Estate agents are used to failure, on three levels. A typical estate agency branch, with say 5% market share, knows this, as 95% of their local sellers prefer to use a competing estate agency. That’s the first failure and it’s a hard fact to swallow. So the agency throws money at marketing, leading to the second failure: 99% of marketing spend fails to directly deliver instructions.
The third failure is buyers. Most of my estate agency clients tell me that they sell a property to about 5% of their buyer database. So 95% of their buyers are either not buying, or buying elsewhere. That’s a fail!
Most estate agency owners and managers have been trying to fix the first two issues for years, on the basis that marketing leads to instructions leads to sales. That’s not unreasonable, but it hasn’t worked, with market share remaining more or less stagnant for many agencies.
But I suggest that we might have been approaching this from the wrong end. We have assumed that we can only do more sales if we have more instructions. We have ignored a massive, largely untapped, resource – our vast pool of buyers. We generally assign these buyers a low commercial status because there is only a 5% chance that they will buy through us. If we have a property for them, then they might buy it. The more properties we offer them, the greater the chance that they will buy one of them; so we focus on acquiring stock.
But what if we could convert, into paying clients, just 5% of the 95% of those buyers who don’t buy through us, then we will have effectively doubled our revenues. That’s why I believe that Buyer Representation (or my own version of what you might think it to be) is the next chapter in British estate agency, and it’s long overdue. And the great thing about the bold claim of doubling our revenues, is that this is additional revenue into our industry – we are not simply redistributing it between agents.
It works like this: we know that a hot buyer needs to see about seven properties, before they decide to buy one of them. This is the “magic number” that supports the decision-making process. (If they are waiting for “the right property” to come onto the market, then they are not hot buyers). The problem is most agents are unlikely to have seven suitable properties on their books at the time, so the buyer is lost to another agent who happens to have the right property. This is frustrating for the buyer because they have to register with several agents, all of whom are trying to sell the buyer one of their instructions.
So why not offer to help the buyer buy one of your competitor’s instructions? They’ll probably buy it anyway, so why not be involved? Chances are that you have a good relationship with the buyer and they would ideally like to buy through you, so offering the Buyer Representation service to them is a natural extension up-sell for any switched-on negotiator.
In fact, we’ve been lying to buyers for too long when we say, “we’ll find you your dream home”. Nonsense! What we mean is “we’ll try to sell you one of our limited stock of instructions, where we act for the seller, and our role is to negotiate the highest price out of you.” Mainstream estate agents have never acted for the buyer – the one person who actually needs representing, possibly even more than the seller does! Until now.
This is not for any and every buyer – just 5% of them. A typical client is time-poor, is probably from out of the area, is not necessarily familiar with the sales process or negotiation tactics. They may be frustrated by choice, or lack of it, or have had a bad experience in the past. Maybe they haven’t moved in a while and just want a helping hand from someone they can trust. These are the sort of people who employ an accountant, rather than doing their own tax return. They call a plumber to fix a leaking tap. They employ interior designers or landscapers. They take their car to main dealers for a service. This is your 5%.
Once signed up under a Buyer Client Agreement, things get interesting, because you can now offer every property on the market, not just your own stock, as well as a few off-market too. But it’s important to recognise that, at least under my system of Buyer Representation LiteTM, this is NOT a search/relocation service. It is more like having a friend or relative who is there to help the buyer move, possibly to a new area, who just happens to be a local estate agent. This means that you do not have to introduce, or be the effective cause of sale, in order to earn your fee. Your fee is earned through your guidance, advice, reassurance, expertise and negotiation skills.
An obvious question is how can you possibly access your competitors’ instructions? Easy – ask them for a viewing! They still get their fee from the seller, and you get yours from the buyer. And if the other agent doesn’t want to cooperate (which would be foolish as well as negligent to their client) then you are perfectly entitled to knock on the seller’s door and explain the difficulty you have had with their appointed agent and may you bring your client round please – no fee required!
What about fees? Those estate agents who have done my course on this subject typically charge 25% of the difference between the asking price and the negotiated sale price (with a minimum fee of at least 1%). Most of the time the fee is about the same as, if not greater than, a regular instruction.
Even though the fees are exciting, and earned faster (as a hot buyer buyers within days, whereas a seller could take months), the cost of delivering this service is far less than a traditional instruction. Yet it also attracts regular instructions, as you may be able to claim “Sell your House for Free” if you have a buyer client for it, who is paying your fees. There is never a conflict of interests. You can even potentially advertise your competitors’ stock – one agent I know currently features over 800 on their website.
There are many other direct and indirect advantages of offering Buyer Representation, which is mainstream in many other countries, yet the one country that needs it most is the UK as we do not have a multi listing service (MLS) (with the possible exception of LonRes). Our time has now come, and it seems that the solution to poor agency performance has been staring us in the face all along.
Richard Rawlings is one of the UK’s leading estate agency trainers and details about his Buyer Representation Lite Seminar and forthcoming roadshow can be found here.
Mr Rawlings who are you representing to their best interest when your buyer wants to purchase a home you are selling? Are you taking a fee from both sides – immoral!
Do you think your competitors will introduce you to their off market properties that could be suitable – very unlikely as they would be afraid you would try and pinch them!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I completely understand your concerns, but this system has been extremely well thought through, legally addressed, and is in current practice in a number of estate agencies across the UK. Your concerns are perfectly natural and all dealt with on my course. Nevertheless, please do rest assured that there is never any conflict of interest. You either act for buyer or Seller, never both in respect to the same transaction. You wouldn’t offer by representation services to somebody who was already interested in one of your existing properties.
In response to your second point, the sellers agent would be foolish not to cooperate (and of course accompany the viewing) because both agents get a fee – one from the Buyer and one from the seller with two fellow professionals working together to get a deal over the line. If the seller’s agent didn’t cooperate, then the buyer’s agent would be perfectly entitled to knock on the seller’ door and explain the difficulty they’ve had with their negligent agent by not allowing a hot buyer to view the property! There are dozens of questions that are thinking agent such as yourself will have, but this opportunity is huge and I’d invite you to consider it with an open mind. I promise you’ll make quite a bit more money!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I have been a buying agent for the last 13 years and are part of a group of some 15 offices. We are only buying agents and do not sell or value them – we evaluate them. Most of our purchases are from agents and most of them have not been launched onto the portals – we call this the grey market. The off market, as far as we are concerned, are when the vendors contact us themselves before they have engaged an Estate Agent and for these we always recommend they are represented by an an estate agent.
Some Estate Agents, normally the smaller ones, don’t understand us and will not even show us a house insisting we bring our clients on the first viewing – their loss – how can we deem a property suitable if we cannot assess it first!
There are Estate Agents that have a Buying Agents arm such as Savills own Prime Purchase, Knight Frank own The Buying Solution, Strutt & Parker own Private Property Search etc but these companies, at least, try to act independently by having separate offices but I and my colleagues have often come across a property being sold by, for instance, Savills and bought by Prime Purchase. Have the vendor and the purchaser had the best of advice? I doubt but the vendor has got his house sold and the purchaser has the house they want.
As to the above on the first point you said that there could never be a situation that the agent is representing both sides but you are wrong. If a purchaser comes into an estate agents office and there is nothing suitable for him at the moment you suggest the agent signs him up to find a property. A few days / weeks / months later the agent wins the mandate to sell a property that is suitable for the original purchaser – who does that agent represent? They are not going to turn away the vendor ……!
Proper full time Buying Agents are totally independent and are not associated in any form with an Estate Agent and that is how it should continue with both Estate Agents and Buying agents working closely together. If an Estate Agent sells a property via a buying agent then half there unpaid job has disappeared as they do not have to look after the purchaser – the Buying Agent is doing that!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Thanks for your comment.
In respect of the situation you mention where you are represented by a client and subsequently list of property that might be suitable for them here is that you represent the person who instructed you. You can still take on the house but in that specific event you would explain to the seller that you already have a represented by, who may be interested? Explain that you can still handle the sale but that you won’t be charging the seller any commission as you would not technically be representing them in that instance. they are delighted to hear this as they don’t have to pay a fee! Don’t forget, although we clearly represent one party or the other both their objectives are identical. They simply want to get a deal over the line and our job is to facilitate this to their mutual advantage.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
This sums up exactly why an Estate Agent should not be a buying agent!!
https://www.instagram.com/reel/C9ztuViCa04/?igsh=Y2FjOTR5eDJtM2M3
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
This is total gibberish
Charging a buyer and vendors is totally immoral of course
I have recenly moved house
I looked on Rifghtmove and rang the relevant agents and aranged a viewing
If any agent had asked me for a fee to buy a house on the market with another agent I woukd have laughed at him before telling him to p off
Buyers will look at righmtove and see any instruction on the market with whoever it is on with
When was an agent I did have a competitor who would somethimes rting and say he had someone who wanted to view a house we had on the market
I always told him to p off as I knew if the buyer was serious he would contact us anyway and we would be ringing the database and contacting the buuer
Why woukd I lose part of my fee when I was conficdent I will sell thne house anyway
Also I would not want another agnet who will doubless be tryimng to poach the instruction having that interaction with my vendor
Ridiculous
Those who can do – those who can’t teach
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Hi Jane, I think you’ve misunderstood the whole concept here. The buyer pays your commission and the seller pays the other Agents commission. Please see my reply above for further details. This is a new concept that can literally double agency revenues and I’d encourage you to look at the opportunity here rather than finding holes that don’t exis. .anlthough all it understandable from a traditional agency perspective.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Richard, the potential for conflicts of interest is ever present in the model you propose.
What credibility can an agent claim when offering to act for a buyer whose interest focuses on a property that he/she has valued, but whose instruction they did not win ? He/she may have valued it at a lower figure or (tricky one here) even higher !
If the buyer client chooses not to pursue that property the agent will also have “burnt their bridges” if that property owner wants to change agent at a later stage.
Of relevance too is the fact that if an agent can secure only a smaller proportion of the market share, his authority and knowledge of the market is somewhat undermined.
I’m all for developing additional income streams, particularly if they can avoid the taint of referral fees. Sadly until such time when Estate Agents can secure a truly professional qualification, the notion of earning alternative fee income by acting as an independent resource for buyers, who can thus benefit from our in-depth experience of local markets, will be challenging.
As you suggest, the skill-set is there, but the public, lawyers/conveyancers, and the buyer’s own lenders may take some convincing that this additional cost to the process is worthwhile.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I did say “this is not what you might think it might be”. As for qualifications then I do offer training in this exact concept, and with 30 years experience of it too! Agents who are running with it are doing well from day one. No conflicts in any area. In fact, it presents more opportunities than difficulties. Please feel free to contact me if you’d like to discuss further. Thanks.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Two issues immediately come in to focus here. 1) as has already been raised – conflict of interest. Solicitors will not act for buyer and seller on same property, how can an agent ? Who do you represent if there are survey issues, renegotiations etc. 2) Your premise re “knocking on vendors door” if an agent will not correspond – assumes every vendor is using sole agency when many are using sole selling rights now and as such vendor will still be liable for a fee !
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Thanks for this. Re point 1: You’d never represent both buyer and seller in respect of the same transaction. 2. You’d represent your client EITHER buyer OR Seller but there is never any confusion here once you understand how it works. 3: yes the seller will still be liable for a fee to their selling agent. After all, it was as a result of their marketing efforts that the buyer’s agent became aware of the property. Their fee is therefore protected. The buyer pays the buyer’s agent fees – hence two fees from the public for our fabulous industry, as is the case in many other parts of the world. Such a good opportunity here that has been staring us in the face for years!!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I agree with the comments above in that there is unlikely to be any traction in this model for the numerous reasons already mentioned.
I would comment however that this model is very prevalent in the Commercial Property World and approximately a third of our agency transactions are completed to tenants/purchasers who are represented.
The main difference in my opinion though is that these are companies seeking units who do not have in house specialists and so retain surveyors to act on their behalf in not only identifying suitable properties but also are experienced in obtaining comparable evidence for a particular area as well as giving professional advice in respect of terms.
They “acquirer” is also likely to be looking at acquiring more than one unit and so outsources for ease.
The commercial community is also very different to the residential arena as a general rule everybody gets on and assists each other as there is enough pie to go round. There is also the advantage of having knowledge about which leases will be expiring in the near future and so properties that are not formally available can be approached to see if existing tenants will vacate.
Jan has hit the nail on the head – if a residential property is being marketed correctly then the purchaser will become aware of it anyway.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Good points Simon, but as anyone who has attended my Buyer Representation Lite training knows, a critical element is offering this to the right buyer. This is someone who appreciates a helping hand – not even sourcing the property – but using their local knowledge, negotiation and sales progression skills on behalf of the buyer. This is for the just 5% of the market who appreciate this (hence doubling your current revenues). Its a huge subject and the right questions are being asking in this thread, but I can assure you this can be the next chapter in profitable joined-up estate agency for those who choose to embrace unfamiliar territory. You won’t be disappointed.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
There is a serious conflict of interest here, not to mention the general public’s lack of trust of estate agents to start with. Far from this cosy relationship with your potential buyer your scenario envisages, most people view agents with deep suspicion and I don’t see this changing/ helping the situation.
I get the concept of the service you suggest; it has been around for high end clients for years its nothing new but anyone can access Rightmove and if they are as hot as you suggest why would another agent refuse a viewing and somehow give you the viewing instead? And to suggest you can earn at least 1% of the agreed sale price for it seems pie in the sky to me. Good luck with selling the concept to Joe Public.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Without seeking to undo what I have already said, I have been asked by my daughter to appraise her intended house purchase, and what parent, with that skill-set, wouldn’t ?
If I see something untoward (I’m not a surveyor) such as if I think the price quoted is hugely ambitious and which cannot be substantiated by evidence I have access to, which of us would not advise their child accordingly?
I have no interest in monetizing such advice to a family member but I can see why Richard thinks such experience has a value, which it clearly has, that we should seek to exploit.
I may be able to save a substantial sum on behalf of my child. But I think CSM misunderstands Richard who proposes a sensible fee structure based on a reasonable proportion of the amount saved.
Personally I wouldn’t “get out of bed” for a modest amount and any attempt to secure a low percentage fee against the original price is to my mind a non-starter with limited appeal to potential clients or me. If we are paid by results on selling our clients properties, an entirely differently based fee structure to act as their agent for a purchase would be needed, perhaps with an overage measured against the amount saved.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
This isn’t new ( not that you said it was) and very American, I’ve always liked the idea, whether it kicks off in the UK is another story too watch, I just somehow doubt UK buyers would pay a fee to an agent to find them a property, an overseas client more so. Changing the way Estate Agency is done in UK is needed but I think a very hard one to tackle.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
I agree with you that most buyers would not pay for this service. But as I said at the top of my article, most buyers do not buy through you And most sellers do not sell through you either. So it’s the same ratio we working with. My dedicated Training seminar identifies precisely to target and how to sell the service to them. Have a great day..
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Out of curiosity, what would you think of solicitor firms who already practice some of this? I know of at least three larger firms in Glasgow who employ ex-estate agents and other sales-minded people to hit the phones for their buyer clients. They don’t do any property sourcing, to my knowledge, but they certainly do negotiate on behalf of clients and advise on local markets. Or what of the corporate FS staff at the likes of Connells, where a ‘help-to-find’ service is advertised, as a hook to prospective mortgage clients? Do these not already offer a large part of what you’re proposing?
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
Exactly. It is those estate agents who decide to embrace the bigger picture here and offer a more holistic, joined up, way of delivering a great service whilst spotting commercial opportunities that will prosper.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register