Instructions can only go down one of two ultimate routes…they become an exchange or a withdrawal. The former makes you money, the latter costs you money.
Many agents pay surprisingly little attention to their "withdrawal rate" – however, it is a brilliant snapshot of an estate agency branch’s effectiveness.
As a starting point, it would be interesting to assess your performance as an office or individual valuer in 2012. To do this, the following calculation applies…
The critical calculation…
1. Total of available resale stock as at January 1st 2012.
2. Add total number of resale instructions over next 6 months.
3. Subtract number of net resale sales agreed during that period.
4. Subtract available resale stock total as at June 30th 2012.
5. This gives a total number of “withdrawals” over the 6 month period.
For example: Office has 62 available resale stock as at January 1st 2012. It then lists 71 resale instructions between January 1st 2012 and June 30th 2012. Total = 133. Subtract the number of net resale sales during that period (39) = 133-39 = 94. Total available resale stock total as at June 30th 2012 = 65. Total withdrawals = 94-65 = 29.
The calculation completed…
6. Divide total number of withdrawals by total number of resale instructions taken during the first 6 months of 2012
7. Multiply by 100
8. That shows the withdrawal percentage (range around the country seems between 20% and 80%)
9. Take average fee on net sales during that period and multiply by withdrawals total
10. That shows the amount of missed commission during that period….
In example office above...29 withdrawals divided number of resale instructions - 29/71 x 100 = 40.84%. Average fee of &2200 x 29 withdrawals = &63800 missed commission in 6 months = &127600 per annum.
But the true cost is much more significant than that because of money invested in time, marketing, printing, postage, communication etc etc PLUS THE HIDDEN COST OF YOUR TARNISHED REPUTATION WHERE YOU HAVE FAILED TO SELL A PROPERTY!
A 0% withdrawal rate will never happen, but there are a number of key actions, measures and techniques which can be put in place to reduce the withdrawal rate. If you would like to know more about how we can help with this issue, please call 01480 405583 or email firstname.lastname@example.org