New Estate Agency Model- Thoughts?

Ewan_THS

Hello everyone this is my first post on MSE so please go easy! I wanted to ask for peoples' opinions on my new business model. Let me give you a bit of background first...
I recently finished working as a negotiator at a large corporate agent in Devon. While I was there, I was shocked at the lack of customer focus and seemingly backwards processes. I didn't have access to a computer and found myself being burdened with administrative duties which detracted from my ability to effectively carry out the core duties of my role. There seemed to be an ethos of rinsing clients for all they were worth, disregarding their desire for a positive experience in order to fulfil personal targets. Having come from a customer service background I found this uncomfortable to say the least as people were paying through the nose for a substandard service.

To cut a long story short I left after a few months. I had enjoyed the customer interaction, the 'selling' side if you like, but couldn't agree with the unethical practises. As such, I have decided to start my own agency. I will soon be launching and, while I wish I had come across this forum sooner, it would be very useful to get an idea of the general concensus in terms of viability from a professional point of view, and gain an insight into aspects which may need further consideration. Constructive criticism is welcomed!

My idea is to take the best points of the online and traditional modes and marry them in a service which is geared towards what the customer wants. This means offering the local knowledge and expertise of a traditional agent for a fee comparable to the online agents. I will not have a high street premises, rather a private office but I am still very much local. The properties will be marketed in the local press, on my website and on zoopla. Here are some more key points:
Fixed fee- regardless of property value, my fee will invariably be £995
No sale, no fee- fee will only be payable upon completion of sale.
Evening and weekend viewings/valuations- I am happy to conduct accompanied viewings and appraisals 7 days a week around the needs of my vendors/applicants.
No tie in- Only two week written notice required to terminate contract.
State of art system- While telephone and email contact will be frequent, there will be the option to track the progress of your sale online.
No higher multi-agency fee- fee will remain at £995

I really want to offer an honest service that goes above and beyond peoples' expectations for a lesser fee as I believe the traditional model is outdated, but people are reluctant to conduct viewings and sales progression themselves.

Very long winded I know and I apologise if this has been covered before but I would be keen to hear your thoughts.

Thanks

tigsly

I went with an online agent - but am in a popular - easy to sell place...

I paid less than you are suggesting £300 less - if your including vat - more if not...

I honestly dont' see what you'd be offering in addition to online - wihtout the 'office' and 'known brand' for people to walk past.. /in...

so IMO - I dont see who'd buy into your 'brand'

Ewan_THS

tigsly wrote: »

I went with an online agent - but am in a popular - easy to sell place...

I paid less than you are suggesting £300 less - if your including vat - more if not...

I honestly dont' see what you'd be offering in addition to online - wihtout the 'office' and 'known brand' for people to walk past.. /in...

so IMO - I dont see who'd buy into your 'brand'

Thank you for your reply!
I won't be charging VAT so there will be no hidden charges.
An online agent will generally be based outside of your locality (the nearest to me is 40 miles), thus lacking the local knowledge many buyers seek. I live in a tourist hotspot, so there are a lot of buyers from outside of the area looking for BTLs or retiring etc and in my experience they really value an insight into the local area. In addition to this, it is possible that without thorough knowledge of the local market the valuation given may not be as accurate as it could be.
A lot of online agents want to be paid up front, and will charge more for added services- I wanted to offer an all in one package.

mrginge

Trying to take the best bits of two models invariably ends up with the worst bits.

You have higher overheads than online
You have less direct visibility than high street
You have less market to aim at than online
You end up have to do all the same work as high street, but with a fixed pricing model that doesn't support it.
You cannot run this without rightmove. No one us going to look on your website.
Your pricing model demands volume sales and a low dropout rate. How are you going to achieve this when you have no footfall and limited online exposure.

I admire your enthusiasm and desire to improve a (usually) overpriced and limited value market, but i don't think this is the plan to do it

PasturesNew

The market is pretty much tied up with big boys. e.g. RM and Zoopla. If you look beyond that there's the Purple lot advertising on telly and Tepilo by Sarah Beeny. These last two don't have much/any market impact.

What you're trying to do is enter a market that's awash with Big Boys' money .... and you'd struggle to make the tiniest of dents into it at all.

It's easy to come up with a better way of providing services.... it's harder to fund the development of that and to afford the extensive marketing costs you'd need to even get a sniff at anything.

When people want to sell their house they want to sell it soonest/for the most possible.... and not to discover, after 3 months, that nobody's heard of the website they're advertising on....

Would you have your own site? Or be on RM/Z?

There is a high-earning, lucrative market you could enter.... but you've not mentioned it so I won't.

tigsly

I think paying on completion would attract me..

But as for offering 'buyers advice' .. I dont get how - they woudl find you...

As a buyer I knew where i wanted to move to ,, I didn't realy care for estate agents views.. (to be honest I felt they had an agenda - and I didn't really trust what they were saying half hte time.. perhaps - thats just me tho?!)

As for price information - all avalaible online..

googler

Ewan_THS wrote: »

Thank you for your reply!
I won't be charging VAT so there will be no hidden charges.

If your turnover goes over the VAT threshold, you'll have to!

And where will that leave you, with some legacy customers not paying VAT, and you forced to charge VAT to the new ones.....?

My gut reaction is that you won't make money. Have you done a business plan, or a cost/benefit analysis?

Ewan_THS

Thank you for your thoughts!
To clarify this will be a local operation. Based in an area I grew up in and have experience selling properties in. I will not be trying to enter the 'big boys' market as I concede I have no chance. I am going in direct competition with local, high street agents with extended services at a lower fee. Granted they have the advantage of being established but everyone started somewhere.

It seems at the moment vendors have a choice between two.. the traditional 9-5 high street agent with a strong local presence who 9/10 will charge a higher fee. OR the online agent who will usually ask for up front payment, will not conduct your viewings for you and will expect you to speak to someone in a call centre up country rather than a familiar face. (I am generalizing, I know)

Surely a service that works beyond the typical hours of a traditional agent, offering arguably equal exposure, at a price which is significantly lower than my competitors is attractive?

In terms of the old RM>Zoopla argument, in my area there are SIGNIFICANTLY more agewnts using Zoopla than RM. It is a little over a quarter of the price and in my experience at my previous employers, generates more leads (literally nearly double).

My overheads are very low. While this will change as I expand, I will only need to sell 2 properties/month to earn a wage. I am not naive enough to think this will happen right away, but you would be hard-pressed to find an agent with overheads that low.

It is true that I will be looking towards volume sales. My area is surrounded by large housing developments which are in extremely high demand and this will be my initial area of focus to start building a presence.

Exceeding the VAT threshold is some way off, but I have allowed for this eventuality and there is enough margin to allow for an inclusive VAT fee which remains unchanged at £995. Granted I will need to sell more properties, but by the time I am VAT registered, I will be established and can expect more custom.

When i talk about buyer's advice I mean the small things that make the difference. Like knowing which bus routes are nearby, the nearest school and what it is like, what different areas are like at different times of year etc. This definitely helped me in my role as a negotiator.

I understand the benfits of a high street presence, but am fully aware of the drawbacks. I firmly believe the market is shifting in the direction of the online agent, their recent growth shows that, so why not a happy medium?

I have a business plan and have conducted endless amounts of market research and I can see the viability. My biggest barrier will be getting the right types of property on my books. I am wanting properties in high turnover areas, the same areas where there has been a shift in preference towards online agents due to their reduced fee. People know their properties will sell quickly in these parts and resent the idea of paying thousands for what is often minimal work, however, those that have gone with high street agents I have found did so because of the want to speak to a familiar face and a reluctance to show people around their homes and deal with the sales progression.

tigsly

Using an online agent - I had one person working with me - not a 'faceless many'... and i had a direct line contact to her..

I did have to do viewings

But I didn't have to do 'sale progression'...

As for bus routes - google maps covered that for me.. but i do realise i'm part of the www age!

jjlandlord

Seems to me that you just intend to launch a local agency with discounted prices to gain market share.
You have experience and did your homework, so I'm sure that you came up with a price structure that would allow you to survive.

Do remember that online agents are able to offer low prices because the the economies of scale they have and the savings on the lack of high street store and viewings.

I can't comment on their fees, but last year a new local agent opened in my area and offered extended viewing times (evenings and all week end) and they seem to have been doing pretty well so far judging by the number of 'for sale' notices with their logo on since then.
One marketing campaign they came up with: They sponsored the local primary school by giving it 10% of their commissions, and that way got flyers in all the pupils book bags.
That certainly gave them a lot of exposure.

When i talk about buyer's advice I mean the small things that make the difference. Like knowing which bus routes are nearby, the nearest school and what it is like, what different areas are like at different times of year etc.

Frankly that's the minimum I would expect a local agent to be able to do as part of their sales pitch.

ging84

I don't think you understand the reason for the preferential rate on exclude agent contracts and the reasonably long tie ins.
With them its a simple case of if the house sells the agent gets their commission, and very easy to enforce through the courts. Without and you attract every chancer who thinks they can use your service and avoid paying.
Estate agents might be money grabbers who use dirty tricks, but so are the customers. House buying and generally anything involving large sums of cash really brings out the worst in people.