It is truly horrible to read the news of a company’s demise as we did here yesterday with Maitlands Estate Agents announcing the permanent closure of their three offices. I genuinely feel for the owners, management, staff and customers at what will be a depressing and uncertain time for them all.
I noted from yesterday’s EYE article that the reason the company gave for their demise was ‘online competition, low fees and lack of stock’.
Come off it. I don’t know Maitlands or its boss Andy Blacklock and I have no quarrel with him but I think such excuses are hollow.
We’ve just experienced the hottest market in UK property market history. The wheels did not fall off due to Brexit nor Covid despite all of the doom laden predictions that we’ve seen from so-called experts in recent months.
As for the ‘online threat’ this is no longer 2015 when Bruce, Quirk, Day and Co were threatening world domination and showing some market share traction. Online is not quite a dead parrot but its squawk is certainly no longer very loud as their mrket share drops hack to barely 5%.
I suppose it’s natural for our egos to need an external reason for failure. A means of placating our mistakes. But let’s be frank, using covid, Brexit or online estate agents as an excuse for shutting up shop is not very plausible when so many agents have done so very, very well of late.
No, the spectre of online estate agents is a misnomer. But low fee, a large element of their proposition, is definitely a real problem. But who’s fault is that? Frankly, it’s a lazy argument to point to a small part of the industry and to blame it for not being able to pay the bills – because fee is entirely in our own control as estate agents and if you’re not willing or able to look at your proposition and to sell its value at a decent commission level then quite honestly that is your fault and no-one else’s.
This industry has a fee problem. But it is your problem.
We seem to have slept-walked into a dynamic whereby we justify our agency’s kudos just on cost. Yet so many other industries have risen above that and justify VALUE instead. And for those of you that don’t know the difference between value and cost well, you may well be the next Maitlands.
Harsh words? Maybe. But perhaps we all need a collective kick up the pants to begin to be proud of the service and results we offer our clients. And to charge a fee accordingly. Because as staff costs, rents, taxation and other costs rise, our sector’s direction of travel where revenue is concerned is diametrically opposed to escalating overheads and that makes no sense at all – and nor is it sustainable.
James Forrester is managing director of Barrows & Forrester Estate Agents.
Well-known estate agency ceases trading blaming online competition
Fees should be reflection of your performance, not a comparison to competitors. Are you failing to deliver value, or failing to demonstrate that value?
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Great in theory
1 how does a vendor know if your service is any good until; they have instructed an agent.
2 can I ask – I am a developer – if you visit one of my sites what are you going to say about how what you offer s better than the competition and the reason I should pay you 2% rather than another agents 1%.
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If you’re inviting agents onto your sites it’s too late for them to be of real benefit to you Jan, you have already missed out on the most valuable bit of the relationship; advice on what you should buy and what you should develop.
You’d happily pay me 2% if that’s what I asked because I was the one who identified the property that gave you access to the site, made viable and made it profitable.
The symbiotic relationship between an agent and a developer isn’t something that should be determined by commission.
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I do not need an agent who has never developed a site to tell me what to buy or where.
For sure I speak to agents prior to buying a site to discuss the buyer profile, the demand in the area in terms of what property types are most sought after – spec – possible pricing etc. But at that stage I am not going to discuss fees or marketing – I will do that when I am ready to launch.
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Sad to say, janbyers has made one of the most naive comments I have ever seen from a self-professed developer.
By the far the greatest profit to be had from residential development is from buying well, not from building, nor from riding the market hoping that one day the price paid for the land starts to become justifiable. Any fool can buy land, you just pay more than anyone else is willing to do. Sadly this means there is often less wriggle room on pricing or timing to generate an acceptable margin in a flat market. Anyone buying land in the expectation of better prices by the time their project is ready for sale needs their head examining.
To do it well (i.e. making better profits) means sourcing land by cultivating relationships with a variety of sources, including estate agents, who may well provide you with opportunities to secure sites that may never come to the open market.
Similarly if seeking to secure strategic, i.e. medium or longer term sites through the Local Plan process, the local knowledge and reservoir of local contacts that an agent can provide is invaluable. Such relationships are a 2-way street with the reasonable expectation that the agent will be awarded the sales on the development without then having their fees compared to the “Johnnie-come-lately” of our industry flattering with high values and unsustainable fees.
We add value by suggestions ranging from identifying the most buoyant market sectors in our area, which may well impact on the mix proposed, to identifying the sweet spot in terms of kitchens, extras and much else. This has included suggestions on exterior stone cladding that have enhanced sales values by multiples of the extra cost. Adding value involves a cooperative and joint endeavour between agent and developer. There are plenty of examples where this has not been the case and it usually the developer carrying the can.
Needless to say if such a naive developer “knows best” as so many think they do, our relationship will be short. If he chooses to leave the agency appointment to the end, as is implied, at least he will only have himself to blame for lower profit.
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Word of mouth.
Recommendations goes a long way to establishing quality of service, as well as creating an expectation of quality service. This is the springboard to being paid what one is worth and adds value for money i.e. quality of service being the USP.
Gaining business simply because of fees is not likely to be quality related, and I see no value for the customer, indeed the agent as well, if a customer’s only reason to use an agent is because how cheap the agent is, the use of the work “cheap” is deliberate.
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So if I had not heard of your company I would just go with an agent who has lower fee?
I do sites in many areas so I am not local so will not have heard of the agents via word of mouth.
You may see no value for the vendor but it is not about what you think when you are on a val.
I certainly do not always use the cheapest agent I carry out various checks and balances myself which most vendors who are not experienced in selling houses do not.
That said I have sometimes used ales expensive agent who have been fantastic and ha achieved a higher price for me than some of the more expensive agents told me was achievable.
The agent has to have a compelling reason to convince a vendor to pay a higher fee when to most vendors minds all agents do the same thing. Just saying “we offer a better service does not cut ot as I know from experience all agents say that.
You have to provide tangible proof which is very hard.
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My reply related to point 1. which I took as a general vendor query, not a developer.
Secret shopping over a reasonable period of time on all agents covering the area under development seems an effective method.
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A little surprised no mention was made of the scourge of referral fees driving down sale fees. Long overdue for reform/compulsory declarations front and centre and true transparency, how else can most corporates survive without such essential cross-selling? it has tainted the appeal of agency for many who wanted to make it a career, only to find their lives are spent chasing referral fee targets. For independents, without such income streams, they should focus on customer service and educate their local market on the difference. Don’t even get me started on the quality of those companies referred, winning business on the simple premise of offering the highest fee.
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Bravo. Very well written piece.
Agents are a funny breed, often so keen not to lose out to the competition, they think fees will be the deciding factor. They often aren’t.
Last year I had some fun, we could afford to with the bank full of cash. Every valuation I went on was 2%. Didn’t matter if it was £500,000 or £2m.
Yes, of course I lost some jobs; but the increase in fees made a dramatic difference to turnover. I actually found my team thriving from looking after fewer clients and doing it well.
This is now my standard business model.
Even if you’re fees are 1% now, raise them to 1.5% for a month and see what happens. In terms of income, you will not lose money. Instructions maybe, but not hard cash.
Would you rather sell 75 houses a year at 1% or 50 at 1.5% ? Same money. Less clients. Less grief.
The clients who will go for a cheap fee are usually a nightmare anyway… See the light and give it a go!
Love Johnny B
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Welcome to my world, have been doing this for a very long time.
Fewer clients allows for a better client/agent experience, and you DO NOT earn less money.
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I am sorry that I can only give this (JB43’s post) one “thumbs up” – it deserves many more!
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Completely agree. When you compare the fee’s for agents in Portugal e.t.c 2% is nothing. We are definitely not the cheapest agents not the most expensive and are doing very well.
Isn’t it interesting how the agents who charge 1% or less are most often the ones who end up reducing their vendors asking prices as well as their own fees.
I think if you can conduct an incredible viewing with a prospective vendor then that is almost more important that the valuation itself. You prove your worth and ability to sell during a decent viewing, that’s how you justify your higher fee. Vendors view with lots of agents and those charging £3.50 for a listing have to rush through the viewing in 5 mins because they are being paid peanuts. I’d rather have the time to knock the socks off a prospective vendor on the viewing, back up everything I do in the valuation and then win the gig.
For those reading this that charge 1% or less – isn’t it time you stopped digging your own grave?
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One of the saddest articles I have read, but the sadness stemmed from the fact that they didn’t have to do this. A classic case of a small trader who mentally stood still in their supposed comfort zone during rapidly changing times. We have been the most expensive agent in every town in which we operate. And we have just put our fees up – very successfully It’s a mind set. And that mindset is about how much you think you are worth.
If you dont believe in you, then the public won’t either
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oh god here we go… It’s like a ******* Loreal advert already.
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“because fee is entirely in our own control as estate agents and if you’re not willing or able to look at your proposition and to sell its value at a decent commission level then quite honestly that is your fault and no-one else’s…”
…says the guy who offers a £999+VAT sale fee option. And has a register of nine properties to show for it.
Oh – and please note, Mr Forrester, that, by Law, should read £1198.80 inc. VAT – as should you other fee offering of “1.25%+ VAT” read ‘1.5% inc. VAT’.
But based upon the fact that the total “Straight to Market Package” fee charged by your company would equate to less than 0.4% – and highly unlikely cover your costs for even such a dismally inadequate ‘service’, I would say you’ve got some chuffin’ neck to make comment. At all.
At least the guys at Maitlands fought it and lost… instead of bending over and singing ‘Glory, glory Halleluja’ a la B&F.
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At least the guys at Maitlands fought it and lost… instead of bending over and singing ‘Glory, glory Halleluja’ a la B&F.
That has really made my morning. Hat doff to you.
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Thankee, Sai (credit: Stephen King)
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Don’t be 2 quick to condemn an agency with 9 properties Peebee, the average is currently about 11. Looking at a lot of outcodes as I’m able to do 25% of agents have NO available listings and 2 or 3 SSTC’s. Another 25% have 1 or 2 available and 3 or 4 SSTC.
9 is quite a lot and that has to be a concern.
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I am not condenming an agency with nine properties, Robert. I am pointing out that an agent pontificating “we all need a collective kick up the pants to begin to be proud of the service and results we offer our clients. And to charge a fee accordingly” himself offers a bucket-shop fee package – and still only has nine properties to show for it.
BIG difference.
Now if Mr Forrester wants to show that he is prepared to sing from his own hymn-book – get rid of his £1199 offering and tell potential clients what his true fee really is instead of hiding behind historic, unlawful ‘ex-VAT’ subterfuge, then I might consider changing my view.
As it stands – all I see is a poorly crafted PR puff-piece that at first glance talks the talk…
…but the supposed author seemingly chooses to crawl the walk.
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All their landlord fees are + VAT too which has been against the law since 2019.
Also no copy of their CMP certificate displayed on the website which again is a legal requirement.
Those living in glass houses………….
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Wow – that must be a bit awkward for Mr Forrester. Sounding off about low fees and fee levels being in our control when his own company’s website promotes a “low fee”.
By his own argument, he doesn’t appear to put much value on his company’s service offering.
Embarrassing
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People in glass houses and all that springs to mind here. Nobody knows the circumstances to this sad story of an established agency going to the wall, but some people are quick to give it the big un, rather than be thinking “there for the grace of god go I” – however, some just seem to want their sixty seconds in the spotlight in publications like this, with click bait headlines. It is tough out there at the moment, that’s a fact.
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With you on this MK.
We don’t know the full story.
I know plenty of agents who could wind their company up tomorrow, “blame low fees and low stock” as the true honest reason, but actually have a very comfortable life living off their companies freehold interests and just basically decided rather than lose their current cash pot over the next year or so, they would rather enjoy life which is far too short sometimes.
IMO, 2020 and 2021 happened to turn into the “Perfect Storm” for the “**** agents” with no real effort required to return an offer of 100% to 115% of asking price in around 10 seconds! and then blame a congested ***** conveyance system for the “poor service”. Which became acceptable as an excuse.
Fees will rise and/or market shares will return to the agents who can warrant a higher fee once property takes perhaps 3 to 6 months to sell, or properties need deals striking between 5% to 10% off asking prices, etc etc… good old fashioned “listing a property online isn’t enough”
But if the current perfect storm continues, low stock, low mortgage rates and a half decent demand… many agents in the real world will have to duck n dive to keep the phones ringing and keep the teams busy. (If you have no cash in the bank, then perhaps the pressure is on)
Unfortunately though, my perfect storm is when the market takes a nose dive into a **** storm and the good from the bad will stand out.
All I am hoping for then is I can use the current excuse many industries use to me “You’re buyer is on Back Order and due back in stock soon” if only this was an excuse we can use when property is selling so quickly.
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100% Ric, I couldn’t agree more with you. Perfectly summed up
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