October 2008
Perhaps now it's time to downsize — permanently!
How vital are those flash town centre premises in the current difficult
economic climate?
COMMENT by DAVID PERKINS
FACT: in any industry where supply exceeds demand, it is necessary to reduce
the supply. Clearly this is happening in estate agency. Offices are being closed
right across the country. Nowhere seems immune.
It is my contention that the traditional ranks of bustling high street estate
agency branches have gone for good.
If it were not for this sudden recession, the pattern of closures may have come
about more slowly – over years rather than weeks – but the almost
universal access to the internet is making such changes inevitable and irreversible.
I will recount various personal reminiscences and see if any lessons emerge.
A few years ago I was advised to sell our three-storey townhouse and buy a bungalow.
When looking around the area, we saw a ‘For Sale’ board outside a
possible property. We drove into the town and found the estate agency.
A young lady asked the usual questions and filled in a traditional applicant’s
card much as I would have done 40 years earlier. She promised to put us on their
mailing list since when we have heard absolutely nothing.
That was the only time we actually went into an estate agency office. News of
this bungalow arrived in an e-mail one Sunday morning. It came from a TEAM member.
What caught my wife’s attention were the two trees at the property. We
drove out to see it later that day.
Selling our present house was not easy as it was arguably the best in the road
and it had a useful home-office which I had had built alongside.
Everything was done by e-mail. Our mortgage lenders had no offices, nor had the
conveyancing company — although that was one of my mistakes.
It ought not to be possible to mess up the sale of a registered freehold and
the purchase of another but this large, well-advertised operation managed to
do just that!
I asked the lady handling the matter whether she was qualified: she replied,
yes, she was a conveyancing technician. Was she a legal executive? No, a conveyancing
technician. Pass.
I told her what I wanted her to do or rather not to do. No, she said, I must
follow our system. I politely pointed out that, as her client, it was for me
to say what she was to do.
Needless to say, the wretched woman followed her flow chart and sent off a standard
letter which immediately created a traditional cat and pigeons scenario!
Not without difficulty, I eventually got hold of a real solicitor – quite
possibly the only real solicitor in the company.
He agreed I had a problem. I corrected him; he had a problem and unless it was
resolved pretty quickly, his PI insurers were looking at a £65,000 claim.
I also told him my opinion of ill-trained automatons masquerading as qualified
conveyancers.
Fortunately, I had a chance meeting with the lender’s marketing director
where I told him my tale. He rang next day to say: “David, because it’s
you, it is okay.” I am not sure who was most relieved — my wife or
the conveyancing firm’s solicitor.
As regular readers will know, I always advocate using an experienced lawyer when
buying any property – one who actually reads things and does not assume.
I had thought this transaction was straightforward and a chance to try out conveyancing
via the internet. It was not quicker, a little cheaper and more risky – so
never again!
Generally – this experience aside – I can see the internet as the
future if used intelligently and not a substitute for a real estate agent.
Take the growth in the use of pictures and ‘3-D walk-throughs’. Clever
stuff which make it much easier for people to say no, too soon.
The skill in selling houses is to stick to ‘maybes’ as you guide
them along to the eventual exchange of contracts – the only ‘yes’ that
really counts.
This may sound controversial but the arrival of photographs on particulars was
a retrograde step – word pictures were so much better.
I recall discussing dozens of houses with one lady who was sorting them into
two piles. I asked why. “I do not like the look of these,” she replied.
Why not? “I don’t like the picture!”
I pointed out that one of the discarded sheets was the property I had thought
would suit her best. I’d like to say she bought it. In fact not, she acquired
one very similar but nearer Guildford.
Another story – the most profitable office I ever ran was on the second
floor. Not just two flights of stairs but narrow twisting stairs in a building
which was itself on the move.
We could Sellotape over cracks at night and find the tape had snapped by the
morning!
It ended with massive timber supports into the high street to prevent a complete
collapse. Temporary traffic lights and long traffic queues resulted while the
landlords poured tons of concrete into the basement before specialist contractors
jacked the building up again floor by floor with massive Acrow props. Things
then got better – a strip of Sellotape lasted almost a month!
Here we were, the most profitable branch two years out of three before I was
moved on.
Some 54 per cent of turnover was net profit after charging everything – our
share of head office expenses, our staff bonuses, even the extra rolls of Sellotape.
What we did not have were many visitors. If you heard the clunk, clunk, clunk
of a pushchair being dragged up the stairs there was no need to qualify them
as hot buyers. One put the kettle on and got the oxygen cylinder out.
Some weeks, visitor numbers were in single figures. What we did have was time
to think and plan the business.
It is interesting to compare this location with that of our closest competitor
a few doors away.
Their high street premises had 22 feet of plate glass windows. It was almost
a full-time job for a junior just to keep the displays up to date. Worse – as
I saw it – they rarely recorded fewer than 250 applicants a week. So most
days their staff were being run ragged!
I cannot quote the sales figures as none of you would believe me. When we were
in competition we out-sold them massively. That said, they may have picked up
and sold a few instructions from people who couldn’t or wouldn’t
climb stairs.
Take three new property sites where we were both instructed on equal terms. On
one estate with 119 units, we sold 112, they sold seven. But these were more
your market, people said.
Okay, take an up-market estate of 17 rather nice four- and five-bedroomed units.
Here we sold 11 including all those with five bedrooms.
Still not convinced? Take three individual riverside units – today each
would be £1m or more. We sold all three and the other agents denied ever
having been instructed. However, in their glossy promotional brochure there was
the site plan on the wall which put paid to that lapse of memory!
And despite operating from what most regarded as the best premises in the city,
this agency never made a profit. Yet it was not due to a shortage of potential
buyers.
I am sure most serious buyers each week were among the 250-plus passing through.
The staff were just too befuddled to identify any of them.
In contrast. I am pretty sure that most of the serious buyers in the city also
came along to us. We may have missed out on a few but we still had conversion
rates to die for!
We had the time to sit and think and plan and co-ordinate what we were doing
which was running rings around the opposition.
Our advertising helped. Our copywriter was brilliant; I learned so much from
him.
One of his best advertisements featured the staircase. It suggested they should
make the climb as we would be very helpful when they got there.
We did not get many replies as no prices or property was mentioned. But when
we did arrange an appointment we might talk for hours going through everything
they wanted to know.
When I checked, Phillip had run this small classified advertisement on 19 occasions
over six months. From that one advertisement, we had secured 11 sales. As remarked,
our conversion rates were magical.
So what am I saying? Basically there are only a given number of serious buyers
at any one time. Usually they are hidden among hundreds more who may buy one
day.
Human nature being what it is, people will always put it off until the pressure
is too great. So the skill comes in sifting the one or two ‘must buys’ from
the many who ‘may buy eventually’!
In this, we were enormously helped by the second-floor location and that narrow
old staircase.
So here is a suggestion – instead of closing down an expensive town centre
branch, what about staying in the building but operating from a top floor, renting
out the rest? The quiet atmosphere will make the business so much easier to run.
Believe me.
Of course, many estate agency branch offices are only there to show the flag.
They were never going to be major profit centres but were useful for image purposes
and staff training. Frankly, in the new paradigm, do you really need them?
 How
are YOU managing in the current economic circumstances?
Have you streamlined
your business or have you diversified and, if so, how? Or have you found a new
way to encourage instructions?
Please let us know your circumstances for use in a future edition.
E-mail tony@estateagencynews.co.uk
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