On my training travels around the country this year, it has been evident that a growing number of estate agents are enjoying a bumper sales period – although not all those agreed sales are going the distance.
One of our key areas of training requested by my client firms has been in bolstering negotiators’ ability to put quality sales together and to maintain a low cancellation rate. As a result, these clients are reporting considerably stronger performance in those disciplines and thereby a protection or increase of income levels.
Cancellation rates (the percentage of agreed sales that fall through) vary massively around the country from single figures through to in excess of 40%. There are a number of reasons for this disparity, including how negotiators are targeted (putting staff under pressure to agree a certain amount of sales each week is bound to lead to a few spurious “deals” being booked). In addition, some agents more or less forget about a sale once it has been tied up, leading many to crash and burn further down the line.
We have spent a great deal of training time devoted to arresting the number of sales falling through and failing to reach exchange – a problem which obviously leads to frustration and dented morale.
One of the key areas many agents need to improve upon is the quality of the manner in which the sale is initially negotiated. This can often be compromised when negotiators are over eager to book a sale too quickly.
Examples I have discovered include a cancelled sale that cost the firm in question &3800 in lost commission.
The viewing on the property had been unaccompanied by the agent, and the purchaser had been left with the impression that the vendor would leave, amongst other items, the curtains.
Upon receipt of the detail of fixtures and fittings via his solicitor, the purchaser was dismayed to discover that the vendor was actually planning to remove all the curtains from the property.
When contacted by the agent on this matter, the vendors conceded that at the viewing, they had referred to the curtains staying but only “for the right price”. The accepted offer had been several thousands of pounds below the asking price, and as fixtures and fittings had not been discussed with either party by the negotiator, both vendor and purchaser incorrectly assumed the detail of the deal. Unfortunately, their two assumptions were entirely different from one another!
The resultant fallout led to the classic “matter of principle” problem which the negotiator failed to resolve, leading to the two parties’ fixed unwillingness to proceed with the transaction on the other’s terms, and thus to an unnecessarily abortive sale.
The simple principle of ensuring clarity of fixtures and fittings at the point of negotiation could have avoided this costly scenario.
Indeed, a broader adoption of complete unambiguity of the quality of the potential sale at the outset has halved the cancellation rate for one of my clients.
Previously, they had lost sales through irreconcilable timescale differences between parties, which should have been established far earlier in the process. Clearly, there is little point in booking a chain of three sales where two parties must complete before the end of March, whilst the first time buyer is unable to move until June.
In another case, failure to identify the absence of probate being granted on the property at the top of a chain led to a delay that resulted in the buyer going elsewhere. Such basic lack of attention to important detail by an agent is inexcusable.
There were yet more examples of failed transactions where insufficient qualification of the facts caused insoluble problems – lack of ability to buy due to the failure of the agent to introduce the buyer to a financial adviser, negligence in spotting the clues presented in a complicated matrimonial situation and the wrong assumption that a prospective buyer in rented accommodation had no related sale to name but three.
Whilst there is a natural adrenalin rush on the part of the agent as a new sale is being negotiated, this must be tempered by adhering to “best practice” principles of a few minutes reflection on the importance of being in possession of all the key information, ensuring that the sale is of an appropriate quality to justify the agents’ understandable excitement.
An hour’s effort and diligence in establishing chapter and verse on a potential sale in the first instance can avoid days of fire fighting later in trying to hold it together.
The acid test is to consider this – if you were the owner of the property in question, would you be happy to agree a sale to this purchaser and to remove it from the open market with confidence that the deal will go through?
It is doubtful whether a sale has ever crashed due to the negotiator gathering too much information at the outset, but it is certain that many sales have done so due to gathering too little.