Estate agents risk making commission the deciding factor for vendors if they fail to demonstrate their value, according to Iain McKenzie.
The CEO of The Guild of Property Professionals says agents can become difficult to distinguish when their valuation pitches look similar.
That can leave vendors with one obvious point of comparison: the fee.
McKenzie said: “When someone needs a solicitor, accountant, architect or financial adviser, they rarely begin by asking who charges the lowest fee.
“Cost plays a part, but it is usually considered alongside the experience and expertise of the professional, and the confidence that they will achieve the right outcome.”
He said estate agency can be different. Consumers may see competing firms as offering broadly similar services, marketing and technology.
‘The fee becomes easiest to compare’
McKenzie believes agents need to demonstrate their differences in areas such as negotiation, judgement and sales progression.
“Great negotiation, sound judgement, strategic advice and the ability to navigate complex transactions aren’t always visible at the point of valuation,” he said.
“Much of an agent’s value happens behind the scenes, in the conversations that prevent a sale from collapsing, the negotiations that secure a stronger offer and the advice that changes the direction of a transaction.”
He argues that agents who fail to demonstrate those differences risk making commission the main battleground.
“If every valuation presentation sounds similar, every marketing proposal follows the same structure and every agent describes their service in much the same way, it’s hardly surprising that clients look to the one thing that’s easiest to compare: the fee,” McKenzie said.
Competing on more than commission
McKenzie said the issue is not simply about defending higher fees. Instead, agents need to explain what vendors receive for their commission.
“Appointing an estate agent isn’t simply buying a service,” he said.
“You’re choosing the professional who will represent one of your most valuable assets and guide one of life’s most significant financial decisions.
“That means the more useful question isn’t necessarily, ‘Who charges the lowest fee?’ It is, ‘Who is most likely to achieve the best outcome?’”
McKenzie said agents have become good at explaining what they do. The next challenge is demonstrating why differences in service matter.
“The industry has become very good at explaining what we do,” he said.
“Perhaps the next step is becoming better at explaining why the quality of what we do can make such a significant difference.”
Comments (2)
Valuation pitches look similar is because the job is very simple so they are similar
You cannot compare agency to a profession such as solicitor, accountant, architect where people have to study for years to qualify or financial adviser
Consumers may see competing firms as offering broadly similar services, marketing and technology because they do
He said estate agency can be different. Consumers may see competing firms as offering broadly similar services, marketing and technology.
McKenzie said the issue is not simply about defending higher fees. Instead, agents need to explain what vendors receive for their commission.
He argues that agents who fail to demonstrate those differences risk making commission the main battleground.
He says “Much of an agent’s value happens behind the scenes, in the conversations that prevent a sale from collapsing, the negotiations that secure a stronger offer and the advice that changes the direction of a transaction.”
He argues that agents who fail to demonstrate those differences risk making commission the main battleground.”
When I was an agent I did all of this I explained in detail what we did -,other agents did exactly the same
Some vendors still opted to go with a agents who we all knew was useless based on fee
The greater issue isn’t that agents don’t “demonstrate value” or how they differ. In my opinion, the potential client is not qualified to judge what they are told. They are often naive and vulnerable and oblivious to the follow up questions they need to pursue once given the pitch.
Competence has its place but Character is they key to building relationships.