Starting up an estate agency

googler

That answers my first question. Have you filled in the figures for the rest?

It sounds like you have the cash to spare in terms of start-up costs, etc.

All you need decide now is - is this a viable business proposition to yield a profit for you, or will it turn out an expensive 'vanity project' ?

stebiz

I know other Estate Agents who use it as a front for other business ventures - usually property related. But one guy I knows has a nice shop front - but has a totally unrelated business that he runs from the back office!!

chucknorris

stebiz wrote: »

Estate Agents didn't help themselves. Instead of acting like professionals, they would do anything to get a house on the market.

Initially I would go around giving correct valuations, only for a rival to say they could get £5k more. The rival would get the sale, but 6 months on would have reduced it by £5k. A persons greed would often follow the highest price!! So in the end you have a lot of properties overpriced, and having to advertise them.

I have always though that being honest with a client would be the best way around this, for exapmple saying something along the lines of:
I think it is worth £270k and you should achieve that price in a about 6-8 weeks, however other agents might say a higher value to get your business. We could try it on the market at 280k and hope for an offer around 272-275k. But I recommend that we put it on at 270k however you as the client have the final say.

The amount of grief I used to get from sellers about advertising was unreal. I would have a set budget, but many vendors were actually quite bullying in their way.

Yes I can see this would be difficult, I would tend to want to market their property for !% with an agreed amount of advertising but they could have more at extra cost

Then you'd get those removing the house of the market, because they'd agreed a private sale - often with somebody you had sent round.

This is worrying, how often did this happen?

The only advantages I had was when I bought a few properties. Modernised them, and sold them back on. Obviously I would push mine the most. But in the end it was a case of keeping the Estate Agents open, just for this purpose!!

As for the staff. I ended up getting a Mortgage Advisor in (although I was qualified in mortgages too) to just keep the shop open, whilst I went on valuations.

Holidays were a big issue too!

So now I have some properties, little mortgages, and work from home. Less hassle!

I too have investment properties but I am looking for something else to do in addition to this.

chucknorris

googler wrote: »

That answers my first question. Have you filled in the figures for the rest?

It sounds like you have the cash to spare in terms of start-up costs, etc.

All you need decide now is - is this a viable business proposition to yield a profit for you, or will it turn out an expensive 'vanity project' ?

Yes I have looked into the figures, I don't enter anything without fully analysing it first

chucknorris

stebiz wrote: »

I know other Estate Agents who use it as a front for other business ventures - usually property related. But one guy I knows has a nice shop front - but has a totally unrelated business that he runs from the back office!!

Thanks for your frankness it does concern me what you said about clients cutting out the agent. Is this a rare ocurrence in your opinion?

The second property that I bought in London back in 1991 thsi happened, the vendor suggested we cut out the agent, I told him that I wanted nothing to do with this (and I also told the estate agent too). It has made me think I have only ever bought 9 properties (still own 6 of them) so it has arisen 11% of the time.

princessamy86

Hi chucknorris.

I work as an EA at the moment, it's not my own business so cost wise I can't help but I can throw in a few pointers from my experience!

What you said about giving honest valuations is a good idea but the reality is that it's not going to get you enough listings to generate the business you will need. Whilst some vendors appreciate you being realistic, most people have a completely inflated idea of what their property is worth and will go with the highest valuation. They may come back to you 3 months down the line when they have had no viewings, but it's always difficult to counteract that initial idea of the value of their property.

1% fees: there were 3 agents who used to charge 1% who were our direct competitors. They paid their staff minimum wage and had minimal overheads, which meant no advertising in the local paper, limited rightmove coverage and shoddy brochures which were just a single sheet of cheap A4 paper printed on a cheap printer. All 3 of these agents have gone bust! As I understand it, a 1% fee just isn't viable when you add in all other costs, you're relying on a high quantity of sales and you can't guarantee them in this market. We charge 1.75% and have the second largest market share behind the national chain across the road who charge 2.5% and have been based in the area for 15 years.

Have you thought about adding lettings to the business plan? It's a much more reliable revenue stream, particularly if you can get properties on a fully managed basis. A lot of letting agents are shoddy and charge ridiculous fees, if you can do a good job for a reasonable price it shouldn't be difficult to grow that area of the business for a reliable revenue stream, and let sales inject the larger sums of money as and when they come through.

Hmmm I'm trying to think of any more points! Any questions let me know

stebiz

Hi Chuck,

In answer to a couple of points. I tried the 'honesty is best policy approach' but human nature meant that many sellers went with who said they'd get the most. Sad I know, but that's how it was!

I never had too many in terms of sales, who did the 'dirty', maybe about 10% of them.

My main expense was advertising and salary. With all the hassle I had on a daily basis, it just wasn't worth it.

If you do go with it, I wish you all the best.

girleight@

If you don't need the money could you think about volunteering? Maybe in something to do with housing.

chucknorris

princessamy86 wrote: »

Hi chucknorris.

I work as an EA at the moment, it's not my own business so cost wise I can't help but I can throw in a few pointers from my experience!

What you said about giving honest valuations is a good idea but the reality is that it's not going to get you enough listings to generate the business you will need. Whilst some vendors appreciate you being realistic, most people have a completely inflated idea of what their property is worth and will go with the highest valuation. They may come back to you 3 months down the line when they have had no viewings, but it's always difficult to counteract that initial idea of the value of their property.

1% fees: there were 3 agents who used to charge 1% who were our direct competitors. They paid their staff minimum wage and had minimal overheads, which meant no advertising in the local paper, limited rightmove coverage and shoddy brochures which were just a single sheet of cheap A4 paper printed on a cheap printer. All 3 of these agents have gone bust! As I understand it, a 1% fee just isn't viable when you add in all other costs, you're relying on a high quantity of sales and you can't guarantee them in this market. We charge 1.75% and have the second largest market share behind the national chain across the road who charge 2.5% and have been based in the area for 15 years.

Have you thought about adding lettings to the business plan? It's a much more reliable revenue stream, particularly if you can get properties on a fully managed basis. A lot of letting agents are shoddy and charge ridiculous fees, if you can do a good job for a reasonable price it shouldn't be difficult to grow that area of the business for a reliable revenue stream, and let sales inject the larger sums of money as and when they come through.

Hmmm I'm trying to think of any more points! Any questions let me know

Thanks for your input and I do appreciate what you say about people being unrealistic about the value of their properties, it must be difficult to find the right balance between realism and picking up the business.

My wife and I currently own 8 properties that we rent out (and manage ourselves, me since 1991) so adding on lettings would be a certainty. I am glad I posted this thread because i am merely in the very early stages of considering whether to either go back to work or start a business. The real me is business orientated, however there is part of me that might just want to simply keep life simpler too.

chucknorris

girleight@ wrote: »

If you don't need the money could you think about volunteering? Maybe in something to do with housing.

I do volunteer work for dog rescue centres at the moment. There is a gap in my life at the moment and I am exploring the right avenue to fill it. It could be another business, work or perhaps the third option more volunteer work, but I favour the first two.