The step-by-step guide to making the most out of poor projections
Navigating your way out of the market’s choppy waters will mean putting into place a number of checks - otherwise you are likely to sink
Thrive is not a word many of us are using this year but it is one I truly believe that we can be. I am not necessarily talking about short-term profits but certainly the ability to take your business to new heights.
You can become stronger and the strength of your brand and market share can grow this year as your competitors make drastic cuts.
Others will fail to do so and lose their fight for survival.
Of course, before we can even start thinking about thriving, we have to ensure we can survive. There are many parts of your business that you need to examine and adjust.
You need to save money where you can but without compromising your profile or the service you provide.
Best foot forward
We cannot wait for our market to recover before reviewing our businesses and make the necessary changes to survive.
We have to accept that this is the market for the foreseeable future and have to find ways to make money now.
Nearly all of us have been busy reducing staffing levels and advertising budgets, with some of us unfortunately in the process of closing down.
But while drastically cutting your two biggest overheads will offer much needed short-term financial relief, if it is not done carefully you are in danger of compromising the service you can provide and at the same time reducing your profile.
Combined, this can lead to a reduction in your market share, stock levels, sales and ultimately your bottom line - the one thing you are trying to protect.
You need to maintain staffing at a level that allows your service to far exceed your competitors’. You need to closely monitor staff and set daily tasks to ensure client contact is maximized.
Although some of these tasks may appear thankless, they can reap invaluable benefits for your reputation - the more contact your business has The step-by-step guide to making the most out of poor projections Navigating your way out of the market’s choppy waters will mean putting into place a number of checks - otherwise you are likely to sink with vendors and applicants, the greater the chance of you earning a reputation for being an agent who excels in helping clients sell their properties. As a consequence, your team’s morale will remain high.
Every viewing should be followed up on the same day or the next at the very latest andevery suitable applicant should receive details of properties following a new price reduction and this must be followed up and fed back to the client. The most senior person available within your firm should, wherever possible, carry out client contact reviews. This makes the client feel important and enables an agent to negotiate an appropriate price reduction.
Our research shows that over 80% of our sales this year are new instructions coming on to the market, at prices that reflect the general market. This would not be possible if our existing stock of properties was still asking 2007 prices.
New instructions with sales have averaged 95% of their asking price. Our sold 2007 and early-2008 stock shows average single or combined price reductions of 7%; in order to secure a sale they needed to reduce by a further 5%.
This data has been invaluable in helping us advise clients on their asking prices.
Many who advertise properties at a reduced price seem to do so at an average of 2% or 3% lower than their original asking prices. This is nowhere near enough, given that prices are currently falling by up to 2.5% per month so far this year.
You should assess your stock.
I grade mine A, B or C. ‘A’ is a motivated client asking a price that you feel is realistic - and someone who you know will respond well to your request to revisit their property price when necessary.
Most of your sales will come from this category and you should be speaking to these vendors every week. ‘B’ is a fairly motivated client but their price is at least 5% too high. Keep in monthly contact with these clients; encourage them to view properties that you know are realistically priced in an effort to get them motivated enough to move with the market by reducing their price. ‘C’-type clients are those who set their asking prices far too high and who you know will not respond to your advice, often saying they are in no hurry to move. I sometimes remove these houses from our books. Otherwise, I am sure to reduce expenditure to almost zero and not advertise them. If clients don’t have a ‘for sale’ board up, there is little point having them on your books at all.
Once your client and applicant contact is slick, you are wellplaced to increase your fees.
Nearly all agents I compete with will work for 1% or less on more expensive properties.
Setting fees at 1.75% has proved a great success. In fact, I intend to increase our standard fee to 2% before the end of the summer. Within four months of raising fees the average fee on our stock had increased by £600.
This goes straight to the bottom line, once a sale has been agreed. But be warned, clients expect value for money, so make sure your service is faultless.
Print advertising is important.
If your adverts don’t appear in the local and/or national press and your competitors’ do, you may well lose clients. But there are ways you can cut your advertising cost without damaging your profile. Speak to your local competitors and agree an advertising strategy.
My local competitors and I recently decided to address the issue of advertising spend.
This resulted in us agreeing to withdraw our local advertising every other week en masse.
The move frightened the living daylights out of the newspapers, particularly when I advised them that if they did not respond quickly with significantly better rates they might not have a property section for long. Needless to say, our rates have now been significantly reduced.
Finally, while staffing and advertising cuts will save you money, everyday costs need to be closely monitored, too.
Speak to your landlord and try to negotiate a mid-term reduction in your rent - it’s in their interest to help you survive, particularly if there are vacant units nearby.