrive on the cheap fees. If that ends and we all do it then they are *********!
Paul,
Why do you need to have twice the number of properties? Your costs will go down, you will need less staff (as you will not have to staff an office when people pop in when it rains waiting for a bus) and the overall cost savings, compared to a lesser reduction in fees charged, making you more competitive and hence, able to win more instructions, means you will have a more profitable business and also a leaner one for when the market turns again……and at some point it will turn again.
JM
And how will I have “high service levels” than I have now if I have to ask my staff to deal with twice the amount of properties then now in the same working day ?
I would assume that AM have a set criteria for allowing what that deem ‘full service estate agents’ on their website. It’s not something that I (House Network) have considered listing on yet because of the strength of Zoopla & Rightmove. But it would be interesting to find out. After all what happens if a high street agent decides to go off the high street and into a central location? would that mean their removal from the portal? would they be happy about that? we watch with interest…
Graham
Springett’s reply reads: “Our proposition is based on a belief in the future of full service estate and lettings agency”. (Not being rude referring to Mr Springett in this way – just quoting the piece above!).
Well, ‘full service’ should mean just that and, in that case, it is irrelevant if an estate agency who does provide ‘full service’ does so with or without a High Street office. It is the services that are provided that should be the key qualifier, not the protectionism of those who have a High St office.
Just because an agency is online does not make it ‘faceless’. I have looked closely at House Network. The vendor receives a visit from the House Network agent, who takes the details, photos, virtual tours, floor plans, etc – it is an online agency but is not ‘faceless’.
Same with emoov – online but not faceless. An agent visits the property as well. If the aim of AM is now (also – mission creep) to protect the service levels in estate agency and to prevent companies who just build a £50 website to advertise properties only, just as an advertising portal, I understand. But in banning agencies with one office covering the whole country, and which has ‘field agents’ or ‘franchisees’ themselves without an office, but who provide excellent levels of professional estate agency services, then AM will not succeed and will find to their, and their members, cost, as King Canute did, that this tide too is not for turning.
Regards
John
Agreed John. There may be many faceless operations out there acting as online agents who aren’t offering a full service as such but as you rightly point out there are some very good companies in this space that ARE operating in a way that would suggest they are very smart and cost effective at the same time. These are the companies that will grow rapidly with an ever-changing market and should rightly so be classed as full service agents.
Paul
If the service levels are high, you will not lose out to the competition. The agents will state, “That Paul, don’t go with him, he works out of the back of a garden shed”. You as a highly professional agent with high service levels will easily overcome that objection during valuation with the potential vendors.
It is now a myth that agents need a high st office and you are falling into the trap those with a vested interest in maintaining that model are propagating. It is not about the price you charge a vendor. It is about offering great value for money at a level that can increase your own company profit level.
The penny dropped for me Paul when I heard Mike Harris speak in London at the Mermaid Theatre. He was in the banking industry and went to his company bosses with a new model for the bank. They thought he was mad and told him so. His aim, he stated, was to “take the High Street out of banking”. They laughed at Him.
Mike Harris went on to build 3 x billion £ businesses, including EGG and FIRST DIRECT.
When you lose the high street office, you will concentrate solely on customer service, exceeding the customer’s expectations and YOU WILL WIN MORE BUSINESS as the vendors will recommend you to their family and friends.
The position of your High Street Office will not do this for you. So, yes, you can bring your costs down, you will win MORE business because you have done so but you profit margin will go UP due to the reduced costs Paul.
Think about it with an open mind…not a pre-conceived idea of ‘this is how it has always been’. Nothing would progress if that mindset prevailed. The failure in those who advocate a High St Office is that they perceive a lack of office with reduced levels of service – it isn’t – just a reduced level of cost that makes the business more profitable.
The vendors and applicants – 90% of them, never see the office – it is a white elephant that has grown to monster proportions in current business owners minds. They simply are not required.
JM
I will save £10k per year by moving to a serviced which equates to a saving of hardly anything to my clients, can you please explain to me how passing on a saving of a few quid will win me more business ?
And how will I have “high service levels” than I have now if I have to ask my staff to deal with twice the amount of properties then now in the same working day ?
Jam01 said…”If you sold your shop and went into a serviced office, you are right, it will not gain you more business.”…Indeed it will lose me business to my local competition and so the only way I will be able to get business is by stretching my service to cover a wider area and dropping my fees so that those vendors/landlords choose me over local companies.
“You will have a far more profitable business and.”…..Any savings made by not paying for a high street office will be lost through local vendors/landlords wanting to choose an agent with a shop presence.
“You will still retain the same high levels of service before”….I will have to cover more properties for less money and yet to keep my business profitable will need to ask my staff to deal with less properties but for the same money as my fees have been lowered to take into account the loss in fee income per property/client.
“Lack of High Street Office does not = lack of professional estate agency qualifications.”….Correct but a lack of high street location equals less local properties and a need to reduce fees to keep revenues at the same levels. As stated = less fees but same amount of total revenue = a less quality of service as my property managers will need to deal with more stock and will quite simply not be able to offer the same level of service.
“Hence, if the new model business requirement is to ensure all staff are qualified to national standard levels,”….It’s not but it would help.
“but the ‘white elephant’ that is the high st office and associated costs is removed,”…The associated costs for me would be a saving of £10k per annum, which is peanuts, but as stated I and every other agent will have to change their business model to accommodate more properties for less income.
“the business will thrive in a recession and not just the good times, due to significantly reduced levels of costs.”…My business has thrived in a recession because of the level of service that I can offer my clients and not because of lowering my rent, if I have to offer lower fees to win business then the service I provide will be compromised.
Paul,
People buy people – not office location.
JM
“People buy people”
100% agree but I will need more people to buy my service to bring in the same amount of revenue .
Paul,
You won’t. Lack of High Street Office does not = lack of instructions. In any town or city, there will be ‘the top agent’ who will be doing really well. There will be a number of others who are doing ok, and some who are really struggling. Some will have high stock levels and others low.
I guarantee, they will all have High Street Offices but if a High St office is required to win instructions, why have some with a High St office got low stock? What is separating the top from the bottom? The office? No, it is the level of service offered and the number of sales achieved.
Costs can be reduced without taking a hit on stock levels. And when that happens, profits go up. More profit, less stress, less costs, less transactions required in a falling market.
An office location is not required to win stock.
JM
In order to “buy people” – you have to first meet them.
Much easier on the local High Street than in a serviced office or converted garage in someone’s garden 180 miles away from your home, I would suggest…
Peebee
There are serviced offices in every town – this gives a local presence. Agents meet vendors and applicants at properties. Those that wish to meet the agent can do so in the break out area of a serviced office, or in the private boardroom hired at £40 per hour.
High Street offices do not win instructions. Local paper advertisement has shrunk because agents have realised the extortionate cost compared to the revenue generated is not worth it.
I generated the instruction for a £1.82M 3 bedroom ground floor apartment in Mayfair whilst based at 64 Knightsbridge. (www.64knightsbridge.co.uk) opposite Harvey Nichols and next to the Mandarin Oriental Hotel.
I secured a fee of 1.75% plus VAT and a fee of £42,000. The vendor was an Indian petroleom company CEO. The buyers were Indian and flew in from India on two occasions to do the viewings.
The office cost £300 plus VAT pcm and the allocated telephone number resulted in my receptionist (the serviced office front desk) taking the calls and passing them to me.
I did the same in Maidstone and Ashford, Kent. The vendors all came from excellent on-line marketing and then when I answered the phone, it was all down to me. Same as in any High St office.
The future is not High St agency I am afraid.
John
I could quite easily sell my shop tomorrow and hire a serviced office down the road, do I think it will bring me more revenue, NO.
On the other hand I could easily just my drop fees and cover a wider area. But I will then need to ask my staff to deal with more properties but for the same/less money, meaning the quality of service provided will be of a lesser quality. In addition, I won’t be able to pay for them to be properly trained plus they will no doubt burn out in no time.
We will become a passing industry that people stroll in and out of at the drop of a hat with no incentive or reason to get qualified, it will be the ‘new’ bar job for students.
Selling your product cheaper than the next man is the oldest trick in the book, but if it’s a race to the bottom is what you want then why not stick with rightmove and Zoopla who (clearly anti agency) are happy to oblige.
Paul
If you sold your shop and went into a serviced office, you are right, it will not gain you more business. You will have a far more profitable business and still retain the same high levels of service before. Lack of High Street Office does not = lack of professional estate agency qualifications. Hence, if the new model business requirement is to ensure all staff are qualified to national standard levels, but the ‘white elephant’ that is the high st office and associated costs is removed, the business will thrive in a recession and not just the good times, due to significantly reduced levels of costs.
Regards
John
Be very careful Agents’ Mutual. It could not be more clear this is a protectionist approach. If estate agents feel they will deliver a superior service compared to the online agent, or developer selling direct, then why do they feel they need to exclude such parties from the portal?
I run a full service estate agency business that visits each home, arranges viewings, negotiates each offer and sees the resulting transaction through to conclusion.
Like all other agents, our buyers are found via internet portals and our own website.
My business, eMoov.co.uk, has one office location covering the UK entirely.
We are able to provide fees that are a fraction of other agents.
Because we are termed an ‘online’ agent we will not be welcome at Agents Mutual. Yet the reason is plainly not because of what we do or due to what term is used to describe us, rather due to our consumer friendly fees.
To ban us from Agents Mutual is blatant protectionism and, of course, a breach of the Competition Act.
But notwithstanding the legality, which will inevitably be tested, it’s also appallingly hypocritical for AM to sell themselves on being cheaper than Rightmove and Zoopla but to exclude an agent because they themselves are also following the same value principle.
Russell,
I agree. I had my ‘traditional’ estate agency and separate lettings branch between 2004 and 2012, grew too quickly and when the market turned, I got caught out. I had 8 members of staff and it was the ‘traditional’, expensive model of the High Street offices that caused the majority of the problem for me. I had studied with the NAEA (via MOL) and was an Associate for 2 years and then full NAEA member. I geared my business on customer service and, by joining the NAEA, left myself open to the sharp practices of the likes of Countrywide offices who regularly knocked on my vendors doors to try and take the business from us – as NAEA agents, we could not do likewise. I add this to show I am/was not a ‘fly-by-night’ agent.
Now, with the Agents Mutual model, it is not being set up in the interests of the customers as Clients – it is purely being set up in the interest of the agents as Clients. It is attempting to keep portal costs down in comparison with RM and Zoopla but then, in barring agents from advertising on both of these portals, the vendors are being disadvantaged as their property will not be advertised as comprehensively as it could be.
I plan on setting up a ‘halfway house’ between the ‘traditional model’ and the 100% online model – having a central office working out of a business centre an then having ‘field agents’ or ‘franchisees’ in the various towns and cities as a local presence, also with a business centre address and use of facilities there if needed. They will use virtual PA services to handle all incoming calls (many traditional agents do the same, and not just for over-spill calls’. Calls will therefore be answered 24/7.
All Field Agents/Franchisees will be required to take the NAEA Technical Award in Residential Estate Agency and become either an Associate or a Member of the NAEA. Every member of the company with therefore be professionally qualified to national standards. The model will be flexible in various economic times, will be profitable at much lower turnover levels, will offer lower cost, high level local professional estate agency services but others may see this ‘model’ as ‘fly-by-night’ as there is not a High Street office.
It isn’t, but we will be able to charge lower fees because we are not requiring High Street offices, won’t need to pay high office rent, won’t need to pay high business rates & won’t need to employ staff to sit in an empty office that neither vendors nor applicants visit.
The more agents that do join Agents Mutual means that others, like my future business, can offer Vendors a more comprehensive advertisement package in comparison as we will not be restricted to just one of the major portals. Agents Mutual is giving me an advantageous USP in this regard.
Business models, such as Agents Mutual, that are set up without the interests and levels of service of the paying customer as the core principle are planning to fail. In a service industry, customers have to come first. We have to offer a high level of quality, quantity and spirit of service for the client and go the extra mile. Offering less by way of national portal exposure through the AM restrictions, is therefore failing on all of these points.
The market will decide success or failure of business models, but agents that offer high levels of professional, qualified service, at lower cost, will succeed.
I joined Agents Mutual because I believe that traditional agency should remain or in the very least that I should give my money to a portal that supports my business model and not that of fly by night companies intent on making a quick buck at our expense.
Let those companies who gain business purely by slagging off traditional agencies whilst cutting corners continue to use rightmove and Zoopla as at least we all now have a different (and in time) less expensive option.
Paul H, your comment “at least we all now have a different (and in time) less expensive option” is exactly what you’re going to be hearing from the public, within the next 12 months, about companies like Purplebricks an Emoov! As a neutral party with a keen interest in property (as a landlord owning several properties), it is clear to me that the high street are clutching at straws with there argument against these revolutionary companies! It would be a shame to see the good estate agents out there end up in the same position as Blockbuster and HMV because they refuse to embrace a new era, in an industry that is crying out for reform.
What is the industry “crying out for reform” have to do with these new business models. Where is the encouragement for reform and proper qualified agents when they get paid peanuts?
These models devalue agency not add value to it.
” As a neutral party… (as a landlord owning several properties)”
Sorry – but you are hardly a “neutral party” that being the case. You have a potential vested interest in driving down your costs and thus maximising your return on the properties you let.
But, on the obverse, you surely want to make the BEST decisions – NOT the cheapest? What if a cut-price offering results in an increased void period? Less monthly rent than a traditional Agent would fight for on your behalf? What about tenant vetting?
Hey – it’s your call. You say that we High Street Agents are clutching at straws – I’ll happily clutch at mine, knowing that my clients are satisfied with what they get for what they pay (they bl00dy should be!).
And I honestly hope that when you clutch at yours, they hold your weight.