The L’Oreal effect…

The L’Oreal effect…

With many estate agency firms typically reporting an ongoing shortage of stock, it is critical to achieve optimum fees from each instruction to sustain your business although the temptation for many agents to attract vendors by charging low fees is proving too strong for some practitioners.

 

It seems somewhat ironic that over the last thirty years, service levels have generally risen within the industry while fee percentages have typically fallen or at best held steady. In fact, for a large number of agents, the only increase in fee amounts has been down to rising property prices. Many UK agents bemoan the fact that we are among the cheapest in Europe, despite longer working hours and higher running costs. In times past, there were no floor plans, virtual tours, Internet coverage or even in some cases colour details! The client is getting a higher level of service than ever before…but not always paying an appropriate price!

 

On my travels around the country conducting training and consultancy work, I cannot think of a town or city where the cheapest agent sells the most property. Indeed, many of my estate agency client companies who have the most impressive market share in their respective areas are also the most expensive local agents.

 

It is no coincidence in the above cases that the staff display an inherent pride in the companies they work for, and perceive without question that their vendors receive excellent value for money despite the fact that there are a raft of cheaper options in their area. This matter of “value for money” is the key to success in agents securing the right fee levels.

 

Upon having the typical three or four valuations, it is critical that the vendor perceives you and your agency to be different and more effective than the rest. After all, the fee the client ultimately pays is really a red herring. The key figure is the net amount they will achieve from their property sale. If a vendor genuinely understands that instructing a cheap agent could cost them thousands of pounds on their sale price, they will look more closely at what each agent offers in terms of services, and thereby the likely end result.

 

Everything an agent does from the first point of contact with the vendor onwards helps to set the right context for appropriate fee discussions later on. As and when the subject of commission is raised at the valuation appointment, it is crucial to have built a clear impression in the client’s mind that you and your company are better equipped to help the client move than any other agent they have had dealings with. Ideally, the client would be sitting there thinking “This firm is so much better than the agents I’ve spoken with….I bet they will be expensive!”

 

By focusing on your USPs (unique selling points), the vendor can be made to understand why you charge more. Naturally, the reverse is true, in that if the potential client sees you as no different to your competitors on any level, there is no way they could be expected to pay you more. Researching your competitors’ services is vital to achieve this approach.

 

Furthermore, in the face of a fee objection, many agents buckle quickly and reduce their commission to try and secure an immediate instruction. A client asking you to negotiate is not necessarily saying that if you don’t they will not instruct you. They may simply be testing the water. The very fact that they are interested in talking about your charges should be taken as an indicator that your company is at least under consideration as their agent of choice.

 

By standing your ground and calmly explaining that your fees are non-negotiable because they reflect the service offered, the potential vendor may recognise a confidence and belief in you that leads them to appreciate that you should be their agent of choice. If however, you drop your fees without blinking, there might just be an underlying question in the client’s mind…”If you are so ready to give your own money away, how skilled are you going to be when negotiating on my behalf?”

 

One of the best valuers whom I have seen in action gets full fee the vast majority of the time. When I asked him why, he simply stated “Because I’m worth it.” It is this self-belief (what we call “the L’Oreal effect") and his self-awareness to seek ways to constantly improve his techniques that guarantee he will have a very, very successful career.