Agency hope springs eternal
by Clare Bettelley
The Negotiator Reader Survey exclusively reveals that the majority of readers expect to be profitable this year. Here, Clare Bettelley reveals the changes they have made to survive and thrive, and their thoughts on the future performance of the housing market.
A staggering 84.2% of readers expect to be profitable this year according to the results of The Negotiator's exclusive reader survey. It is undeniable evidence of readers' tenacity and adaptability to the economic climate, which has seen national house prices plummet 16.5% in the last year.
Thanks to our continued support of our 11,298 readers through our exclusive and wide-ranging news coverage, together with our endless supply of advice and commentary, readers are well-positioned to not only weather the storm, but cash in along the way.
Readers' survival is testament to their determination to succeed and provide the most competitive service they can offer existing and new clients for the foreseeable future. Be it staff or service cost reductions, our readers have taken a range of bold steps to secure their future.
As one Shropshire-based reader says, they have learnt to do things in a completely different way to survive the downturn and ensure profitability.
"We have reduced costs through staff cuts, merged out lettings and sales departments and reduced out annual rent bill by 50%," they reveal.
The branch manager says that the agency has 99 less staff than this time last year, and that their annual rent bill is now around £13,000.
They add: "We're also using email wherever possible and have got rid of our cleaner. It is a case of rolling up our sleeves and getting on with it."
One Northern franchise managing director, who also expects to be profitable this year, agrees about having had to be more resourceful. "But it's a very basic approach. We have cut out all the agency luxuries, such as fancy photocopiers and portals that don't generate sufficient levels of leads, and diversified into lettings and property management."
"If you're a business with sales down 50% on the year and you're getting the sign-on and management fees from property management, you're in a much better position".
The director says that they have terminated the network's Rightmove subscription this year because of price.
"We found that we have been getting the same results, if not better, without Rightmove and are consequently saving £350 per month."
In terms of staffing, two of the network's offices have closed over the last year, though three new franchisees signed up in February.
A staggering 59% of readers have had to axe staff over the last 12 months, with many reporting a 50% decline in numbers. Just 3% of respondents have reported an increase in staff numbers, but these were of a maximum of five staff for all but one firm, which has increased staff by 25%.
Staffing levels have remained the same for 26% of readers.
A number of agents have overhauled their staffing structures to introduce roles that span a number of branches, to help cut costs.
Joshua Rayner, managing director of recruitment firm Dove & Hawk, says that many agencies at the top end of the market have been forced to cut staff because of their salary structures.
He says: "Basic salaries at the top end of the market are so much higher than the industry average, starting at anywhere from £30,000. One candidate with 10 years' experience earned £58,000 last year, based on a £36,000 basic salary.
"The downturn has prompted a look at salary structures, which is no bad thing."
Some 48.4% of readers reveal that their company employs up to 10 staff while 23.9% of readers are one of more than 100 employees. Just 4.7% of readers employ between 51 and 100 staff.
The majority of readers are directors (42.2%), followed by proprietors (21.9%) and branch managers (17.6%). Some 36.4% of readers are aged between 41 and 50 while 22.9% are aged between 31 and 40. Unsurprisingly, the majority of readers are male (71.8%).
Residential sales constitute the main business activity for 65.8% of readers, with 10.6% specialising in lettings.
Lettings and property management constitute secondary business interests for 58.2% and 48.5% of readers, respectively, with Home Information Packs an income generator for 39.8% of readers.
Less than half (48.1%) of readers have just one office, with 29.9% with between two and five.
Portal membership shows little sign of abating, with just 19.8% of respondents planning to terminate their subscription this year. Price is cited as the main motivation by 97.8% of readers who plan to terminate their contracts.
A number of readers expect to leave both Primelocation and Rightmove this year, which they attribute to service and poor lead generation, as well as price, though a number of readers claim they have yet to decide which subscriptions to cancel.
For agents remaining with their existing portals, Rightmove remains the clear favourite, with 79.5% of readers expecting to use the site this year. The portal won particular praise for the news coverage on its website.
Globrix is readers' second favourite portal (47.6%), according to the survey results, followed by Primelocation (36.7%) and Propertyfinder (35.5%). Readers' least popular portals include SmartNewHomes (2.4%); Property Index (3.6%) and Zoomf (6%).
Many readers expressed interest in signing up to the National Association of Estate Agents' portal, PropertyLive, in their responses, but expressed a desire for the site to grow before doing so.
News coverage is of most interest to 94.1% of The Negotiator's readers, with 69.1% interested in business trends and advice. Just 9.6% are currently interested in job opportunities.
Agents' business performance is of most interest to 38.9% of readers, followed by new products and services (22.8%) and legal comment (14.1%).
The Negotiator remains agents' favourite industry title, with 78.2% claiming to read every issue of the residential estate agency's leading magazine.
The results of The Negotiator Reader Survey are a timely reminder of the brilliance that permeates the agency market. It is far too easy to lose sight of the strength of character required to operate in the market, particularly in a market downturn.
The fact that the majority of readers expect to be profitable this year is indicative of an extremely hard-working profession, so surviving firms should feel proud and confident in their efforts to prepare for a market recovery.
The Negotiator will continue to bring readers the latest exclusive industry news and views to help ensure their profitability, through both the magazine and our website, negotiator-magazine.co.uk.
Don't miss the next issue on April 17 to discover the winner of The Negotiator Reader Survey prize draw for a case of wine.
And why not tell us about your achievements over the last year in your entry to The Negotiator Awards 2009, which will celebrate the UK residential estate agency market's top achievers in style at London's prestigious Hilton Hotel on Park Lane on November 11.