What a busy couple of weeks. It was good to get away and catch a bit of sunshine, but the one week break for the blog quickly turned into two with the length of the to-do list I returned to.
Catching up on my mail, Harry Hill's article in the latest Negotiator Magazine made interesting reading - particularly for those considering starting up an estate agency.
He suggests that the average estate agent who sells 60 properties a year and turns over £120,000 is struggling to do any better than breaking even. And that as a result, agents must increase commission rates to survive.
It's an interesting perspective when there's a small but significant trend towards fixed price agency at around half that price.
Harry isn't overestimating costs either - simply listing on Rightmove will take almost all of the £8,000 budget allocated for advertising for new agents.
Many start-ups would be grateful to win 60 instructions in their first year, nevermind complete on them. Likewise, some will have little choice but to compete on price to build market share.
The lesson is to do the sums properly:
- Don't overestimate the number of instructions or sales you're going to complete on, particularly in smaller local markets.
- Don't expect to earn anything in the first 6 months, it will take time to win your first instructions, tie up the deals and complete on them.
- If you can't afford Rightmove, come up with a strong justification for not listing with them. Vendors will challenge you on this, but it is possible to be successful without Rightmove.
Martin
Done well, with the right niche, good marketing and controlled costs, agents can still be successful with a sales service alone. Several customers at PropertyADD are still doing well this way.
That said, having a lettings income as well can certainly smooth out the peaks and troughs!
Martin
This does not need to be monthly maybe only two a year but certainly for a start up they will bring in fees quickly. Potentially without the delays of forming chains etc via the traditional sales route.
Biased as I am towards auctions I am suprised by the lack of local actions available and the public's obvious interest in all things auction like based purely on the amount of TV shows etc.
Start ups can hire in the auctioneer expertise on an auction by auction basis or become part of a joint auction with others in a geographic area.
Worth looking at I think.
I've emailed you privately to follow up in more detail.
Martin
Can anyone offer me some advice on how to develop the sales side of my business, and where to find detailed info on the sales process and what exactly happens from offer to completion. As I work in the property industry, Im sure many people would expect me know this, but to be honest I dont.
I am really keen to develop this, and up to now I have been basically turning sales business away.
Any help or advice would be gratefully recieved.
Many thanks,
Mark
Thanks for taking the time to comment.
I suspect that most agents would be more concerned going from sales to lettings rather than vice versa.
As you suggest, up until the point of offer the process is essentially the same appraisal and marketing task.
After offer and memo of sale, the real skill is to be a true peacekeeper and negotiator, to keep the sale on track to exchange/completion. Keeping everyone happy and informed, smoothing out the bumps, etc.
We've had clients sign up with us on the exact basis you mention - a feeling that they were missing out on easy business from existing landlords. Not only that, but potentially also the opportunity to move a property from one landlord to another to keep it within your managed stock.
If you'd like to have a chat next week, I'd be more than happy to. Give me a call on 01293 888075.
Martin
I'm not an estate agent, actulaay I'm the CEO of a Charity but I am helping someone with a business plan to set up a new agency. Looking at the figures that Harry Hill quotes my big question is this, why, if he this is about setting up a new business is he proposing spending £83,000 on staff? surely as a new business you are doing the work yourself. A secretary/administrator in the office yes but the rest is up to you. On this basis 60 sales a year will keep you going quite well. just an observation from someone who constantly struggles to keep his organisation afloat.
Regards
Daniel Brookbank