How To Double Your Estate Agency Sales Revenues

RAT 150 (Rawlings Agency Tips) The case for Buyer Representation within your agency.

The current market has prompted several opportunities for innovative estate agents, and one of the exciting projects that I have been working on is helping to set up and launch a buyer representation service for my estate agency clients. The opportunity is huge.

If you are like most estate agents, if you look at your figures, I suspect you’ll find that you actually only sell to about 6% of your registered buyers. The other 94% actually represents a cost to your business.

It may be that buyers don’t buy from some agents because the sales staff simply don’t have the skills to recognise and capture the applicants’ business. Sometimes, it is the indifference of agents that prompts an indifferent response from buyers. Well, those are age-old training and motivational issues that clearly need to be addressed.

However the chances are, that despite your best efforts, the reason why most applicants do not buy through you is simply because you do not have the right stock, at the right price, for the right person, at the right time. Additionally, the buyer probably has no particular loyalty towards your agency. Why should they! They just want the right property.

Whilst a comprehensive Multi Listing System would significantly overcome this problem, we are not yet there in the UK. In the meantime, buyer mandate represents an opportunity to make money out of some of those buyers whom you would otherwise lose. This is how it works:

A buyer registers, and you have two choices. You can either send them loads of details, show them a few houses, and hope they buy one of them. We know that they probably won’t. Alternatively you can sign them up as a fee-paying client, where you will represent their best interests in the purchase. You would show them everything suitable on the market, through any agent -not just your own stock. Importantly, you would advise them what NOT to buy, and generally be their trusted advisor in the property buying process, right through to completion and beyond. This takes away much of the hassle of house-hunting, and saves a lot of time, money and risk.

After all, it does seem slightly ridiculous that buyers should contemplate spending hundreds of thousands of pounds without an expert to represent them in any event! This is particularly the case when they are buying in an unfamiliar area. 

Most buyers are not experienced negotiators. In representing their best interests it is your job to use your skills to secure the best terms for the property, which justifies your buyer’s agency fee in itself. Also, someone who is paying you for your advice is more likely to take it! That’s good news if you are also trying to sell financial services!

Of course, if you sell the buyer one of your pre-existing vendor client’s properties you could not represent or charge the buyer as well in that instance. Likewise if a property came on your books subsequently which your retained buyer buys, you would not charge the vendor any fees. You cannot represent both parties if you are to avoid a conflict of interests.

From an agent’s perspective there are several major advantages. The buyer no longer needs to register with your competitors, as you will be offering their properties to the buyer as well. Your competitors would be foolish not to allow you access to their properties, as they will be enhancing their chances of selling to a proven keen buyer, without compromising their own fee. If a competing agent failed to co-operate there would be nothing stopping you from approaching the seller directly, as you will not be asking them for fees. The seller would also have a pretty poor impression of their own agent who failed to take advantage of such an opportunity, which positions you nicely should the seller subsequently fire that agent. Ha!

Buyer representation is also a great way to pick up instructions - imagine an advert that says “Sell Your House For Free”. This is surely the ultimate in estate agency service - no fees! If you don’t sell, or strictly speaking buy, the house for your buyer client, perhaps the seller would like to consider instructing you to represent them on the usual terms instead? They certainly know you mean business if you have buyers paying you to find them a property!

Whilst the concept of buyer’s agent is not new, it is remarkable how few agents are currently harnessing the opportunity, although, with training, it is surprisingly easy to sign up selected buyer clients.

In fact, it’s pretty odd that we call ourselves professional, yet only seem capable of acting for one party, even though the requirements of buyer and seller alike are the same - they want to work with a property expert who can negotiate the best deal for them! It’s a bit like being a dentist, but only filling lower jaw teeth; “sorry, madam, I don’t do upper jaw work!”

Globally there are 50,000 members of REBAC, the Real Estate Buyers Agent Council, which puts the scale of the opportunity into perspective, especially as they primarily operate in a country (USA) where there is apparently less need for buyer representation as they have a multi-listing system! The thing is - you are already in pole position to take the lead here as you already have buyers on your books who can easily be converted into fee-paying clients with guaranteed revenue! Yes, guaranteed!

Uncomfortable? Or Smart? 

Buyer Representation is big business, and I believe will be the next chapter in estate agency in the UK. And it can be for you too, and quickly! The maths is easy. If you can convert around 6% of those buyers who would otherwise have failed to buy through you (which you can do easily) then you will have literally DOUBLED your income from property sales in your area - and probably picked up a few more instructions along the way as well!

You probably have loads of questions and possible concerns about conflict of interest, commission levels, etc. That’s natural. But if you’d like more information on how to work this magic, sorely needed in this market, then please feel free to contact me, and I’ll help you set up a buyer representation business as part of your agency. Your timing couldn’t be better!