We are experiencing a rise in inflation on a scale that we haven’t seen for 40 years. Predicted to tip over 10% within months, we’re all wondering what this truly means for the property market and those who could be buying and selling in this climate?
The consumer price index (CPI), which measures the cost of living and inflation, shows us that the cost of living is increasing, but the housing market doesn’t follow suit. When the CPI goes up the demand for housing falls. Interest rates increase as the Bank of England attempts to control inflation, leading to a higher cost of borrowing and mortgages becoming more difficult to secure as lenders manage their risk and will only lend to ‘sure bet’ buyers.
It’s a perfect storm, as homeowners think twice about spending, particularly on items such as agents’ fees, conveyancing and stamp duty. That – in turn – inevitably means a reduction in inventory and more agents competing for less stock.
So, who will be moving and what will attract them?
What we’re hearing from the agents that we work with is that motivators in the current market include buyers who are in a secure job with enough elasticity in their budget to withstand the rise in the cost of living and borrowing, with a sound reason to move. Renters experiencing higher rates of rent, where buying would be more cost-effective, will be tempted to take their first steps on the property ladder and will need sound professional guidance. Or the person who wants to take advantage of the market to realise their gains could be looking to sell.
We all know that securing instructions is all about trust. But learning how to build trust in a difficult market is no mean feat. Do you simply keep in touch with your prospect sellers, raise your profile at charitable events, work on a timebound offer on your fees or consider the skills of your team and your brand’s reputation?
The phrase “I didn’t know you also offered that service?” from a potential customer is an indicator of an opportunity to ensure that divisions or service offerings are joined up for opportunities like buy-to-let enquiries to be maximised. Where departments don’t collaborate, valuable opportunities can potentially be lost. An investor buying but using another agent to manage their property or a landlord looking to sell but using a different sales agent – are common occurrences.
In a tightening market, there are good reasons to think about specialisms and how businesses could utilise the very effective risk management strategy of diversification. Over the years, we have seen many agencies achieving growth, and greater stability by diversifying. For example, if an agent specialises in property sales, having an established business and market presence puts them in a strong position to add to their services. Despite being renowned for its complex legislation and administration, a lettings business provides cash flow and real long-term value. With the right training and support, getting up to speed quickly, and easily, could be less daunting than imagined. What’s more, by choosing the right type of training the trainee and employer can combine both selling skills and process with legal knowledge and even become L3 CePAP qualified in the process.
Referral fees divide opinion but are common practice in our sector. Choosing professional partners is about working with firms that will deliver the best service to buyers and sellers, and the referral fee is a bonus. We caution though to choose partners wisely – as focusing on the referral fee first may be costly in the number of successful sales in the long-term and result in reputational damage. A recent update from Government has stated that as long as agents declare these fees, there is little appetite for further regulation of referral income.
By truly understanding the needs of their clients, a successful agent can talk in an advisory capacity and become a trusted partner in the transaction; earning this reputation gives them preferred agent status in their local area.
There is a clear indicator of change on the horizon, the writing is on the wall, and to do nothing could have undesirable consequences. As Charles Darwin said, “It is not the strongest that survives, but the one who is best able to adapt and adjust to the changing environment”.
Charlotte Jeffrey-Campbell is an industry trainer and director of The Able Agent.
Trust doesn’t arrive from competence. Respect does.
If an agency seeks trust, they need to demonstrate character.
Theres a big difference between being a respected agency and being one that is trusted.
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